Weekly Focus

  • S. Treasury Foreshadows “Significant New Requirements”
  • Enforcement Actions Brought Against Allegedly Fraudulent Digital Asset Investment Scheme
  • Department of Justice Charges Darknet-Based “Mixer” With Laundering Over $300 Million, Operating an Unlicensed Money Transmitting Business, and Money Transmission Without a License
  • Report Finds Crypto Crime Losses Double to $4.5 Billion in 2019
  • P. Morgan Discusses Merger With ConsenSys
  • Aragon Court Launches Precedence Campaign
  • IBM Claims Blockchain Expenditures Yield 15x for Cloud
  • IOSCO Releases Updated Report on Issues, Risks and Regulatory Considerations Relating to Crypto-Asset Trading Platforms
  • German Bank Develops Special-Purpose Euro Stablecoin
  • Blockchain-Based Financial Instruments Utilized in Wake of Coronavirus
  • Fed Reserve Governor Discusses the Digitalization of Payments and Currency

Continue Reading Blockchain Week in Review: Week of February 14, 2020

Perkins Coie LLP is pleased to bring you this Digital Asset SEC Timeline. This Timeline is an interactive compilation of select SEC guidance, enforcement actions, and speeches relating to the application of the federal securities laws to digital assets. Beginning with the release of the DAO Investigative Report in July 2017, the Timeline includes relevant information for analyzing the offering, issuance, and trading of certain digital assets in the context of the federal securities laws.

This Timeline is meant to be a resource for those following SEC actions and guidance related to digital assets and to assist experienced securities counsel in assessing the applicability of the federal securities laws. The Timeline is for informational purposes only and does not constitute legal advice. If you are, or are planning to engage in transactions involving digital assets, you may want to contact experienced securities counsel.

Information in the Timeline is provided “as-is,” and may not reflect the latest guidance from the SEC and/or other federal or state regulatory authorities. The Timeline contains links to third-party websites. Such links are only for the convenience of the reader or user. Use of and access to the Timeline, including the links contained within the Timeline, do not create an attorney-client relationship with Perkins Coie LLP.

 

Weekly Focus

  • SEC Commissioner Proposes Safe Harbor for Token Offerings
  • Crypto Company Must Place Investors Back in Their Pre-Investment Position
  • American Council on Education to Explore Blockchain Optimization
  • Two Men Charged in Crypto Ponzi Scheme
  • Australia to Launch Blockchain Roadmap
  • Telangana, India To Launch Blockchain Incubator
  • Bermuda to Explore Digital Currency Payment System

Continue Reading Blockchain Week in Review: Week of February 7, 2020

The CFTC DSIO Division Director issued a statement reminding the industry that pooled investment vehicles that trade futures, swaps, and other commodity interests that reference digital assets like Bitcoin and stablecoins are commodity pools under the Commodity Exchange Act and CFTC regulations, and the operators of such vehicles must register as commodity pool operator(s) (CPOs), unless they meet an exemption, and must comply with certain disclosure, recordkeeping, and reporting requirements.  He also noted the Division supports responsible innovation and offers to meet with industry participants and registrants to discuss novel product ideas.

Click here to read the statement in full.

Weekly Focus

  • Replies to Motions for Summary Judgments filed in SEC v. Telegram
  • Cases Consolidated in Class Action Suit Against iFinex Inc
  • Bittrex Introduces Insurance Coverage
  • Research Report Finds the Number of Cryptocurrency Scams Rose in 2019
  • Research Report Indicates Regulatory Uncertainty a Barrier for Digital Asset Companies
  • Coinbase Custody Launches in Ireland
  • Cambodia Announces Forthcoming Central Bank Digital Currency
  • France Charges Alleged BTC-e Operator
  • Deputy Governor of Japan’s Central Bank Comments on Potential Central Bank Digital Currency
  • Singapore Payment Services Act Comes Into Force
  • The World Economic Forum Announces a Global Consortium for Digital Currency Governance
  • Iranian Ministry Grants Licenses to Cryptocurrency Miners

Continue Reading Blockchain Week in Review: Week of January 31, 2020

U.S. Developments

Federal and State Regulatory Developments

Bill in Hawaii State Senate Addresses Digital Assets Including Authorization for Banks to Serve as Qualified Custodians

SB 2594 before the Hawaii State Senate addresses a number of matters relating to digital assets.  In particular, it would classify digital assets under the Hawaii Uniform Commercial Code, specify the manner of perfecting a security interest in digital assets, authorize banks to hold digital assets in their custody, and authorize courts to hear claims relating to digital assets.  As for the banking portions, SB 2594 seeks to establish that banks can serve as “qualified custodians” as that term is defined under the rules of the Investment Advisers Act of 1940.  It also discusses situations in which a bank may undertake transactions with digital assets placed in its custody.  SB 2594 was introduced on January 17, 2020, and was referred on January 23, 2020 to the Hawaiian Senate’s Judiciary Committee and the Committee on Commerce, Consumer Protection, and Health. Continue Reading Blockchain Week in Review: Week of January 24, 2020

U.S. Developments

U.S. Regulatory Developments

Bill Addressing Tax Treatment of Crypto Transactions Introduced to the House

On January 16, 2020, Congresswoman Suzan DelBene (WA) and Congressman David Schweikert (AZ) introduced the “Virtual Currency Tax Fairness Act” (H.R. 5635). This bill would amend the Internal Revenue Code of 1986 to address some transactions made with virtual currency. Drafters of the bill intend to create a “structure for taxing purchases made with virtual currency, further strengthening the legitimacy of virtual currency in the digital economy by creating parity in the tax code.”

Presently, when a person uses virtual currency in a transaction, any gain resulting from exchange rates must be reported as taxable income—regardless of the size or purpose of the transaction. This bill would provide a de minimis exemption for personal transactions made with virtual currency when the gains are less than or equal to $200.

Please click here to read Representative Schweikert’s Press Release.

Please click here to read Representative DelBene’s Press Release. Continue Reading Blockchain Week in Review: Week of January 17, 2020

U.S. Developments

Members of Congress Respond to IRS Tax Guidance for Digital Assets

On December 20, eight members of the U.S. House of Representatives sent a letter to the Commissioner of the Internal Revenue Service (“IRS”) urging further clarity on positions expressed in the IRS’s October tax guidance for digital assets.

The letter described various ways in which the October guidance raised additional questions about the taxation of digital assets, specifically identifying the issue of airdropped or forked digital assets as an area of immediate concern. The authors expressed concern that ambiguity regarding airdrops and forks may result in unanticipated tax obligations for owners of digital assets who become owners of additional digital assets as a result of a fork or airdrop. According to the authors, this outcome would be inconsistent with the IRS’s previous interpretations regarding unsolicited prizes or samples. Continue Reading Blockchain Week in Review: Week of January 10, 2020

U.S. Developments

Federal Reserve Governor Speaks on Stablecoins and Related Risks

On December 18, 2019, Governor Lael Brainard of the U.S. Federal Reserve delivered a speech entitled “Update on Digital Currencies, Stablecoins, and the Challenges Ahead.” In her prepared remarks, the governor discussed “global stablecoins” and their scalability potential. Comparing the rate of adoption for telephones, the internet, and payment processors (such as Venmo and other digital payment systems), the governor noted the “potential for ‘global stablecoins’ to scale rapidly,” especially when deployed by technology companies with “network advantages.”

Without the “requisite safeguards,” stablecoins could pose risks to consumers that regulators should carefully consider, according to the governor. Using Libra as an example, Brainard went on to discuss various “significant concerns,” such as anti-money laundering, counterterrorist financing, know-your-customer, financial stability, and other issues that she believes stablecoins raise. Continue Reading Blockchain Week in Review: Week of December 20, 2019

U.S. Developments

FinCEN Director Discusses How FinCEN Uses BSA Data and the BSA Value Project

The Director of the Financial Crimes Enforcement Network (FinCEN), Kenneth A. Blanco, delivered prepared remarks at the American Bankers Association/American Bar Association Financial Crimes Enforcement Conference this week.  Mr. Blanco spoke on five key topics: (1) how FinCEN uses Bank Secrecy Act (BSA) data, (2) the status of the BSA Value Project, (3) the importance of beneficial ownership information, (4) the federal banking agency working group efforts, and (5) the realignment of FinCEN’s organizational structure. Continue Reading Blockchain Week in Review: Week of December 13, 2019