On February 2, 2026, the U.S. Securities and Exchange Commission issued an Order Dismissing Proceedings against American CryptoFed DAO, formally ending a case that began in November 2021. The dismissal wasn't based on the merits—it was a policy decision. In its order, the SEC acknowledged that "much has changed about the regulation of crypto assets since these events." The timing is significant: this dismissal follows the GENIUS Act's passage, a White House executive order on crypto, and a sweeping rollback of SEC enforcement that has seen crypto-related actions drop 60% since 2024. For stablecoin issuers, DAOs, and the broader crypto industry, this under-the-radar legal development signals that the old enforcement-first approach is dead—and a new regulatory era is beginning.

The CryptoFed Saga: A Four-Year Legal Battle

American CryptoFed DAO became the first legally recognized DAO in the United States when Wyoming granted it status in July 2021. The Cheyenne-based organization proposed an ambitious monetary system featuring two interdependent tokens: Ducat, an algorithmic stablecoin designed for payments and value storage, and Locke, a governance token intended to stabilize Ducat and administer the ecosystem.

Trouble began in September 2021 when CryptoFed filed a Form S-1 registration statement with the SEC—a proactive attempt to operate within securities law. The SEC responded by halting the registration, alleging the filing lacked required disclosures about business operations, management, and financial condition, including audited financial statements. More controversially, the SEC alleged CryptoFed made "inconsistent statements about whether the tokens are securities" while simultaneously attempting to register them as securities.

Case Timeline

What made the case unusual: CryptoFed fought the SEC without legal representation, arguing the agency had the burden to prove Ducat and Locke were securities—a burden it claimed the SEC never met. The SEC even took the rare step of broadcasting administrative hearings via live webcast, seemingly to make an example of the defiant DAO. But four years later, the agency walked away.

What the SEC Actually Said

The dismissal order's language is remarkably candid about shifting regulatory priorities. The SEC stated: "Much has changed about the regulation of crypto assets since these events, including on topics that could affect a company's decision on whether or how to file registration statements concerning crypto assets."

The order explicitly gave CryptoFed room to reconsider its path forward: "Doing so will allow American CryptoFed to consider the above developments in the regulation of crypto assets when determining what, if any, steps to take next, including whether it still wishes to pursue registration of its tokens and, if so, when and how it decides to pursue such registration."

This isn't the SEC admitting it was wrong—it's the agency acknowledging the ground has shifted so dramatically that pursuing a case initiated under entirely different regulatory assumptions no longer makes sense.

CryptoFed's Response

"American CryptoFed truly appreciates the SEC's efforts to foster crypto innovation," said Scott Moeller, co-organizer of American CryptoFed. "We attended the SEC's Crypto Task Force Roundtables in person held in the SEC Headquarters in Washington DC, one of which was entitled DeFi and the American Spirit. We felt the sea change is coming."

The organization announced it's converting to a Wyoming DUNA (Decentralized Unincorporated Nonprofit Association), a new legal structure effective July 2024 designed to give DAOs legal standing while maintaining decentralization. CryptoFed also revealed a patent application for its monetary mechanism, "Methods for Endogenous Decentralized Monetary Systems," was recently published by the U.S. Patent and Trademark Office.

The Broader SEC Crypto Retreat

CryptoFed's dismissal isn't an isolated event—it's part of a systematic rollback of crypto enforcement under SEC Chair Paul Atkins. The numbers tell the story: crypto-related enforcement actions dropped from 33 in 2024 to just 13 in 2025, a roughly 60% reduction. Major cases initiated under former Chair Gary Gensler have been dismissed or paused across the board.

Major SEC Crypto Cases Dismissed (2025-2026)

The SEC's rationale for these dismissals is consistent: they facilitate "the Commission's ongoing efforts to reform and renew its regulatory approach to the crypto industry." Acting Chairman Mark Uyeda framed it bluntly: "For the last several years, the Commission's views on crypto have been largely expressed through enforcement actions without engaging the general public. It's time for the Commission to rectify its approach and develop crypto policy in a more transparent manner."

Commissioner Hester Peirce, who leads the SEC's Crypto Task Force, has been even more direct, criticizing the previous administration's approach as marked by "legal imprecision and commercial impracticality."

The GENIUS Act: Why Stablecoin Rules Changed Everything

The SEC's dismissal order implicitly references "developments in the regulation of crypto assets"—and the most significant development is the GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins Act), signed into law on July 18, 2025. This legislation created the first comprehensive federal framework for stablecoins, fundamentally changing the regulatory landscape CryptoFed was navigating.

GENIUS Act Key Requirements

Critically, the GENIUS Act explicitly states that compliant payment stablecoins are neither securities nor commodities—resolving the fundamental ambiguity that plagued CryptoFed's case. Under the old regime, CryptoFed faced the impossible task of registering tokens as securities while arguing they weren't securities. Under the new framework, a compliant stablecoin simply isn't a security, period.

Dual Federal-State Framework

The GENIUS Act creates a tiered system: issuers with less than $10 billion in outstanding stablecoins can operate under state-level regulation if that regime is certified as "substantially similar" to federal standards. Larger issuers must transition to federal oversight within 360 days of exceeding the threshold. This structure could benefit CryptoFed, which as a Wyoming-based entity could potentially operate under state supervision rather than direct federal registration—assuming Wyoming's framework receives certification.

What This Means for Crypto Projects

The CryptoFed dismissal, combined with the broader enforcement retreat and GENIUS Act passage, creates several actionable implications for crypto projects:

1. The registration question is being reframed. Projects that attempted to register tokens as securities—only to face SEC scrutiny for doing so—now have clearer paths. The GENIUS Act defines what a payment stablecoin is and explicitly excludes compliant stablecoins from securities classification. Projects can now design around these definitions rather than guessing how the SEC will interpret existing securities law.

2. "Regulation by enforcement" is ending. The SEC's Crypto Task Force is developing formal rules through notice-and-comment rulemaking rather than pursuing ad hoc enforcement actions. Chair Atkins announced an "innovation exemption" expected in early 2026 that will allow crypto products to launch under lighter, principles-based rules. This represents a fundamental shift from the Gensler-era approach of suing first and defining rules later.

3. State-level frameworks gain importance. Wyoming's early DAO legislation and DUNA framework position it as a potential haven for compliant crypto projects. If Wyoming's stablecoin regime receives GENIUS Act certification, state-regulated issuers could operate nationally without direct federal oversight—at least below the $10 billion threshold.

4. Past enforcement doesn't predict future treatment. The SEC's willingness to dismiss cases "in the exercise of its discretion" and "as a policy matter"—rather than based on legal merits—suggests historical enforcement actions shouldn't be interpreted as binding precedent. Projects that modified operations to avoid SEC scrutiny may find those accommodations were unnecessary under the new regime.

Caveats and Remaining Risks

Despite the favorable trends, significant uncertainties remain:

Implementation timeline: The GENIUS Act's full implementation isn't expected until December 2026 or 120 days after regulators issue final rules—whichever comes first. Until then, regulatory gaps persist. CryptoFed's Ducat and Locke tokens still face uncertain classification under interim rules.

Political reversibility: The enforcement rollback is driven by political appointments and executive priorities. A future administration could reverse course, potentially reopening closed investigations or initiating new enforcement against projects that operated during the permissive period.

Fraud focus remains: Chair Atkins has consistently emphasized that the SEC will continue pursuing fraud cases involving crypto assets. The retreat is from registration and technical violations, not from cases involving "lying, cheating, and stealing." Projects engaged in actual misconduct shouldn't interpret the policy shift as immunity.

Congressional gridlock: While the GENIUS Act passed, broader market structure legislation (like the CLARITY Act) remains stalled. The SEC's jurisdiction over non-stablecoin tokens and DeFi protocols remains ambiguous, meaning projects outside the stablecoin space still operate in legal uncertainty.

The End of Enforcement-First Crypto Regulation

American CryptoFed's four-year legal battle ended not with a court ruling but with a policy pivot. The SEC's acknowledgment that "much has changed" reflects a genuine transformation in how U.S. regulators approach digital assets. The GENIUS Act provides the first comprehensive federal framework for stablecoins. Enforcement actions have dropped 60%. Major cases against Coinbase, Kraken, Binance, and now CryptoFed have been dismissed. And the SEC's Crypto Task Force is developing formal rules through public engagement rather than litigation.

For stablecoin issuers specifically, the path forward is clearer than at any point in crypto's regulatory history. The GENIUS Act's requirements—1:1 reserves, permitted issuer status, redemption rights, disclosure obligations—are demanding but defined. Projects can now design for compliance rather than guessing at enforcement priorities.

For the broader crypto industry, the CryptoFed dismissal symbolizes the end of an era. The SEC's enforcement-first approach, which saw 125 crypto-related actions and $6 billion in penalties under Chair Gensler, has given way to something resembling traditional regulatory development: proposed rules, public comment, and formal guidance. Whether this produces better outcomes for investors and innovation remains to be seen. But the old regime—where filing for registration could itself trigger enforcement—is clearly over.

As CryptoFed's Scott Moeller put it after attending the SEC's "DeFi and the American Spirit" roundtable: "We felt the sea change is coming." For American CryptoFed, that sea change arrived on February 2, 2026.