SEC Settles Charges With FinTech Companies in Unlawful Redemption of Bitcoin Investment Trust Shares During Distribution

The SEC announced yesterday a settlement with Bitcoin Investment Trust (BIT) and SecondMarket, Inc. (SecondMarket).  According to the Administrative Order, the SEC claims that BIT and SecondMarket redeemed BIT shares during an ongoing distribution and, therefore, violated Rules 101 and 102 of Regulation M. Continue Reading

Financial Stability Oversight Council Identifies Distributed Ledgers as Innovative, Yet Posing Certain Risks

The Financial Stability Oversight Council (FSOC) recently published its Annual Report, providing insight into its perspective on market developments and emerging threats. The FSOC, which includes representatives from the Treasury Department, the Federal Reserve, the Commodity Futures Trading Commission and the Securities and Exchange Commission, recognized that distributed ledger systems offer opportunities to lower transaction costs and improve efficiencies. However, the FSOC also acknowledged that certain risks are inherent, and therefore careful regulatory coordination is necessary.

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Recent Blockchain Legal Panel held in Seattle

On June 20, Dax Hansen and Carla Reyes from Perkins Coie LLP spoke at a Blockchain Legal Panel in Seattle. The panel, hosted by blockchain technology leaders and entrepreneurs, discussed the legal implications and concerns facing blockchain technologies. Topics included the regulatory climate, personal liability, and the Decentralized Autonomous Organization (DAO). View the discussion here.

Making Sense of the CFTC’s Enforcement Order and Settlement with Bitfinex

On June 2nd, the U.S. Commodity Futures Trading Commission (the “CFTC”) announced an enforcement order and settlement with BFXNA Inc. d/b/a Bitfinex, an online platform for exchanging and trading cryptocurrencies (the “Platform”).  This posting will summarize that order with the goal of helping our readers make sense of the current state of the law with respect to the CFTC’s regulation of bitcoin and other cryptocurrencies.


Before turning to the facts of this particular enforcement order and settlement (the “Order”), it is helpful to review the current state of the law with respect to the the CFTC’s regulation of bitcoin and other cryptocurrencies.  The following are the key regulatory principles, as excerpted from the Order (detailed citations have been omitted in the interest of readability). Continue Reading

Attention FinTech and Blockchain Firms: Financial Innovation Was the Talk of the Week in Regulatory Circles

In a span of 48 hours this week, two noteworthy developments occurred on the U.S. regulatory front:

  1. A major bank regulatory agency, the Office of Comptroller of Currency (the “OCC”), published Supporting Responsible Innovation in the Federal Banking System: An OCC Perspective; and
  2. A commissioner from the Commodity Futures Trading Commission (the “CFTC”), J. Christopher Giancarlo, addressed the Depository Trust & Clearing Corporation 2016 Blockchain Symposium, delivering his personal observations on the development of financial technologies in a speech entitled Regulators and the Blockchain: First, Do No Harm.

This posting will summarize the OCC’s publication and provide excerpts from CFTC Commissioner Giancarlo’s speech. As we explained in a February 2016 posting (Doing Business with Regulated Market Participants: Why Regulations Are So Important Even (Especially?) To the Unregulated), we believe that these regulatory developments are as important to regulated market participants (like banks) as they are to the unregulated innovators looking to sell services to those regulated market participants and, in many cases, compete with those participants for market share. Continue Reading

Bitcoin Week in Review 01.09.16 – 01.15.16

Below is a summary of some of the significant legal and regulatory actions that occurred over the past week. This alert is not intended to be a comprehensive list of all such developments, but rather a selection of publicly-reported news that may be of particular interest.

U.S. Developments

South Carolina Legislature Proposes Bill to Enact Anti-Money Laundering Act

South Carolina Representative Alan Clemmons introduced a bill proposing state regulation of money transmission services business.  Titled the “South Carolina Anti-Money Laundering Act,” the proposed act is based on the Uniform Money Services Act.  Under the proposed bill, virtual currencies are included in the definition of money transmission, requiring state licensure.  Presently, South Carolina does not regulate money transmission services businesses. Continue Reading

CFTC to Hold Meeting of Technology Advisory Committee on January 26th to Discuss Blockchain and Distributed Ledger Technology

Earlier today, the U.S. Commodity Futures Trading Commission (“CFTC”) published a notice announcing that its Technology Advisory Committee (“TAC”) will hold a public meeting on January 26th to discuss issues related to blockchain and the potential application of distributed ledger technology to the derivatives market. Learn more about what this meeting will cover on the Perkins Coie blog: Derivatives and Repo Report.

Are Mining Pool Interests Securities?

On December 1st the Securities and Exchange Commission (SEC) filed charges against bitcoin mining companies GAW Miners and ZenMiner, and their founder Homero Joshua Garza.  The complaint alleges Garza and his companies fraudulently sold $19 million worth of unregistered securities, called Hashlets, to over 10,000 investors in the latter half of 2014.  The SEC believes Hashlets constitute “investment contracts, and thus ‘securities’” under the Exchange Act and the Securities Act. Continue Reading

Bitcoin Weekly Updates – Did you see last week’s update?

For coverage of weekly regulatory news, be sure to visit Bitcoin Week in Review.

Last week’s update discussed the Uniform Law Commission (ULC) draft version of a model law that will guide states in creating regulation for virtual currencies, a warning from Ukraine’s National Bank and the collaboration of Europol and Interpol at the Europol Cybercrime Conference.

Bitcoin Week in Review 10.03.15 – 10.09.15

Below is a summary of some of the significant legal and regulatory actions that occurred over the past week. This alert is not intended to be a comprehensive list of all such developments, but rather a selection of publicly-reported news that may be of particular interest. Continue Reading