TLDR:

• Larry Fink renewed calls for SEC approval of tokenized stocks and blockchain-based bond markets.
• BlackRock comments increased focus on tokenized securities and regulated blockchain settlement systems.
• SEC oversight remains the main barrier to broader public trading of tokenized financial assets.
• Crypto discussions intensified after BlackRock linked blockchain systems with traditional financial markets.

BlackRock CEO Larry Fink once again urges U.S. regulators to expedite tokenized stocks and bonds. 

His remarks resonated right away in the cryptocurrency and traditional finance spheres, given the fact that BlackRock has over $11 trillion under management. 

The comments also highlighted blockchain settlement systems and the regulation of digital securities. Regulatory approval is a key element to wider adoption of tokenized assets, which are still subject to oversight by the SEC. 

BlackRock CEO Pushes SEC on Tokenized Stocks and Bonds

Larry Fink said the SEC should move rapidly on tokenized bonds and stocks during recent public remarks. The statement circulated widely after social media post from Crypto Rover amplified the comments.

The BlackRock CEO linked tokenization to the future structure of financial markets. His comments placed blockchain settlement and digital ownership records back into the policy spotlight.

Tokenization converts ownership records into blockchain-based digital assets. Under that structure, stocks and bonds can move through distributed ledger systems instead of traditional databases.

Several large financial firms have already explored tokenized products. BlackRock has also expanded its digital asset presence through crypto exchange-traded funds and tokenized treasury products.

According to the post shared by BankXRP, Fink’s comments drew immediate reactions from crypto traders. Discussions focused on how traditional finance firms may increasingly adopt blockchain infrastructure.

The SEC remains responsible for regulating securities products in the United States. Any approval involving tokenized securities would still require compliance with custody, reporting, and investor protection rules.

SEC Approval Remains Central to Tokenized Asset Expansion

The SEC has not approved large-scale public trading of tokenized stocks and bonds. Current discussions still center on how blockchain systems can operate within existing securities laws.

Traditional financial firms continue testing blockchain settlement tools behind closed networks. However, public market access for tokenized securities still depends on regulatory clarity.

BlackRock’s growing involvement in digital assets has kept the company near the center of crypto market discussions. Its spot crypto ETF products already connected institutional investors with blockchain-related exposure.

The tokenization debate also affects crypto exchanges and custodians. Regulated platforms may eventually support tokenized securities if the SEC establishes clear operating frameworks.

Settlement speed remains one of the main points behind tokenization efforts. Blockchain systems can reduce delays tied to traditional clearing and reconciliation processes.

At the same time, regulators continue reviewing market risks linked to digital securities infrastructure. Oversight standards for reporting, compliance, and asset custody remain under discussion.

Fink’s remarks added pressure to an already active regulatory debate. The discussion now extends beyond crypto-native firms into mainstream financial institutions and asset managers.

In a development with wide-ranging implications for professional liability and regulatory oversight in the crypto sector, Fenwick & West LLP has agreed to pay $54 million to settle a 2023 class-action filed by former customers of the FTX exchange. The suit alleges that the Silicon Valley law firm played a central role in facilitating the exchange’s alleged misappropriation of customer funds by advising on entities, structures and strategies intended to hide commingling with Alameda Research and to sidestep licensing requirements. The agreement, announced on Friday, remains subject to the approval of a U.S. judge before it becomes final.

According to Cointelegraph, the plaintiffs contended that Fenwick guided FTX on creating legal structures designed to reduce the likelihood of needing money transmitter licenses and to obscure the flow of customer funds. The settlement underscores the continuing legal fallout from FTX’s 2022 collapse and comes amid heightened regulatory scrutiny of governance, risk management, and professional duties within crypto companies and their advisers.

Key takeaways

• Fenwick & West LLP will pay $54 million to settle a 2023 class-action by former FTX customers; finality hinges on court approval.
• The suit alleges Fenwick facilitated the alleged fraud by shaping entities and transactions to hide fund commingling and to evade licensing requirements.
• The Fenwick settlement adds to the post-FTX litigation landscape as regulators intensify scrutiny of professional roles in crypto insolvencies.
• The FTX Recovery Trust distributed $2.2 billion to creditors and customers in March; the next distribution is scheduled for May 29.
• Asset-management questions persist within the Recovery Trust, including criticisms of liquidation practices and the mispricing of certain holdings, such as aCursor stake sale that underscored potential opportunity costs.

Fenwick settlement in the FTX aftermath

The case sits within a broader pattern of litigation that followed FTX’s collapse, including actions against advisers who were involved in shaping the exchange’s corporate and financial structures. Fenwick & West initially sought to have the lawsuit dismissed, but later agreed to a settlement in February before the publicly disclosed $54 million figure. The settlement’s fate now rests with a U.S. judge, who must sign off for the agreement to proceed and for the court to resolve the plaintiffs’ claims against the firm.

Analysts note that the dispute highlights the line between legal counsel’s traditional professional duties and the risks associated with guiding entities through complex, cross-border crypto structures. As regulators increasingly scrutinize how law firms, bankers, and service providers interact with crypto platforms, the Fenwick case may inform ongoing considerations of duty, due diligence, and potential liability in crypto-related governance and enforcement actions.

FTX Recovery Trust distributions and asset-management challenges

The FTX Recovery Trust, which oversees the restitution process for creditors and customers, distributed $2.2 billion to those affected in March. A subsequent tranche is anticipated on May 29, continuing the process of asset realization and distribution. While the Trust seeks to fulfill its mandate, dissatisfaction has grown among some claimants and observers who accuse the Trustee and related administrators of mismanaging asset liquidation or realizing assets at prices that undervalue recovery potential.

One notable illustration of these concerns concerns a 2023 sale of a 5% stake in AI company Cursor for about $200,000. At the time, the Value of that stake was not fully recognized within the recovery plan; by April 2026, Cursor’s value had risen to an estimated $3 billion, highlighting the risk of valuation and timing in bankruptcy- and estate-management contexts. Such disparities underscore the tension between rapid distributions and maximizing recoveries for creditors and customers in crypto collapses.

These dynamics occur amid broader questions about how trusts securing crypto-liquidation proceeds should price and sell recovered assets, how to manage strategic stakes, and how to balance speed of payouts with maximized recoveries. The discussions also intersect with regulatory expectations for how distressed crypto assets are handled, including transparency, valuation methodologies, and fiduciary duties of trustees and advisers.

Regulatory and policy implications for the sector

The Fenwick settlement and the Recovery Trust’s liquidation approach sit at the intersection of legal professional responsibilities and crypto-regulatory policy. In the United States, the episode feeds into inquiries by lawmakers and regulators into the adequacy of compliance, licensing, and anti-money-laundering controls across crypto platforms and their service networks. For institutions, the developments raise practical considerations around vendor risk, professional liability, and the scope of due diligence required when assisting crypto entities through restructuring and wind-downs.

From a policy perspective, the events resonate with ongoing debates around licensing regimes, cross-border supervision, and the treatment of crypto assets under consumer protection, securities, and banking frameworks. In particular, the case touches on enforcement priorities among the U.S. agencies—such as the SEC, CFTC and DOJ—and echoes discussions around broader regulatory alignment with frameworks like MiCA in the European Union, as jurisdictions seek greater clarity on the treatment of exchanges, asset custodians, and recovery processes. For banks and financial counterparties, the evolving regime continues to influence risk management practices, licensing considerations, and the due-diligence standards applied to customers and counterparties engaged in crypto-related activities.

Industry observers emphasize that the outcomes may shape professional-standards expectations for law firms and other service providers involved in crypto insolvencies, with potential implications for standards of care, disclosure, and conflict-management obligations. The developments also illustrate the regulatory and legal risk that can accompany asset-holding and restructuring strategies in distressed crypto businesses, reinforcing the need for robust AML/KYC controls and transparent governance across the ecosystem.

Closing perspective

As courts evaluate the Fenwick settlement and the Recovery Trust continues to unwind and distribute assets, authorities and market participants will be watching how these processes inform regulatory expectations, professional responsibility standards, and the governance of crypto insolvencies moving forward.

Fenwick & West LLP, the law firm that advised the now-defunct FTX exchange, has agreed to pay $54 million to settle a 2023 class-action suit brought by former FTX customers. The settlement, reached as the case moves through U.S. courts, remains subject to judicial approval.

The plaintiffs contend that Fenwick “facilitated FTX’s fraud” by playing a pivotal role in how the alleged scheme operated. They allege the firm helped design and deploy legal structures and other mechanisms that obscured the misuse of customer funds, including transfers between FTX and its trading arm, Alameda Research, and created entities intended to avoid money-transmitter licensing. The claim is that these strategies enabled commingling of funds and aided the concealment of improper fund movements.

The filing indicates Fenwick had resisted the suit’s dismissal but eventually agreed to the settlement in February. A court still must approve the agreement before any payment is issued to plaintiffs. The development adds another layer to the sprawling legal aftermath of FTX’s 2022 collapse, which continues to reverberate through the crypto industry and invite closer scrutiny from regulators and lawmakers.

Key takeaways

• The law firm Fenwick & West will pay $54 million to settle a 2023 class action brought by former FTX customers; settlement approval remains pending.
• Plaintiffs allege Fenwick helped facilitate FTX’s alleged fraud by advising on entities and structures intended to hide customer funds and avoid licensing requirements.
• The case is part of the broader legal fallout from FTX’s 2022 collapse, which has intensified scrutiny of crypto firms and their advisers.
• The FTX Recovery Trust has distributed about $2.2 billion to creditors and customers in March, with another payout scheduled for May 29, underscoring ongoing asset-liquidation processes.
• Critics say the Trust has mismanaged asset liquidation, often selling recovered assets at discounts or below peak values reached after the collapse, highlighting concerns about the pace and pricing of distributions.

FTX estate distributions and questions over asset management

In March, the FTX Recovery Trust, the vehicle handling distributions to creditors and customers affected by the exchange’s failure, announced a distribution of roughly $2.2 billion. The next tranche of reimbursements is scheduled for May 29, but ongoing criticism from affected users centers on how assets have been liquidated. Several observers contend that the Trust has offloaded assets at prices well below potential peak values achieved in the wake of the collapse, potentially shortchanging victims of the exchange’s failure.

Related coverage has noted the ongoing scrutiny of firms connected to FTX’s collapse and the broader implications for the crypto legal landscape, including questions about accountability for law firms and other service providers involved in high-profile crypto failures.

What comes next remains uncertain: the court must sign off on the Fenwick settlement, and the Recovery Trust’s asset-disposition strategy will likely continue to attract attention from creditors, regulators, and market watchers as the FTX saga evolves.

Readers should stay attentive to developments in the court approval process for Fenwick’s settlement, forthcoming distributions from the Recovery Trust, and any new disclosures about how asset sales and legal structuring influenced the handling of customer funds in the FTX era.

The Federal Reserve published the latest version of its proposal to create a “skinny” master account, updating the proposal first published last December. In the same week, President Donald Trump signed an executive order directing the greater integration of digital assets with existing payment networks.

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The narrative

U.S. President Donald Trump signed two executive orders this past Tuesday. One directed the broader government to update existing regulations to better integrate crypto into payment systems, while the other directed the Treasury Department and regulators to strengthen Bank Secrecy Act regulations. The next day, the Federal Reserve Board published its updated proposal for a skinny master account, laying out more detail about its approach to granting crypto firms access to its payment rails.

Why it matters

The crypto industry’s integration with the broader federal payments system is certainly a goal for the industry at large. Last week’s proposals may bring that a step closer.

Breaking it down

The Federal Reserve’s proposal on Wednesday updates its skinny master account request for information first published in December 2025, laying out how the central bank envisions granting fintech and crypto firms access to its payment rails without requiring them to be full fledged, Office of the Comptroller of the Currency-chartered banks.

The fintech-focused order directed federal regulators to review their existing policies to evaluate how they regulate financial institutions and identify rules that might block fintech firms from partnering with regulated entities.

The order also directed the Fed to review how it handles uninsured depository institutions and their access to payment accounts.

Part of that review includes having the Federal Reserve member banks evaluate if they can independently grant payment accounts to entities.

The Fed cannot necessarily do all of this on its own; Congress may need to pass legislation further detailing what types of entities may be qualified for an account.

The BSA-focused order directs the U.S. Treasury Department and regulators to issue guidance to banks and other entities.

“My Administration will not tolerate national security and public safety risks caused by illicit cross-border financial activity, nor will it permit risks to our financial system posed by the extension of credit or financial services to the inadmissible and removable alien population,” Trump’s order said.

This would include an advisory that notes “payroll tax evasion,” shell companies and “the strategic use of unregistered money services businesses, third-party payment processors, or peer-to-peer platforms to facilitate ‘off-the-books’ wage payments intended to bypass Bank Secrecy Act reporting thresholds or tax obligations,” among other types of entities.

While the order did not explicitly mention cryptocurrency or decentralized finance trading platforms, they could get caught up in any ultimate guidance, said Nicholas Anthony, a research fellow at the Cato Institute.

The next question is what might be in the guidance and advisory.

“Right now it’s in the hands of the Treasury, and the Treasury is able to apply it not only however it sees fit, but also to whoever it sees fit, because of the broader power that the Treasury has under the Bank Secrecy Act,” he said.

Senate shenanigans

The Senate Banking Committee voted to advance the Clarity Act just over a week ago.

The expectation was the overall Senate might get to this sometime in the next month, to sort out ethics and other outstanding issues and then vote on whether to send the bill to the House of Representatives. That timeline took a bit of a hit Thursday, when the Senate left town for the Memorial Day recess without voting on a reconciliation bill to fund the Department of Homeland Security, among other things.

The issue is this: There’s really only so much time to get stuff done on the Senate floor. There are 19 working days in June and 15 in July. There’s another five in August and then everyone’s gone for the rest of the summer.

In that time, the Senate has to sort through reconciliation, a renewal of the Foreign Intelligence Surveillance Act (which will expire in mid-June) and possibly a housing bill.

Adding to the tension is the reason why the Senate left town. President Donald Trump’s administration wanted $1 billion for his planned East Wing ballroom and more recently another $1.8 billion for a weaponization fund, which members of both parties have referred to as a “slush fund.” The Senate had already dropped the ballroom funding from the bill, but the other $1.8 billion appeared to be too much to negotiate this week.

Negotiations over these issues — if there isn’t any backroom dealing through the recess — can draw out the negotiation process, further limiting floor time for Clarity. And of course, there’s still the ethics provision itself in the market structure bill. The White House hasn’t yet indicated what exactly it might accept, so that’s another negotiation to watch out for.

This week

• The House and Senate are on recess this week.

If you’ve got thoughts or questions on what I should discuss next week or any other feedback you’d like to share, feel free to email me at nik@coindesk.com or find me on Bluesky @nikhileshde.bsky.social.

You can also join the group conversation on Telegram.

See ya’ll next week!

Fenwick & West LLP, the principal law firm that advised former cryptocurrency exchange FTX, agreed on Friday to pay $54 million to settle a 2023 class action lawsuit, filed by former customers of the defunct exchange.

The plaintiffs allege that Fenwick “facilitated FTX’s fraud” by playing “a key and crucial role in the most important aspects of why and how the FTX fraud was accomplished,” according to the original complaint. 

Plaintiffs argue that the Silicon Valley law firm helped the now-bankrupt FTX obscure the misuse of customer funds by creating legal entities, structures and other strategies to hide the commingling of funds, including transfers between the exchange and its trading arm, Alameda Research.

Court filing excerpt from $54 million settlement Fenwick & West LLP has agreed to pay. Source: PACER

These strategies also included advising FTX on creating legal structures that would alleviate the exchange from having to acquire money transmitter licenses. 

Fenwick initially sought to have the lawsuit dismissed before agreeing to settle with the plaintiffs in February. However, the settlement must still be approved by a US judge.

The settlement marks the latest development in the legal fallout from the 2022 collapse of the FTX exchange, which sent shockwaves through the crypto industry at the time and exposed the sector to greater scrutiny from US regulators and lawmakers.

Related: Law firm Fenwick & West sued for $525M over alleged role in FTX collapse

FTX estate pays former customers and creditors at steep discount 

In March, the FTX Recovery Trust, which oversees the distribution of assets to former creditors and customers of the exchange, distributed $2.2 billion to the damaged parties.  

The next tranche of reimbursements is scheduled for May 29.

However, customers and former creditors of the exchange say the Trust has mismanaged the liquidation of assets, often selling the recovered assets at a steep discount or below all-time high values reached that were reached following the collapse of FTX. 

Source: SpaceX

The Recovery Trust sold a 5% stake in AI company Cursor for about $200,000 in April 2023, missing out on windfall profits when the value of that 5% stake ballooned to about $3 billion in April 2026. 

Magazine: Are DeFi devs liable for the illegal activity of others on their platforms?