The Evolving Legal Landscape of Blockchain Technology in 2024: A Comprehensive Review

The legal landscape surrounding blockchain technology underwent dramatic shifts in 2024, particularly in the United States, offering both remarkable opportunities and considerable compliance challenges. Government actions, including sweeping regulations, intensified enforcement measures, and pivotal court rulings, sent ripples across the crypto ecosystem. The Polsinelli Blockchain+ team diligently tracked these developments throughout the year, capturing the essence of this dynamic environment in their Bi-Weekly BitBlog updates.

As we enter 2025, it’s important to reflect on the milestones that have significantly influenced the industry. Presented here are the Top 10 Web3/Blockchain Legal Developments of 2024, each selected for its substantial impact on market participants and regulatory frameworks, as well as the broader evolution of decentralized finance in the U.S. and beyond.

1. SEC Targets Major U.S. Crypto Exchanges in Unprecedented Legal Actions

The ongoing lawsuits by the U.S. Securities and Exchange Commission (SEC) against three of the largest digital asset exchanges—Coinbase, Binance, and Kraken—marked one of the most disruptive regulatory actions of 2024. The SEC’s focus shifted toward exchanges as unregistered broker-dealers, sparking significant debate about its regulatory authority and the definition of a “security” in the rapidly evolving digital asset space. The implications of these moves are staggering, as they could potentially force these exchanges to delist numerous assets with ambiguous legal statuses, fundamentally reshaping the market.

2. Ripple Ruling Finalized with Appeal Pending

In a landmark decision in 2023, the court ruled that XRP, the digital asset linked to Ripple, is not itself a security. This partial victory continued in 2024 when Ripple was assessed a civil penalty for illegal sales of XRP to institutional investors. Although the settlement was far less than initially sought by the SEC, it reflected a shift in the regulatory landscape, suggesting that the SEC may reinterpret its stance on digital assets and their classification as securities.

3. Securities Status of Non-Fungible Tokens Under Continued Scrutiny

The legal classification of non-fungible tokens (NFTs) as either securities or consumer goods became increasingly contentious. Lawsuits against high-profile entities like Dapper Labs and DraftKings revealed the complexities surrounding NFT sales, while the SEC’s scrutiny of projects interlinked with NFTs showcased the evolving regulatory landscape. The uncertainty surrounding NFTs continues to hinder major brands from fully exploring their potential in the digital realm, as legal challenges loom large.

4. Banking Regulators Under Scrutiny for “Debanking” Digital Asset Participants

In response to heightened scrutiny and pressure from federal banking regulators, many banks distanced themselves from digital asset clients, leading to the phenomenon termed "Operation Choke Point 2.0." Testimonies from industry insiders and extensive investigation raised alarm over the banking industry’s treatment of crypto businesses, prompting public outcry and political attention. The struggles faced by crypto firms to secure banking services highlighted the systemic challenges in the current regulatory framework.

5. M&A Activity Closes Out Strong

The 2024 landscape saw a surge in mergers and acquisitions within the crypto sector, signaling a maturation of the market. Notable alliances included Coinshare merging with Valkyrie Funds, and several key acquisitions like Robinhood’s bid for Bitstamp. This activity underscored a trend where traditional financial institutions are increasingly integrating with the blockchain ecosystem, recognizing the potential of tokenization and decentralized finance.

6. Major U.S. Crypto Bankruptcies Enter Final Stages

High-profile bankruptcies from companies such as Celsius Network and FTX dominated the headlines, initially casting a long shadow over the market’s stability. However, by 2024, progress was made in resolving these cases, allowing creditors and depositors to regain some losses. The handling of these bankruptcies within the existing legal framework indicated a growing recognition of the unique challenges posed by digital assets in traditional bankruptcy proceedings.

7. Protocol Developers Win Some and Lose Some

Legal outcomes in 2024 confirmed that software developers might not be held liable for the code they create, even when misused. Landmark cases, including decisions favoring Coinbase and challenges to sanctions against Tornado Cash, emphasized the courts’ recognition of the nature of blockchain innovation. However, individual developers faced ongoing legal scrutiny, highlighting the need for clear regulatory guidelines that differentiate between liability and code neutrality.

8. Judicial Scrutiny Over DAO Structures

As decentralized autonomous organizations (DAOs) gained traction, courts started wrestling with their legal structures. Decisions regarding how to serve these entities in litigation and the nature of participant liability were pivotal. In cases like Samuels v. Lido DAO, courts began to establish frameworks that might ultimately lead to a clearer legal status for DAOs, paving the way for structured, legally recognized operations in the future.

9. Congress Grapples with Crypto Legislation Amid Regulatory Uncertainty

Despite no significant laws being enacted in 2024, congressional efforts to provide regulatory clarity for the crypto industry ramped up. While proposals to overturn the controversial SEC Staff Accounting Bulletin were vetoed, a bipartisan resolution indicated growing political support for clearer regulatory frameworks. The groundwork laid by Congress could signal better prospects for crypto legislation in a future expected to favor digital innovation.

10. Crypto’s Bi-Partisan Lobbying Efforts Pay Dividends

The intensified lobbying efforts by crypto exchanges, advocacy groups, and political action committees made significant strides in influencing the political landscape. With substantial funding in support of pro-crypto candidates, the industry effectively turned crypto into a bipartisan issue, yielding potentially positive outcomes for future regulatory efforts. This increased engagement between the crypto sector and policymakers underscores a growing recognition of the industry’s significance in the U.S. economy.

The developments of 2024 solidified the critical and evolving role of blockchain technology in the legal landscape, shaping the environment for all stakeholders involved—from startups to seasoned professionals. Understanding these changes will be essential as we enter 2025, a year filled with both uncertainty and immense potential. Companies should stay alert and be prepared for the evolving regulatory environment that is sure to unfold in the near future.