Regulatory Compliance & Growth in the U.S.A & Abroad
DARA
Digital Asset Regulatory Authority
A Self Regulated Organization
Presented By:
DARA U.S & DARA International
Blockchain Legal Institute Foundation
Digital Asset & Tech News From Around The USA
- Follow DARA on LinkedIn for News Posts
- Federal & State Updates
- Special Speaker: Dr. David Utzke PhD, MBA, MSc CFE, CFI, CBD, CBA, CSCD, CDFE
- CLE classes & Conference Update
- Next Steps
Guest Speaker:
Dr David Utzke, PhD, MBA, MSc CFE, CFI, CBD, CBA, CSCD, CDFE
On-Chain Service of Process:
BLI E-Process Server
Guest Speaker: Dr. David Utzke
1️⃣ Rules for substitute service of process
2️⃣ How on-chain service of process could be legally allowed
3️⃣ How this supports Attorney General offices (especially in crypto cases)
Benefits of E Process Serving
Serving Anonymous Crypto Defendants
Typical crypto fraud case:
- Defendant identity unknown
- Only wallet address known
Traditional service:
❌ Often impossible
On-chain service:
✔ Send summons to wallet
✔ Publish notice
✔ Create verified record
Faster Emergency Enforcement
AG offices often seek:
✔ Asset freezes
✔ Injunctions
✔ Temporary restraining orders
On-chain service enables:
⚡ Rapid notice
⚡ Immediate legal action
Cross-Border Enforcement
Crypto defendants often operate:
✔ Outside U.S.
✔ Across jurisdictions
On-chain service:
✔ Bypasses geographic barriers
✔ Creates global delivery record
Improved Fraud Recovery
In crypto theft cases:
Time is critical.
On-chain service:
✔ Enables rapid legal action
✔ Improves recovery chances
Reduced Publication Costs
Traditional publication:
- Newspapers
- Expensive
- Low probability of notice
Blockchain:
✔ Persistent
✔ Verifiable
✔ Lower cost
How To Execute On-Chain Delivery
What The BLI E Process Server Does:
✔ Send on chain delivery system
✔ Send token message
✔ Include legal documents
Record:
✔ Transaction hash
✔ Block number
1️⃣ Rules for Substitute Service of Process (General U.S. Framework)
Substitute service (sometimes called alternative service) is used when traditional service methods fail.
The governing rule in federal court is:
Federal Rule of Civil Procedure 4 (FRCP 4)
Most states—including Maryland—have similar provisions.
Traditional Order of Service (Typical Sequence)
Courts generally require attempts in this order:
- Personal service (first priority)
- Substitute service (authorized alternatives)
- Service by publication (last resort)
Common Substitute Service Methods
Courts may allow:
✔ Service at defendant’s residence
✔ Service on authorized agent
✔ Service by certified mail
✔ Service by email
✔ Service via social media
✔ Service by publication
✔ Service through digital platforms
When Substitute Service Is Allowed
Courts usually require:
1. Diligent Efforts First
You must show:
- Multiple service attempts
- Attempts at known addresses
- Attempts to locate defendant
This is called:
- Due diligence
2. Court Approval
You must file:
- Motion for Alternative Service
Includes:
- Affidavit of attempts
- Explanation why service failed
- Proposed alternative method
3. Method Must Be “Reasonably Calculated”
This standard comes from:
Mullane v. Central Hanover Bank & Trust Co.
Key legal test:
Service must be reasonably calculated to notify the defendant.
This standard is what makes on-chain service possible.
2️⃣ How On-Chain Service of Process Can Be Allowed
On-chain service of process means delivering legal notice through:
✔ Blockchain wallet
✔ Smart contract
✔ On chain notification
✔ Transaction memo
This is already happening in some courts.
1️⃣ On Chain Service Approved
LCX AG v. John Does
Court allowed:
✔ Service via On chain system
✔ Sent to blockchain wallet
✔ Included summons and complaint
Why approved:
- Wallet owner unknown
- Traditional service impossible
- Wallet confirmed to belong to defendant
2️⃣ Crypto Theft Cases
Courts have approved:
✔ Service via blockchain
✔ Service via email
✔ Service via messaging apps
Especially when:
- Defendant identity hidden
- Wallet is primary identifier
Legal Requirements for On-Chain Service
To be valid, courts usually require:
A. Demonstrated Wallet Ownership
You must show:
✔ Wallet controlled by defendant
✔ Defendant used wallet in dispute
✔ Transaction history evidence
This is called:
Attribution – Often supported using:
- Blockchain analytics
- Forensic tracing
B. Proof Traditional Service Failed
Required:
✔ Affidavit of failed attempts
✔ Documented investigation
C. Technical Proof of Delivery
Court wants:
✔ Transaction hash
✔ Block confirmation
✔ Timestamp
Blockchain provides:
✔ Permanent audit trail
✔ Verifiable delivery proof
D. Court Order Approving Method
You must obtain:
Order Authorizing Alternative Service
Without this:
Service is invalid.
How States Could Explicitly Allow On-Chain Service
States can formalize this through:
Method 1 — Rule Amendment
Example:
Amend civil procedure rules to allow:
✔ Blockchain service
✔ Digital wallet service
✔ On chain service
Under alternative service provisions
Method 2 — Administrative Guidance
State courts issue:
✔ Technology guidance
✔ Judicial administrative orders
This has already happened in several jurisdictions.
Method 3 — Legislation
States could pass laws explicitly allowing:
✔ Digital service
✔ Smart contract service
✔ Token-based notice
3️⃣ How On-Chain Service Supports Attorney General Offices
This is where it becomes very powerful operationally ⚖️
Especially in:
✔ Crypto fraud
✔ Anonymous defendants
✔ International defendants
Developments Impacting Your Office
The developments discussed today can directly increase the responsibilities, risks, and opportunities for each State Attorney General (AG) offices, especially in areas like consumer protection, securities enforcement, retirement oversight, and crypto regulation.
Big Picture: Why This Matters to AG Offices
All actions discussed today signal more federal involvement + more financial innovation, which means:
✅ More consumer complaints
✅ More state–federal jurisdiction disputes
✅ More enforcement responsibilities
✅ More legal advisory work to state agencies
✅ Increased need for digital asset and financial litigation expertise
1️⃣ Treasury GENIUS Act Rule
(Stablecoin Regulation Framework)
What Happened
The U.S. Treasury issued a proposed rule to determine whether state stablecoin regulatory systems are “substantially similar” to federal law under the GENIUS Act.
Smaller stablecoin issuers (under $10B issuance) may be regulated at the state level if the state framework meets federal standards
Impact on Attorney General Offices
A. Major Role in State Certification
AG offices will likely:
- Help draft or revise state digital asset laws
- Defend state regulatory frameworks
- Ensure state rules meet federal standards
This creates:
⚖️ More regulatory drafting
⚖️ More federal coordination
⚖️ More litigation risk
B. Expanded Enforcement Authority
AG offices may be responsible for:
- Consumer protection enforcement
- Fraud investigations
- Stablecoin reserve violations
- AML (Anti-Money Laundering) compliance oversight
The GENIUS Act specifically emphasizes tools like:
- Blockchain analytics
- AI monitoring
- Digital identity tools to combat illicit finance
C. Litigation Risk Between States and Federal Agencies
If a state framework is rejected:
AG offices may have to:
- Challenge Treasury decisions
- Defend state authority
- Handle preemption disputes
2️⃣ CFTC Challenges State Actions
(Federal vs State Authority Conflict)
What Happened
The Commodity Futures Trading Commission filed lawsuits against several states claiming exclusive federal jurisdiction over prediction markets and event contracts.
Impact on Attorney General Offices
A. Increased Federal–State Litigation
AG offices may:
Defend state enforcement actions
Challenge federal preemption
Litigate jurisdiction disputes
Expect:
⚖️ More constitutional law work
⚖️ Administrative law litigation
⚖️ Federal supremacy cases
B. Reduced State Authority (Possible)
If courts side with federal regulators:
States could lose authority over:
- Prediction markets
- Crypto derivatives
- Certain digital asset trading platforms
That changes the scope of AG enforcement power.
3️⃣ Department of Labor Expands Alternative Investments in 401(k)s
(Crypto + Private Assets in Retirement Plans)
What Happened
A proposed rule allows retirement plans to include:
- Private equity
- Digital assets
- Other alternative investments
Plan fiduciaries receive safe-harbor protections if they follow specific diligence rules.
Impact on Attorney General Offices
A. Surge in Consumer Protection Cases
Expect:
📈 More investor complaints
📈 More retirement plan disputes
📈 More fraud investigations
Why?
Alternative assets:
- Have higher risk
- Are less liquid
- Often harder for consumers to understand
Critics warn these investments may increase fees and complexity for retail investors
B. Oversight of State Retirement Systems
AG offices often advise:
- State pension boards
- Public employee retirement systems
They will need:
⚖️ New fiduciary risk guidance
⚖️ Crypto investment policies
⚖️ Risk disclosure frameworks
C. Potential Litigation Against Plan Sponsors
Possible claims:
- Fiduciary duty violations
- Misrepresentation
- Investment suitability failures
4️⃣ Updated Congressional Crypto Tax Bil
(Digital Asset PARITY Act Draft)
What Happened
Congress released an updated draft addressing:
- Tax treatment of digital assets
- Reporting requirements
- Clarification of taxable crypto events
This continues federal efforts to formalize crypto tax
Impact on Attorney General Offices
A. More Tax Enforcement Collaboration
AG offices may work with:
- State tax authorities
- IRS investigations
- Multi-state enforcement actions
Focus areas:
- Crypto tax evasion
- Fraudulent reporting
- Unregistered digital asset platforms
B. Increased Financial Crime Investigations
New reporting rules typically generate:
- More audit triggers
- More investigations
- More enforcement referrals
Key Operational Impacts on AG Offices
Consumer Protection Major increase in crypto complaints
Financial Litigation Growth in digital asset fraud cases
Regulatory Drafting New state crypto and retirement rules
Multi-State Actions Likely rise in coordinated lawsuits
Technology Expertise Need for blockchain forensic capability
Federal Coordination More joint enforcement with DOJ, Treasury, CFTC
Biggest Strategic Risks for Attorney General Offices
These developments create five major legal risk zones:
1️⃣ Stablecoin insolvency cases
2️⃣ Crypto retirement losses
3️⃣ Federal preemption disputes
4️⃣ Tax fraud investigations
5️⃣ Digital asset consumer scams
Areas of Support & Upcoming Conferences
- State fintech legislation
- Attorney General advisory roles
- Workforce training in crypto compliance
- Public-sector blockchain adoption
- Evaluate stablecoin regulatory compatibility
- Consider digital asset compliance frameworks
- Expand enforcement capabilities
July 13th to July 17th
Additional Resources
Visit DARA.FOUNDATION
Visit BLI.TOOLS.
www.marylandblockchainassociation.org
Visit MARYLANDBLOCKCHAINASSOCIATION.ORG.