We sent a letter this week to the Senate Banking Committee, in response to their draft of crypto market structure legislation. On the critical question of which tokens should be regulated as securities, the Senate's draft takes a very different approach from the CLARITY Act that was already passed in the House. We think the Senate's approach—"ancillary assets"—is better for crypto. While both bills are an improvement on the Howey-based regime—which is notoriously difficult to apply and creates toxic perverse incentives for issuers—the Senate draft is significantly simpler, and avoids forcing decentralized tokens and protocols to fit themselves into an inflexible legislative framework. Instead, it protects against abuse with a simple exclusion—assets that come with legal rights to specified financial interests do not qualify as ancillary assets. As we explain in the letter, we think this is the cleanest test that protects decentralized crypto assets while preventing traditional securities issuers from improperly taking advantage of this framework.

The Tornado Cash trial has concluded. Roman Storm has been found guilty of the conspiracy to operate an unlicensed MTB charge. Here are my thoughts on the outcome, the government’s (rejected) motion to remand Storm, and what comes next.

🚨NEW: Some initial confusion over the status of the third count, which the jury could not unanimously decide. But to clarify: @rstormsf has been found guilty on one charge: conspiracy to operate an unlicensed money transmitting business (aka “the 1960 charge”), which, according to Storm’s lawyer Keri Axel, carries a maximum sentence of five years. The jury was hung on the other two counts: money laundering and sanctions violations. Judge Failla denied the government’s motion to remand him to jail, stating: “There is a lot of fighting left in this case before sentencing, and I think Mr. Storm will stay to fight it.” As the government team exited the courtroom, I asked AUSA Rehn for comment. He seemed caught off guard (may not have realized I was press), stammered, and said: “No comment right now, but we will… yeah…” before walking out the door. Storm remained in the courtroom, conferring with his legal team. His emotions are hard to read as he’s remained pretty stoic throughout this whole trial. I’ll try to get a comment from him as well. Back in again…

Judge: Let me see it... Deputy: Mr. Foreperson, Count 1, how do you find? Foreperson: Not unanimous. Deputy 2: Count 2? Foreperson: Guilty. Deputy: Count 3, IEEPA? Foreperson: Not guilty.

🚨JUST IN Jury in trial against Roman Storm says it's deadlocked on some charges. Court asked jury to reconsider – if deadlock remains, the court will accept a partial verdict. Government may re-try remaining charges.

1:27 pm Judge Failla: We have the worst of all world. The juror's mother's birthday party is an all day affair including a pedicure. We only learned this now. If we say no, you risk the ire of the jury. My deputy believes the best way is for me to go into the room