CTA UPDATE: US District Court Reinstates Reporting Requirement; FinCEN Grants 30-Day Filing Extension
Go-To Guide:
On Feb. 18, 2025, the U.S. District Court for the Eastern District of Texas granted the government’s motion to stay relief in Smith v. U.S. Department of the Treasury, thereby lifting the injunction against the Corporate Transparency Act (CTA) that had been in place in that case.
As a result, FinCEN confirmed that beneficial ownership information (BOI) reporting requirements under the CTA are once again back in effect, subject to a 30-day filing extension.
Most entities will have a reporting deadline of March 21, 2025 (except for reporting companies with later reporting deadlines under existing guidelines).
The CTA’s status has shifted multiple times1 since Dec. 3, 2024, when a Texas district court in Texas Top Cop Shop, Inc. v. McHenry (formerly Texas Top Cop Shop, Inc. v. Garland) preliminarily enjoined the CTA and its BOI reporting rule (Reporting Rule) on a nationwide basis.
On Jan. 7, 2025, a second federal judge of the U.S. District Court for the Eastern District of Texas (the District Court) ordered preliminary relief barring CTA enforcement in Smith v. U.S. Department of the Treasury.2 Then, notwithstanding the SCOTUS Order staying the injunction in Texas Top Cop Shop, on Jan. 24, 2025, FinCEN confirmed that reporting companies were not required to file BOI Reports with FinCEN due to the separate nationwide relief entered in Smith (and while the order in Smith remained in effect). On Feb. 5, 2025, the government appealed the ruling in Smith to the U.S. Court of Appeals for the Fifth Circuit (the Fifth Circuit) and asked the District Court to stay relief pending that appeal.
CTA Reporting Requirements Back in Effect
On Feb. 18, 2025, the District Court in Smith granted a stay of its preliminary injunction pending appeal, thereby reinstating BOI reporting requirements once again. On Feb. 19, 2025, FinCEN issued guidance on its website to reflect this update and to announce that companies have 30 days to submit BOI reports:
With the February 18, 2025, decision by the U.S. District Court for the Eastern District of Texas in Smith, et al. v. U.S. Department of the Treasury, et al., 6:24-cv-00336 (E.D. Tex.), beneficial ownership information (BOI) reporting requirements under the Corporate Transparency Act (CTA) are once again back in effect. However, because the Department of the Treasury recognizes that reporting companies may need additional time to comply with their BOI reporting obligations, FinCEN is generally extending the deadline 30 calendar days from February 19, 2025, for most companies.
New Filing Deadlines
Most reporting companies will be required to file BOI reports no later than March 21, 2025, as follows:
The new deadline to file an initial, updated, and/or corrected BOI report is generally now March 21, 2025.
Companies that were previously given a reporting deadline later than the March 21, 2025, deadline must file their initial BOI report by that later deadline (i.e., companies that qualify for certain disaster relief extensions and companies formed on or after Feb. 20, 2025).
Looking Ahead
In its guidance, FinCEN indicates that it will assess its options to further modify deadlines and initiate a process this year to revise the Reporting Rule to reduce burden for lower-risk entities, including many U.S. small businesses. How this will impact BOI reporting requirements remains to be seen.
Expedited oral arguments for the Fifth Circuit appeal in Texas Top Cop Shop are set for March 25, 2025. Unless the courts or Congress3 provide further relief, reporting companies should prepare to comply with the deadlines outlined above. Additionally, reporting companies should stay updated on FinCEN announcements, as further adjustments to reporting deadlines could be issued within the next 30 days.
1 On Dec. 3, 2024, the CTA and its BOI reporting rule were preliminary enjoined on a nationwide basis, approximately four weeks ahead of a key Jan. 1, 2025, deadline. FinCEN appealed that ruling, and on Dec. 23, 2024, a motions panel of the U.S. Court of Appeal for the Fifth Circuit stayed the injunction, allowing the CTA to go back into effect. Three days later, on Dec. 26, 2024, a merits panel of the Fifth Circuit vacated the motion panel’s stay, effectively reinstating the nationwide preliminary injunction against the CTA and the Reporting Rule. On Dec. 31, 2024, the government filed an emergency application with the U.S. Supreme Court to stay that preliminary injunction. On Jan. 23, 2025, the Supreme Court granted that application (the SCOTUS Order), staying the nationwide preliminary injunction in Texas Top Cop Shop, Inc. v. McHenry. McHenry v. Texas Top Cop Shop, Inc., No. 24A653, 2025 WL 272062 (U.S. Jan. 23, 2025).
2 See Smith v. United States Dep’t of the Treasury, No. 6:24-CV-336-JDK, 2025 WL 41924 (E.D. Tex. Jan. 7, 2025).
3 On Feb. 10, 2025, the House of Representatives unanimously passed the Protect Small Businesses from Excessive Paperwork Act (H.R. 736, 119th Cong. (2025)). The bill has moved to the Senate for consideration. If enacted, the bill will extend the reporting deadline for entities that qualify as “a small business concern” to Jan. 1, 2026.
The Return of the CTA: FinCEN Confirms that Beneficial Ownership Information Reporting Requirements are Back in Effect with a New Deadline of March 21, 2025
On February 19, 2025, the Financial Crimes Enforcement Network (“FinCEN”) announced that beneficial ownership information reporting requirements under the Corporate Transparency Act (“CTA”) are back in effect with a new deadline of March 21, 2025 for most reporting companies. This announcement came in response to the decision made on February 17, 2025 by the U.S. District for the Eastern District of Texas in Smith v. U.S. Department of the Treasury, No. 6:24-cv-336-JDK, 2025 WL 41924 (E.D. Tex.) to stay (lift) the preliminary injunction on enforcement of the CTA.
In addition to the deadline extension of 30 calendar days from February 19, 2025, FinCEN notably stated that “in keeping with Treasury’s commitment to reducing regulatory burden on businesses, during this 30-day period FinCEN will assess its options to further modify deadlines, while prioritizing reporting for those entities that pose the most significant national security risks. FinCEN also intends to initiate a process this year to revise the BOI reporting rule to reduce burden for lower-risk entities, including many U.S. small businesses.”
FinCEN did not provide any further details regarding how or when the BOI reporting rule would be revised. However, FinCEN did note that it would provide an update before the March 21, 2025 deadline “of any further modification of this deadline, recognizing that reporting companies may need additional time to comply with their BOI reporting obligations once this update is provided.” The full notice from FinCEN can be read here: FinCEN Notice, FIN-2025-CTA1, 2/18/2025.
Meanwhile, in Congress, several bills have been proposed that, if signed into law, would push the reporting deadline out still further. On February 10, 2025, the Protect Small Business from Excessive Paperwork Act of 2025, H.R. 736, co-lead by U.S. Representatives Zachary Nunn (R-IA), Sharice Davids (D-KS), Tom Emmer (R-MN) and Don Davis (D-NC), unanimously passed by the House. This bill, if passed into law, would modify the deadline for filing of initial BOI reports by reporting companies that existed before January 1, 2024 to not later than Jan. 1, 2026. On February 12, 2025, the Protect Small Business Excessive Paperwork Act of 2025 – companion legislation in the Senate that would likewise extend the filing deadline until January 1, 2026 – was introduced by U.S. Senators Katie Britt (R-AL) and Tim Scott (R-SC) and referred to the Committee on Banking, Housing and Urban Affairs.
Additionally, on January 15, 2025, another bill – the Repealing Big Brother Overreach Act – was introduced by U.S. Senator Tommy Tuberville (R-AL) in the Senate and re-introduced by U.S. Representative Warren Davidson (R-OH) in the House. This bill, if passed into law, would repeal the CTA entirely.
As noted above and in previous posts, the CTA landscape remains volatile. The Sheppard Mullin CTA Task Force will continue to monitor the various court cases, both in Texas and in other jurisdictions around the country, as well as the legislative bills that are making their way through the House and Senate, and will continue to provide updates as they become available. In the meantime, reporting companies are advised to comply with the law as it currently stands and, barring any further updates from FinCEN, should being filing BOI reports again if they have not already done so.
For background information about the CTA and its reporting requirements (including answers to several frequently asked questions), please refer to our previous blog post, dated November 5, 2024. For more information about the history of the CTA litigation mentioned above, please refer to our blog post, dated January 3, 2025.
Additional information about the CTA requirements can be found at the following FinCEN websites:
FinCEN’s website regarding beneficial ownership information
FinCEN’s Small Entity Compliance Guide
FinCEN’s BOIR Frequently Asked Questions (https://www.fincen.gov/boi-faqs)
California: Private Equity Management of Medical Practices Again Appears in Proposed Legislation
The California legislature recently introduced legislation, SB 351, that would impact private equity or hedge funds managing physician or dental practices in California. The bill is similar to a portion of California legislation from last year, AB 3129, which targeted private equity group and hedge fund management of medical practices. Last year, AB 3129 passed in the legislature but was vetoed by the Governor before becoming law. The introduction of SB 351 is part of a continuing trend in California and across the country in examining the influence of private equity investment in medical practices.
What Does SB 351 Do?
SB 351 is intended to ensure health care providers maintain control of clinical decision-making and treatment choices and to limit the influence of private equity or hedge fund influence or control over care delivery in the state.
SB 351 would codify and reinforce existing guidance relating to the prohibition on the corporate practice of medicine and dentistry. Specifically, SB 351 would prohibit a private equity group or hedge fund involved in any manner with a California physician or dental practice from interfering with professional judgment in making health care decisions or exercising control of certain practice operations.
Under the proposed legislation, prohibited activities include: determining the diagnostic tests appropriate for a particular condition; determining the need for referrals to other providers; being responsible for the ultimate care or treatment options for the patient; and determining the number of patient visits in a time period or how many hours a physician or dentist may work. Exercising control over a practice would include the following types of activities: owning or determining the content of patient medical record; selecting, hiring, or firing physicians, dentists, allied health staff, and medical assistants based on clinical competency; setting the parameters of contracts with third-party payors; setting the parameters for contracts with other physicians or dentists for care delivery; making coding and billing decisions; and approving the selection of medical equipment and supplies.
In addition, SB 351 would limit the ability of a private equity or hedge fund to restrict a provider or practice from engaging in competitive activities. SB 351 would prohibit a private equity group or hedge fund from explicitly or implicitly barring any practice provider from competing with the practice in the event of a termination or resignation of that provider from that practice. The bill would also prohibit a private equity group or hedge fund from barring a provider from disparaging, opining, or commenting on issues relating to quality of care, utilization, ethical or professional changes in the practice of medicine or dentistry, or revenue-increasing strategies employed by the private equity group or hedge fund. The California Attorney General would be entitled to injunctive relief and other equitable remedies for enforcement of the provisions of SB 351.
SB 351 contains some of the provisions that were included in AB 3129 relating to management of physician and dental practices but does not include the same breadth of limitations that were in AB 3129. Notably, SB 351 does not require the notice to and consent of the California Attorney General for certain private equity health care transactions. SB 351 also does not extend to hedge fund or private equity involvement with psychiatric practices. The scope is limited to private equity or hedge fund involvement with a physician or dental practice.
What Happens Next?
SB 351 will continue to make its way through the California legislature this year and may undergo further amendments throughout the process. Similar to AB 3129, SB 351 may garnish sufficient support to be passed by the California legislature.
The reintroduction of this legislation in California demonstrates the continuing national focus on private investment in medical practices across the country and the limitation on restrictive covenants. Management organizations and professional entities in California should review their existing arrangements to ensure compliance with applicable laws and existing corporate practice restrictions. Given the continued interest in the California legislature in addressing these issues, it may be prudent to proactively align those arrangements with the limitations in SB 351. We will continue tracking SB 351’s progress.
Recent Developments: Nationwide CTA Injunction Lifted, New March 21, 2025, Reporting Deadline Set, and Reporting Rule May Be Modified
Key Takeaways:
The Corporate Transparency Act (CTA) reporting requirements are back in effect following a Texas district court decision entered on February 18.
According to the Financial Crime Enforcement Network (FinCEN), the new general deadline for most reporting companies filing initial, updated, and corrected BOI reports is March 21and the deadline for a reporting company with a previously given later deadline is the later deadline.
In the interim, FinCEN “will assess its options to further modify deadlines, while prioritizing reporting for those entities that pose the most significant national security risks.”
FinCEN also “intends to initiate a process this year to revise the BOI reporting rule to reduce burden for lower-risk entities, including many U.S. small businesses.”
Background:
On January 23, 2025, the United States Supreme Court (SCOTUS) reversed the U.S. district court’s preliminary injunction staying the Corporate Transparency Act (CTA) and the implementing Reporting Rule in Texas Top Cop Shop v McHenry (f/k/a Texas Top Cop Shop v Garland), Case No. 4:24-cv-00478 (E.D. Tex. 2024). For background, see our previous alerts describing the Texas Top Cop Shop district court’s December 3, 2024, opinion and order, and the Fifth Circuit’s decisions lifting and later reinstating the district court’s nationwide stay.[1]
A separate nationwide stay of the CTA Reporting Rule issued on January 7, 2025, by another Texas district court in Smith v U.S. Department of Treasury, Case No. 6:24-cv-00336 (E.D. Tex. Jan 7, 2025) was not affected by the SCOTUS order in Texas Top Cop Shop and remained in effect.[2]
On January 24, 2025, FinCEN published an updated alert acknowledging that, in light of the continuing effect of the nationwide stay in Smith, reporting companies were at that time not required to report beneficial ownership information but could do so voluntarily.[3]
On February 5, 2025, the Department of Justice (DOJ) appealed the Smith nationwide stay to the Fifth Circuit and filed a motion with the Smith district court asking it to lift that stay in view of the SCOTUS order in Texas Top Cop Shop. DOJ stated that, if lifted, FinCEN intended to extend reporting deadlines for 30 days and, during that period, evaluate whether to revise reporting requirements on “low-risk” entities and prioritize enforcement on the “most significant national security risks.”
On February 6, 2025, FinCEN published a new alert acknowledging the DOJ’s pending appeal in Smith and motion requesting the district court to lift the stay in Smith. FinCEN also confirmed its intention, if the stay was lifted, to extend the reporting deadline by 30 days and to assess options to modify further reporting deadlines for “lower-risk” entities during the 30-day period.
Smith District Court Lifts Stay of CTA Reporting Rule:
On February 18, 2025, the Smith district court stayed the preliminary relief granted in its January 5, 2025, order, including the nationwide stay of the CTA Reporting Rule, pending disposition of the Smith appeal to the Fifth Circuit.[4]
CTA Reporting Requirements Back in Effect:
On February 19, 2025, FinCEN published an updated alert stating that, in view of the Smith district court’s decision, “beneficial ownership information (BOI) reporting requirements under the Corporate Transparency Act (CTA) are once again back in effect.” FinCEN generally extended the deadline for most reporting companies filing initial, updated and corrected BOI reports to March 21, 2025 (30 calendar days from February 19, 2025). FinCEN also stated that “during this 30-day period, FinCEN will assess its options to further modify deadlines, while prioritizing reporting for those entities that pose the most significant national security risks” and that “FinCEN also intends to initiate a process this year to revise the BOI reporting rule to reduce burden for lower-risk entities, including many U.S. small businesses.” At the same time, FinCEN also updated two other alerts with respect to Texas Top Cop Shop and National Small Business United v Yellen.[5]
FinCEN Updated CTA Reporting Deadlines:
The updated deadlines, as set forth in the FinCEN updated alert, follow:
For the “vast majority” of reporting companies, the new deadline to file an initial, updated, and/or corrected BOI report is March 21, 2025. FinCEN also stated that it will provide an update before that deadline of any further deadline modifications, recognizing that more time may be needed to meet BOI reporting obligations.
For reporting companies that were previously given a reporting deadline later than the March 21, 2025, the applicable deadline is that later deadline. FinCEN included as an example, “if a company’s reporting deadline is in April 2025 because it qualifies for certain disaster relief extensions, it should follow the April deadline, not the March deadline.”
FinCEN also noted that the plaintiffs in National Small Business United v. Yellen are not currently required to report their beneficial ownership information to FinCEN. See FinCEN alert “Notice Regarding National Small Business United v. Yellen, No. 5:22-cv-01448 (N.D. Ala.)”.
For additional information, see the FinCEN February 19, 2025, updated Alert, Beneficial Ownership Information Reporting | FinCEN.gov], and FinCEN Notice, FIN-2025-CTA1, FinCEN Extends Beneficial Ownership Information Reporting Deadline by 30 Days; Announces Intention to Revise Reporting Rule (February 18, 2025).
If you have questions about your CTA-related engagement with the firm, please contact your Miller Canfield lawyer for further guidance.
[1] Corporate Transparency Act: Miller Canfield
[2] See the Smith district court’s opinion and order here: [Smith et al v. United States Department of The Treasury et al, No. 6:2024cv00336 – Document 30 (E.D. Tex. 2025).]
[3] The current FinCEN Alerts can be found here [Beneficial Ownership Information Reporting | FinCEN.gov.]
[4] gov.uscourts.txed.232897.39.0.pdf
[5] [Beneficial Ownership Information Reporting | FinCEN.gov]
The CTA Strikes Back
Following a cascade of developments, the Corporate Transparency Act (CTA) is back, but with some potential changes on the horizon. Most reporting companies that have not yet filed all required reports under the CTA should prepare to file their initial, updated, or corrected reports by March 21, 2025.
In our recent alert on the CTA, we noted that the US Court of Appeals for the Fifth Circuit on December 26 reinstated a nationwide injunction prohibiting the government from enforcing the CTA. That injunction was stayed by the US Supreme Court on January 23, but a district court order in another case, Smith v. US Department of the Treasury, kept the CTA offline.
Court Orders the CTA Back into Effect
By an order dated February 17, however, the final district court order in the Smith case that was preventing the CTA’s enforcement was lifted by the US District Court for the Eastern District of Texas. As a result, beneficial ownership information (BOI) reporting requirements under the CTA are now back in effect.
FinCEN’s Response
In response, the Financial Crimes Enforcement Network (FinCEN) issued a notice stating that the new deadline for most reporting companies to file an initial, updated, or corrected BOI report is now March 21, 2025. Reporting companies that were previously given a reporting deadline later than March 21 (such as those qualifying for certain disaster relief extensions or those that were formed in late December 2024) have until that later deadline to file their initial BOI reports.
FinCEN’s notice further states that the government, recognizing that reporting companies may need additional time to comply with their BOI reporting obligations, will provide an update before March 21 of any further modifications to this deadline. FinCEN also observes that it will initiate a process this year to revise the BOI reporting rule to reduce burdens for “lower-risk entities,” including many US small businesses, although the notice does not go into detail on what companies might fall within that category or what changes may be contemplated.
Potential Future Court Action?
While it is possible that a court may find the CTA to be unconstitutional or otherwise stay its enforcement once again, there are no guarantees that this will occur (if at all) before the new March 21 deadline.
Potential Legislative Action?
There also remains the possibility of legislative action. On February 10, the US House of Representatives unanimously passed a bill, H.R. 736 (the Protect Small Businesses from Excessive Paperwork Act of 2025), to extend the filing deadline to January 1, 2026, for reporting companies formed before January 1, 2024. That bill is now under consideration in the US Senate, although, as of the publication of this alert, there is no indication of whether or when there may be further action on the bill in the Senate.
What Now?
In light of these developments, reporting companies should resume their CTA compliance efforts to file the requisite BOI reports by March 21 (or, as applicable, a later reporting deadline for those reporting companies that were previously given a reporting deadline later than March 21).
Client Alert- Corporate Transparency Act Is Back in Effect – Another Major Update
As has now been well reported, in 2021 Congress enacted the Corporate Transparency Act (the “CTA”), which empowers the U.S. Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”) to collect information about “Beneficial Owners” of certain privately held entities for the purpose of deterring illicit activities through the operation of shell corporations and LLCs.
Entities formed on or after Jan. 1, 2024, that are subject to the CTA were to disclose to FinCEN information about their Beneficial Owners within 90 days of formation or any change for entities (Beneficial Ownership Interest Reports or “BOIR”). Entities formed prior to Jan. 1, 2024, were to have until Dec. 31, 2024, to file BOIRs. However, in the latter part of 2024, a series of lawsuits were brought challenging the constitutionality of the CTA; they have served to delay the reporting requirements of the CTA and have created confusion and uncertainty regarding the CTA for more than 30 million entities.
The most recent event occurred on Feb. 17, 2025, when the U.S. District Court for the Eastern District of Texas, Tyler Division issued a decision in Smith, et al. v. U.S. Department of the Treasury, et al., lifting the stay the Court had ordered on Jan. 7, 2025, that prevented FinCEN from enforcing the BOIR requirements on a nationwide basis.
In view of this decision, FinCEN issued guidance on Feb. 18, 2025, stating that the requirement to file BOIRs under the CTA is once again back in effect. For the vast majority of reporting companies, the new deadline to file an initial, updated, and/ or corrected BOIR is now March 21, 2025. FinCEN indicated that it will provide an update before then of any further modification of this deadline, recognizing that reporting companies may need additional time to comply with their reporting obligations once this update is provided.
The following chronology of events leading up to Feb. 18 underscores the confusion surrounding the CTA:
On Dec. 3, 2024, in the case of Texas Top Cop Shop, Inc., et al. Garland, et al., the U.S. District for the Eastern District of Texas, Sherman Division, issued an order prohibiting the federal government from enforcing the CTA anywhere in the country. The Court determined that the CTA was likely unconstitutional, and that its implementation would irreparably harm companies if they were forced to comply.
On Jan. 7, 2025, in the case of Smith case, the U.S. District Court for the Eastern District of Texas, Tyler Division, issued an order enjoining the government from enforcing the CTA against the plaintiffs and staying FinCEN’s regulations relating to the implementation of the CTA’s reporting requirements.
On Jan. 20, 2025, President Trump signed an Executive Order titled “Regulatory Freeze Pending Review,” which provides in part:
“I hereby order all executive departments and agencies to take the following steps:
(1) Do not propose or issue any rule in any manner, including by sending a rule to the Office of the Federal Register (the “OFR”), until a department or agency head appointed or designated by the President after noon on January 20, 2025, reviews and approves the rule.”
The impact of this Order on FinCEN’s ability to issue new filing deadlines is uncertain.
On Jan. 23, 2025, the U.S. Supreme Court stayed (i.e., halted) the injunction issued in the Texas Top Cop Shop decision but did not address the injunction in
On Jan. 24, FinCEN issued the following:
“In light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force… However, reporting companies may continue to voluntarily submit beneficial ownership information reports.”
On Feb. 5, 2025, the federal government filed an appeal in the Eastern District of Texas challenging the injunction in Smith based on the Supreme Court’s ruling in Texas Top Cop Shop. FinCEN has indicated that if the remaining nationwide injunction in Smith is stayed, it intends to resume enforcement of the CTA and extend the reporting deadline by at least 30 days from the issuance of the stay.
On Feb. 10, 2025, the House of Representatives unanimously passed R. 736 — 119th Congress (2025-2026), the Protect Small Business from Excessive Paperwork Act of 2025. This bill would require reporting companies formed or registered before Jan. 1, 2024, to submit reports to FinCEN by Jan. 1, 2026, instead of by Jan. 1, 2025.
Prior to the above- mentioned Court decision on Feb. 17, some entities were taking take a “wait and see approach,” taking the risk of having to make a filing quickly. Other entities were more proactive and made a voluntary filing. With the February Court decision and FinCEN’s resulting position, a “wait and see approach” is no longer an option, at least not for now. But uncertainty regarding the ultimate fate of the CTA remains in view if the Executive Order described above and the possibility that the U.S. Supreme Court may rule on its constitutionality.
Stay tuned!
Corporate Transparency Act Back in Effect and Extended Deadline
On February 18, 2025, the U.S. District Court for the Eastern District of Texas lifted the nationwide injunction it had previously issued against the enforcement of the Corporate Transparency Act (CTA).1 As a result, the CTA reporting requirements are effective again.
In response, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) has extended the deadline for most reporting companies by 30 days, moving the new deadline to March 21, 2025. Reporting companies that were granted later deadlines—such as those with disaster relief extensions to April 2025—should continue to follow their original deadlines. Unlike prior deadlines, there is no distinction between companies formed before or after January 1, 2024 in terms of the deadline.
During this 30-day period, FinCEN will assess the possibility of further deadline changes and focus on prioritizing reporting from entities that pose higher national security risks. Additionally, FinCEN plans to revise the BOI reporting rule later this year to reduce the administrative burden on lower-risk businesses, including many small U.S. businesses.
However, it is unclear whether any changes will occur before the March 21, 2025 deadline.
What This Means for Your Reporting Company:
The CTA reporting requirements are back in effect.
If you do not have significant business or privacy concerns, you should submit your filings now.
If you have concerns, prepare your materials to file closer to the deadline if no updated guidelines or deadlines are issued.
New deadline for companies: March 21, 2025 (unless your reporting company has a later deadline).2
1 Background on Court Cases:
On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a nationwide injunction in Texas Top Cop Shop, Inc., et al. v. Merrick Garland, et al. On January 23, 2025, the Supreme Court ordered that the injunction be lifted.
On January 7, 2025, the same U.S. District Court issued another nationwide injunction in Smith v. U.S. Department of the Treasury. On February 18, 2025, the court lifted its injunction. With no more nationwide injunctions in place, the CTA came back into effect. The Department of Justice has filed an appeal, and the injunction will remain lifted until the appeal is completed.
2 The CTA is still not being enforced against the plaintiffs in National Small Business United v. Yellen.
CTA Reporting Requirements Reinstated and Beneficial Ownership Reports Due March 21, 2025 for Most Reporting Companies
The beneficial ownership information reporting requirements of the Corporate Transparency Act (CTA) are now back in force. As described in more detail below, the majority of Reporting Companies are required to file their initial, amended, or corrected beneficial ownership information reports (BOIRs) by March 21, 2025, absent any subsequent legal developments.
On February 17, 2025, the US District Court for the Eastern District of Texas in Smith, et al. v. U.S. Department of the Treasury, et al., Case No. 6:24-cv-00336 (E.D. Tex.), stayed a preliminary injunction enjoining the Reporting Rule containing compliance deadlines to file BOIRs. This order removed the final hurdle (for now) blocking the CTA’s reporting deadlines and requirements.
As previously indicated, the Financial Crimes Enforcement Network (FinCEN) extended a 30-day grace period for Reporting Companies to file BOIRs. Specifically, on February 19, 2025, FinCEN published an official notice stating that FinCEN is generally extending the reporting deadline for most Reporting Companies that were previously required to file BOIRs, but have not already done so, to March 21, 2025. FinCEN also noted that (a) during this period FinCEN would “assess its options to further modify deadlines, while prioritizing reporting for those entities that pose the most significant national security risks,” and (b) it intends to revise the CTA’s Reporting Rule to reduce burdens for lower-risk, small business entities. Note that, in parallel, there are several bills pending in Congress to repeal the CTA and to extend certain reporting deadlines to January 2026. As there can be no guarantee that FinCEN will further extend the grace period, or that a subsequent legal development will once again intervene with the enforcement of the CTA, Reporting Companies should prepare to file their BOIRs by March 21, 2025.
A copy of the official FinCEN notice may be accessed here.
Scott Vetri and Walter Weinberg contributed to this article
A New Era for Crypto Regulation & Innovation? The Crypto Executive Order, a Rebooted SEC Crypto Task Force & the Journey Ahead
Recent regulatory developments in the crypto asset and financial technology space suggest that US regulators may be shifting toward a more balanced approach — one that prioritizes clearer regulations while fostering innovation over a more enforcement-driven strategy. President Trump’s recent executive order on this topic reshapes the Biden administration’s approach to crypto assets by eliminating many of the prior administration’s policies on crypto and establishing the President’s Working Group on Digital Asset Markets (Working Group). Acting US Securities and Exchange Commission (SEC) Chairman Mark Uyeda has relaunched the SEC’s Crypto Task Force, appointing Commissioner Hester Peirce to lead its efforts and set its objectives. The SEC has also moved to roll back problematic accounting guidance and pause certain enforcement actions against major crypto companies. Other key regulators, including the Commodity Futures Trading Commission (CFTC) and the Office of the Comptroller of the Currency (OCC), have yet to take similar steps. However, the president recently nominated Brian Quintenz to lead the CFTC, and Jonathan Gould to head the OCC, both of whom have substantial crypto experience. Taken together, these developments may signal a long-awaited shift toward regulatory clarity for crypto that balances innovation and investor protection.
If these developments are received favorably by the industry, we anticipate more investment and new entrants in the crypto asset space. In particular, we can expect additional research & development and new innovations by both start-ups and existing enterprises. Past cycles have brought a race to develop valuable technology and stake out intellectual property rights to capture the value represented by those innovations.
The Trump Administration’s Executive Order on Crypto Assets
On January 23, 2025, President Trump issued an executive order titled “Strengthening American Leadership in Digital Financial Technology,” which establishes a new framework for crypto asset policy. The order revokes prior executive order 14067 and the Department of the Treasury’s “Framework for International Engagement on Digital Assets,” effectively reversing the prior administration’s approach to crypto regulation. The Trump administration’s policy suggests a preference for open public blockchain networks, opposes the creation of a US central bank digital currency (CBDC) or the recognition of CBDCs issued by other countries, and seeks to provide regulatory certainty through better-defined jurisdictional boundaries.
The executive order also created the President’s Working Group on Digital Asset Markets, chaired by David Sacks as the Special Advisor for AI and Crypto. The Working Group’s mandate is to develop a federal regulatory framework governing crypto assets, including stablecoins, and to evaluate the potential creation and maintenance of a national crypto asset stockpile. They are tasked with submitting a report to the president within 180 days recommending regulatory and legislative proposals that advance the policies established in the executive order.
Federal agencies, including the SEC and CFTC, also must now review and potentially rescind previous regulatory guidance that conflicts with this new direction. Additionally, the Working Group will evaluate the feasibility of a national crypto asset reserve derived from lawfully seized cryptocurrencies and seek to ensure that existing and future US regulatory frameworks support US leadership in blockchain and digital financial technology.
Crypto Task Force Reboot & Pause on Binance Enforcement
In a related development, the SEC re-formed a new dedicated Crypto Task Force led by Commissioner Hester Peirce (Task Force). In an announcement titled “Crypto 2.0,” Commissioner Uyeda stated that, among other things, the Task Force aims to resolve long-standing uncertainties in crypto regulation by developing clearer registration pathways, enhancing disclosure frameworks, and ensuring a more consistent enforcement strategy. Many have criticized the SEC’s prior regulatory approach for relying too heavily on enforcement actions, which created uncertainty for industry participants. The Task Force will reportedly collaborate with stakeholders across the public and private sectors, including Congress, the CFTC, and international regulators, to shape a more coherent regulatory approach. The release announcing the Task Force acknowledges the need for a clear regulatory framework that fosters both innovation and investor protection.
Shortly after announcing the Task Force, the SEC and Binance jointly requested a 60-day stay of the SEC’s lawsuit against the crypto exchange, citing the potential impact of the newly established Task Force. The SEC previously sued Binance, its US unit, and founder Changpeng Zhao in June 2023, alleging market manipulation and investor deception. The request signals a potential shift in the SEC’s enforcement strategy, with some viewing it as a step toward a more crypto-friendly stance in line with the president’s broader industry goals. A similar pause was also requested in the SEC’s ongoing action against Coinbase.
Commissioner Peirce’s Statement on the Future of Crypto Regulation
In her February 4 statement titled “The Journey Begins,” Commissioner Peirce outlined the Task Force’s objectives and highlighted several key areas of focus.
Clarifying “Security” Status. The Task Force “is working hard” to assess different types of crypto assets and determine their status under securities laws. Currently, market participants face uncertainty regarding whether certain crypto assets qualify as securities, which affects compliance obligations, trading, and broader market adoption. To date, the SEC has largely relied on enforcement actions to define its stance, leaving investors and other market participants without clear regulatory guidance. Establishing a clear framework to help determine the security status of crypto assets has the potential to provide much-needed regulatory certainty, support responsible innovation, and facilitate greater institutional participation in the crypto markets.
Providing a Pathway to Registration & Trading for Unregistered Offerings. The Task Force “is thinking about” recommending SEC action to grant temporary prospective and retroactive relief for coin or token offerings not registered with the SEC if an entity takes responsibility to provide specified information, updates it, and accepts SEC jurisdiction in fraud cases. Such coins or tokens would be deemed non-securities, allowing trading on unregistered secondary markets if disclosures remain current. The potential success or failure of such a proposal is likely to depend on the specific disclosure requirements imposed and on whether the relief provided offers real benefits while avoiding excessive regulatory burdens.
New Crypto ETFs, Staking, and In-Kind Creations and Redemptions. The Task Force “will work” with the SEC staff to clarify the SEC’s approach to approving or denying proposed rule changes to list new types of crypto exchange-traded products. To date, the SEC has taken a cautious approach to crypto exchange-traded funds (ETFs), or investments focused on cryptocurrency assets, approving only spot Bitcoin and Ethereum ETFs, despite applications to create ETFs for other crypto assets (e.g., Ripple’s XRP). Existing crypto ETFs also cannot currently engage in staking. Staking typically involves committing crypto tokens to a blockchain network to earn rewards, sometimes requiring them to be locked for a period. ETFs also cannot engage in in-kind redemptions. Allowing staking could enable ETFs to generate additional yield for investors by participating in network validation, aligning ETF returns more closely with the underlying assets’ earning potential. Permitting in-kind creations and redemptions — where ETF shares are exchanged directly for crypto assets rather than cash — could also reduce transaction costs, improve tax efficiency, and minimize tracking errors. Clarifying the regulatory path forward on these issues has the potential to further expand investment opportunities and provide ETF investors with more cost-effective and capital-efficient access to crypto assets.
Addressing Crypto Lending and Staking Programs. The Task Force “plan[s] to work” to help address how crypto lending and staking programs can be structured consistent with applicable law. Currently, these programs face substantial regulatory uncertainty, particularly regarding whether they involve securities offerings subject to SEC registration and investor protection requirements. The SEC has pursued enforcement actions against certain crypto lending platforms, but clear guidance on compliant structures remains lacking. Establishing clear guidelines for crypto lending and staking programs could provide investors with greater confidence in accessing staking rewards while ensuring these services operate transparently and in compliance with regulatory protections.
Clarifying Custody Solutions for Investment Advisers. The Task Force “will work” with investment advisers to provide a framework within which advisers can safely, legally, and practically custody client assets themselves or with a third party. Currently, investment advisers face challenges in complying with the “Custody Rule” (Rule 206(4)-2 under the Investment Advisers Act of 1940), which requires client funds and securities to be held by a “qualified custodian.” This is because substantial ambiguity remains about whether any crypto custodians meet this standard and whether advisers can safely custody crypto assets themselves. Establishing a clear framework that provides advisers with a practical and legally compliant pathway to custody client assets has the potential to significantly reduce regulatory uncertainty for advisers to both individuals and investment funds and to help expand institutional participation in crypto-asset markets.
Updating Special Purpose Broker-Dealer Relief. The Task Force “will explore” updating its special-purpose broker-dealer framework to potentially allow broker-dealers to custody crypto asset securities alongside crypto assets that are not securities. Current securities laws effectively prohibit broker-dealers from facilitating transactions in many crypto assets, substantially limiting their ability to offer comprehensive crypto-related services. The SEC’s prior relief for special-purpose broker-dealers was very narrowly tailored and imposed operational constraints on broker-dealers, making it unworkable for most. Expanding the framework to permit custody of both security and non-security crypto assets would be a helpful first step in broadening its appeal.
If the Task Force can accomplish even half of these objectives, it bodes well for the larger crypto community.
There may also be reason to hope for such progress. As noted by Commissioner Peirce, the SEC recently rescinded “SAB 121,” which stands for Staff Accounting Bulletin No. 121. SAB 121 was issued by the SEC’s Office of the Chief Accountant and Division of Corporation Finance in March 2022, and it required financial institutions that custodied crypto assets to record them as both assets and liabilities on their balance sheets. As a result, banks and other financial institutions faced significantly higher capital requirements when holding crypto assets compared to more traditional assets, making crypto custody prohibitively expensive for many. Thus, SAB 121’s rescission simultaneously removes a major regulatory obstacle to providing crypto custody and marks a meaningful shift in the SEC’s regulatory approach.
Conclusion
While many questions remain, the regulatory developments above appear to signal a significant shift in the treatment of crypto assets by the SEC. In the crypto space, the relaxation of regulatory restrictions combined with new technological advancements often drives growth for the most innovative players, which can expand both market share and valuable intellectual property rights. Market participants should remain proactive in monitoring developments and position themselves to capitalize on the new opportunities that will emerge.
Guess Who’s Back? That’s Right – the CTA
Reporting Companies Are Now Required to Comply with the CTA by March 21, 2025
The U.S. District Court for the Eastern District of Texas lifted the stay on enforcement of the Corporate Transparency Act’s reporting requirements with its February 18, 2025, decision in Smith, et al. v. U.S. Department of the Treasury, et al.
As a result, BOI reporting is again mandatory.
As of the date of this alert, the new deadline for (a) reporting companies formed prior to January 1, 2024, to file an initial report and (b) all other reporting companies to file updated and/or corrected BOI reports is now March 21, 2025. However, if FinCEN previously gave a deadline later than March 21, 2025, to a reporting company (e.g., a disaster relief extension until April 2025), the later deadline continues to apply to that reporting company.
In FinCEN’s February 18, 2025 notice (available here: Beneficial Ownership Information Reporting | FinCEN.gov), it acknowledges that it may provide further guidance on reporting requirements prior to March 21, 2025, and as a result reporting companies may be granted additional time to comply with their BOI reporting obligations once this update (if any) is provided.
If you have been following our guidance to date, you have already gathered your BOI and should be able to file prior to March 21, 2025. If you still need assistance determining if your company is a “reporting company” or if you are required to report BOI, please reach out to your Bradley contact as soon as possible.
Legislative Note: The House of Representatives recently passed the “Protect Small Businesses from Excessive Paperwork Act,” which provides in part for an extension of the CTA reporting deadline until January 1, 2026, for reporting companies formed prior to January 1, 2024. That bill is now in committee in the Senate.
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Financing and Debt Issuance for Data Center Developers: Insights from Womble Attorneys
Data center developers face a myriad of challenges when it comes to financing and debt issuance. In this blog post, Womble Of Counsel Barlow Keener delves into the intricacies of these topics with Womble Of Counsel David Beckstead and Womble Of Counsel Art Howson. The conversation covers essential aspects such as project finance models, revenue streams, and risk management. This comprehensive discussion aims to provide valuable insights for data center developers looking to enhance their financial strategies.
Barlow Keener: David, what are the primary considerations for data center developers when it comes to debt financing?
David Beckstead: When considering debt financing for data centers, it is crucial to understand that lenders are primarily interested in the project’s revenue streams and risk profile. They look for an acceptable return given the risk involved, and this includes examining co-location agreements, tenancy agreements, and the overall financial model. Lenders scrutinize the project’s utility supply, including power and water, and the potential impact of delays or downtime on revenue. Additionally, lenders are interested in the project’s location, proximity to power and water infrastructure, and the availability of fiber cables.
Barlow Keener: How do lenders assess the risk associated with data center projects?
David Beckstead: Lenders assess risk by evaluating various factors such as the project’s revenue streams, the creditworthiness of tenants, and the terms of service level agreements. Lenders are particularly interested in the service level agreements (“SLAs”), which outline minimum downtime and construction delay provisions.
Barlow Keener: Can you explain the concept of limited recourse financing in the context of data centers?
David Beckstead: Limited recourse financing means that the data center project’s assets are used to secure the lending, and the revenue streams are what lenders rely on for repayment. This model is common in project finance and is particularly relevant for data centers due to their unique infrastructure requirements.
Barlow Keener: What role do green loan principles play in data center financing?
David Beckstead: Green loan principles, such as those issued by Loan Market Association (“LMA”), the Asia Pacific Loan Market Association (“APLMA”), and the Loan Syndications and Trading Association (“LSTA”), are increasingly important in data center financing. These principles require data center operators to maintain certain energy and environmental design standards, which can make the project more attractive to lenders. Data center operators are expected to adhere to standards such as LEED certification, which focuses on energy efficiency and environmental sustainability.
Barlow Keener: Moving on beyond green loan principles, Art, how do lenders approach the construction phase of data center projects?
Art Howson: During the construction phase, lenders often require completion guarantees and financial support from sponsors, including minimum equity contribution requirements for the project. From a due diligence perspective, they typically review the project construction schedule closely in comparison with terms of the project’s revenue contracts, and structure the loan documents to mitigate the risk of potential delays or cost overruns.. Lenders may also require reserve to maintain funds on deposit to cover loan payments or other project costs.
Barlow Keener: Art, what are the key elements of a co-location agreement that lenders focus on?
Art Howson: Lenders focus on the terms of the data center’s revenue contracts, including the length of the lease, early termination risks, and the creditworthiness of tenants. They typically seek the ability to cure defaults under key project contracts, to protect their interests in case of default and ensure that the project’s revenue stream remains intact. And they will want to confirm that the tenancy agreements can be assigned to a new project owner if necessary, given the importance of those contracts as collateral for the loan.
Barlow Keener: How do lenders evaluate the supply of utilities for data center projects?
David Beckstead: Lenders evaluate the supply of utilities by examining the project’s power and water infrastructure. Lenders to data centers today are more than ever particularly interested in how power is secured, whether through dedicated power purchase agreements (“PPAs”) or other arrangements, as this is a critical factor for data center operations. Lenders will also assess the project’s proximity to power plants and water sources to ensure reliable utility supply.
Barlow Keener: Art, what are the common risk allocation strategies in data center financing?
Art Howson: Common risk allocation strategies include limitations on the amount of debt that can be advanced, in relation to equity contributions or to the projected value of the project. Lenders may also require the project to have payment and performance bonds in place with the key construction contractors and equipment suppliers, to mitigate risks outside of the borrower’s direct control.
Barlow Keener: In conclusion, financing and debt issuance for data center developers require a thorough understanding of various financial models, risk assessment strategies, and contractual terms. By focusing on revenue streams, utility supply, and green loan principles, data center developers can enhance their financial strategies and secure the necessary funding for their projects. The insights provided by Womble Of Counsel David Beckstead and Womble Of Counsel Art Howson offer valuable guidance for navigating the complexities of data center financing. As the data center industry continues to evolve, staying informed about these critical aspects will be essential for success.
Important Update – Corporate Transparency Act Filing Obligations Reinstated and Mandatory
CTA filings are obligatory again. Most reporting companies have until March 21, 2025 to complete their filings. If you adopted a wait-and-see posture in regard to making your CTA BOIR filings, the wait is unfortunately over.
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Since December 2024, the CTA has been subject to nationwide injunctions (which have prohibited FinCEN’s enforcement of the CTA’s filing deadlines). Such deadlines are divided into two primary parts: the filing deadline for (i) reporting companies that were in existence prior to 1/1/2024 (“Pre-‘24 Companies”) and (ii) reporting companies formed on or after 1/1/2024 (“New Companies”).
Because the last of the injunctions (in Smith v Treasury in the 5th Circuit) has now been put on hold, FinCEN may immediately begin enforcing the CTA filing deadlines again, including for Pre-‘24 Companies.
In response to the Smith v Treasury ruling, FinCEN announced on February 19, 2025 the following:
With the February 18, 2025, decision by the U.S. District Court for the Eastern District of Texas in Smith, et al. v. U.S. Department of the Treasury, et al., 6:24-cv-00336 (E.D. Tex.), beneficial ownership information (BOI) reporting requirements under the Corporate Transparency Act (CTA) are once again back in effect. However, because the Department of the Treasury (Treasury) recognizes that reporting companies may need additional time to comply with their BOI reporting obligations, FinCEN is generally extending the deadline 30 calendar days from February 19, 2025, for most companies.
Notably, in keeping with Treasury’s commitment to reducing regulatory burden on businesses, during this 30-day period FinCEN will assess its options to further modify deadlines, while prioritizing reporting for those entities that pose the most significant national security risks.
FinCEN also intends to initiate a process this year to revise the BOI reporting rule to reduce burden for lower-risk entities, including many U.S. small businesses.
FinCEN then stated specifically with regard to the current CTA reporting deadlines:
For the vast majority of reporting companies, the new deadline to file an initial, updated and/ or corrected BOI report is now March 21, 2025. FinCEN will provide an update before then of any further modification of this deadline, recognizing that reporting companies may need additional time to comply with their BOI reporting obligations once this update is provided.
Reporting companies that were previously given a reporting deadline later than the March 21, 2025 deadline must file their initial BOI report by that later deadline. For example, if a company’s reporting deadline is in April 2025 because it qualifies for certain disaster relief extensions, it should follow the April deadline, not the March deadline.
As indicated in the alert titled “Notice Regarding National Small Business United v. Yellen, No. 5:22-cv-01448 (N.D. Ala.)”, Plaintiffs in National Small Business United v. Yellen, No. 5:22-cv01448 (N.D. Ala.)—namely, Isaac Winkles, reporting companies for which Isaac Winkles is the beneficial owner or applicant, the National Small Business Association, and members of the National Small Business Association (as of March 1, 2024)—are not currently required to report their beneficial ownership information to FinCEN at this time.
As a result:
All Pre-‘24 Companies (entities formed prior to 1/1/2024) are required to complete their initial filing by March 21, 2025. Note that the Pre-’24 Companies originally had a 1/1/2025 filing deadline, prior to the court actions.
All New Companies (entities formed on or after 1/1/2024) are required to complete their initial filing by March 21, 2025.
Additional Information:
Courts: While there are ongoing court proceedings that could impact the CTA in the future, there are no currently applicable injunctions (and no additional court rulings are anticipated that would alter the deadlines above). The injunctions that were recently effective were preliminary injunctions (i.e., they were issued before the courts had ruled on the merits of the cases) and courts, including the U.S. Supreme Court, have indicated that a preliminary injunction is not appropriate in this case. Courts have split as to whether or not they find the CTA to be “constitutional” (or, whether they presume the CTA to be “constitutional” in cases where a finding has not yet been made). To date, multiple courts in the 1st Circuit, 4th Circuit and 9th Circuit have issued rulings favorable to the CTA and its constitutionality, and multiple courts in the 5th Circuit and 11th Circuit have issued rulings against the constitutionality of the CTA.
Administration: While the new Administration has not made public statements regarding its intention for the CTA, and it could always change its tact, it has thus far supported the CTA in CTA related cases through recent court filings and the above FinCEN pronouncement.
Congress: The U.S. House of Representatives, on February 11, 2025, by a vote of 408 – 0, approved a bill to extend the BOIR filing deadline for only Pre-‘24 Companies to January 1, 2026. This bill has not been passed by the Senate, and, as drafted, would only delay a portion of the filings due under the CTA, and would not impact the filing obligations of New Companies.