Crypto Law Update: Courts, Banks, and New Rules

Welcome to this week's crypto legal roundup. Navigating the world of legal rules and court rulings in crypto can feel tricky.

We are here to break down the biggest stories into plain, simple English. Let's look at what happened in the courts and regulatory offices this week.

Court Refuses to Vacate CFTC Settlement with Gemini

On October 15, Judge Alvin Hellerstein of the Southern District of New York made a notable decision.

He denied a joint request from the CFTC and Gemini Trust Company to throw out their January 2025 consent order.

The CFTC originally sued Gemini back in 2022. The agency claimed Gemini made misleading statements during a review of a proposed bitcoinBTC-0.72% futures contract.

Gemini later settled the matter. They paid a $5 million civil penalty and agreed to a permanent injunction.

Earlier this year, the CFTC shifted its internal enforcement standards. The agency decided it would not file the same case today.

Because of this shift, both Gemini and the CFTC went back to court together. They asked the judge to clear the old judgment.

Judge Hellerstein said no. He explained that changing policy positions inside an agency do not automatically wipe away past court orders.

Gemini had fought the lawsuit for over three years before settling. The $5 million penalty was already paid, and the permanent court order will stay active.

This decision carries a vital lesson for digital asset firms. Settling a regulatory case creates lasting consequences that simple policy shifts cannot easily undo.

US Banking Regulator Finds Banks Unfairly Restricted Crypto Firms

On October 14, the Office of the Comptroller of the Currency released a big supervisory report.

The OCC examined debanking practices across the nine largest national banks in the United States. The review looked at bank actions between 2020 and September 2025.

The findings were clear. All nine banks kept policies that restricted services to legal businesses based on non-financial factors.

The OCC specifically named crypto asset issuers, exchanges, and custodians as targets of these broad restrictions.

Banks relied heavily on vague reputational risk policies instead of evaluating real, objective financial risk.

To reach this conclusion, the OCC reviewed roughly 50,000 documents, totaling 420,000 pages, alongside nearly 100,000 customer complaints.

This report does not give crypto businesses an automatic right to a bank account. Banks must still guard against financial crimes, money laundering, and sanctions risks.

However, it signals much tighter scrutiny on arbitrary bank rejections. Digital asset companies seeking accounts should document their regulatory compliance, customer checks, and fraud controls carefully.

Illinois Crypto Tax Lawsuit Pushed to Fast Track

On October 13, industry groups and the State of Illinois asked a county court to speed up ongoing lawsuits over the Digital Asset Tax Act.

This state law aims to impose a 0.2% tax on the value of specific digital asset transfers and purchases.

Opponents argue that the law violates constitutional rules and conflicts with the federal Internet Tax Freedom Act.

Both sides agreed on a proposed court timeline to resolve the dispute quickly:

• November 4: Deadline for opening summary judgment motions.
• January 22, 2027: Deadline to complete all legal filings.
• February 2027: Proposed court hearing.
• March 1, 2027: Requested date for a court decision.

Enforcement of the tax is currently stayed until July 1, 2027. If the court approves this fast-track schedule, businesses could get a clear decision months before the tax takes effect.

Exchanges and brokers serving Illinois users should monitor this case closely to prepare their calculation systems if the tax is upheld.

European Union Names USDCUSDC+0.00% as First Significant Stablecoin

On October 14, the European Banking Authority classified USDC as a significant e-money token under MiCA rules.

Out of 45 e-money tokens submitted for review, USDC is the very first to reach this threshold.

Circle Internet Financial Europe SAS issues USDC within the European Union.

Starting November 12, USDC will enter a dual-supervision model. The EBA will directly supervise reserve assets, liquidity requirements, own funds, and recovery plans.

Meanwhile, France's financial authority will continue overseeing internal governance, outsourcing, and conflict-of-interest policies.

This classification is not a penalty or finding of non-compliance. Instead, it reflects USDC's growing size and economic importance across Europe.

UK Court Rules Chinese Law Applies to 61,000 Seized Bitcoin

On October 12, the High Court in London reached a major choice-of-law decision regarding roughly 61,000 seized bitcoin.

The bitcoin was seized by UK police in connection with Zhimin Qian, who was convicted over a massive investment fraud in China.

Victims claimed that English law should govern ownership because the bitcoin is stored on servers in the United Kingdom.

Mr. Justice Mark Turner disagreed. He ruled that Chinese law applies because the fraud, misrepresentations, contracts, and financial losses occurred in China.

This ruling does not name the final owners of the bitcoin. Claimants must now prove their property rights under Chinese law to satisfy UK standards for recovering seized funds.

The decision shows that where seized crypto is physically located does not automatically dictate which country's property laws apply.

Market Context & Important Disclaimers

Past performance of digital assets or financial institutions is not a guarantee of future results or performance.

Digital asset markets experience rapid changes and volatility. Always evaluate regulatory rules and risk factors carefully before participating in digital asset markets.