The timeline has since been updated.  To find the most recent version, updated April 2021, please click here.

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

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

Litigation

New York Resident Indicted for Duping Investors with Fake ICO Scam

On November 6, the United States Attorney for the Southern District of New York announced a wire fraud charge against Asa Saint Clair, the operator of World Sports Alliance, which held itself out on its website as using sports to promote “economic development and social mobility” and claims an association with the United Nations. The U.S. Attorney, Geoffrey Berman, contends that World Sports Alliance is a “sham affiliate of the United Nations.”

According to the indictment, Saint Clair lured investors into loaning funds, through convertible notes, to World Sports Alliance so that the organization could conduct an ICO for a proprietary digital currency called IGOBIT. Saint Clair allegedly promised investors that they would receive guaranteed returns. According to the government, Saint Clair’s representations were false: Investor funds were not used to conduct an ICO and, instead, Saint Clair diverted the funds and used them to support a lavish lifestyle.

The press release from the United States Attorney’s Office can be found here and the indictment here.
Continue Reading Blockchain Week in Review: Week of November 8, 2019

U.S. Developments

Mastercard and Food Co-Op Work Together on Food Visibility Blockchain Solution

Envisible, a company that is dedicated to supply-chain visibility in food systems, has teamed up with Mastercard’s blockchain-based Provenance Solution to offer a food tracking system. The system is called Wholechain and will allow customers to know more about the source of the food they consume and its journey to their table.

Topco Associates, one of the largest group purchasing organizations in the U.S., is a notable early adopter of the system. Topco’s food co-op includes almost 50 member-owners – including supermarkets, wholesale distributors, and pharmacy companies – that collectively bring in about $170 billion in sales annually.

Topco has begun working with its member grocery chains, starting with Food City, to pilot the use of the technology. The first of several species to be tracked will be salmon, cod, and shrimp.

Read more about the launch here.
Continue Reading Blockchain Week in Review: Week of November 1, 2019

U.S. Developments

U.S. Federal Regulatory Developments

CFTC, FinCEN, and SEC Leaders Release a Join Statement on Digital Assets

On October 11, 2019, the heads of the Commodity Futures Trading Commission (“CFTC”), Securities and Exchange Commission (“SEC”) and Financial Crimes Enforcement Network (“FinCEN”) issued a joint statement reminding those involved with digital assets about their obligations to protect against money laundering and terrorist financing, as required by the Bank Secrecy Act (“BSA”). The statement clarifies that AML/CFT regulations apply to “financial institutions” as defined under the BSA and includes certain introducing brokers, broker-dealers, money services businesses, and SEC-registered mutual funds. Financial institutions under the BSA definition must, among other things, establish and implement anti-money laundering programs and certain recordkeeping and reporting programs, according to the statement.
Continue Reading Blockchain Week in Review: Week of October 11, 2019

U.S. Developments

Veritaseum Founder Provides Response to Asset Freeze Order

Responding to an emergency application filed by the Securities and Exchange Commission, Judge LaShann DeArcy Hall of the United States District Court for the Eastern District of New York issued an order on August 12, 2019, freezing Veritaseum accounts and digital assets and ordering founder Reggie Middleton to provide a response to the SEC’s allegations. On the day of the filing, defense counsel asked for permission to file a response prior to a ruling being issued. The Court ruled the same day. On August 19, Mr. Middleton filed a response with the court defending against the SEC’s claims of securities fraud stating among other things that the SEC did not have any evidence that he was attempting to hide company funds by transferring digital assets from one account to another, which Mr. Middleton claimed was done to fund Veritaseum operations.
Continue Reading Blockchain Week in Review: Week of August 19-23, 2019

Taxpayers should take prompt action to assess their situation, yet move carefully before making representations or filings to the IRS.

Over the past month, the Internal Revenue Service (IRS) has sent letters to over ten thousand taxpayers that it believes may have failed to report virtual currency transactions (primarily Bitcoin-related) or may have omitted income derived from virtual currency transactions. These letters continue to receive significant press coverage from major financial outlets and may be just the beginning of the government’s notification, collection and enforcement efforts. For example, the IRS has also recently sent notices to certain virtual currency investors informing them that the investors’ reporting does not match other records in the IRS’s possession.

Taxpayers who receive an IRS letter, receive an investor notice, or have questions about reporting their past virtual currency transactions (e.g., sales of tokens or exchanges of one token for another) should consider the following advice:
Continue Reading You Received One of the IRS Crypto Letters—What’s Next?

U.S. Developments

Regulatory Developments

CFTC Announces Two Events Designed to Encourage FinTech Innovation

On June 27, 2019, the Commodity Futures Trading Commission (“CFTC”) announced two events designed to encourage fintech innovation. First, the agency announced the launch of LabCFTC Accelerator. According to the press release, “LabCFTC Accelerator is a component of the broader CFTC’s LabCFTC initiative, focused on deploying a variety of tools, including internal pilots and tests, market research, and innovation competitions in order to drive better understanding and potential adoption of emerging technologies.”

Second, the CFTC announced that it will hold its second annual FinTech Forward 2019 conference—dedicated to exploring the latest in fintech developments—on October 24, 2019. The agency hopes to bring together innovators, regulators, and the general public to examine the impact of developments in such areas as digital assets, commodities, exchange platforms, machine learning and AI, RegTech, and algorithmic trading. Registration for FinTech Forward 2019 will be open to the public early this fall.
Continue Reading Blockchain Week in Review: Week of June 28, 2019

The California Consumer Privacy Act (“CCPA”) is a sweeping new law that introduces a host of privacy rights for California consumers, as well as creates a series of robust obligations for certain businesses that collect personal information about those consumers.

Join us for CCPA Week: A series of webinars hosted by Perkins Coie’s Privacy

U.S. Developments

Blockstack Files With SEC for Regulation A+ Token Sale

Blockstack, the New York-based blockchain software provider, has announced that it intends to make a $50 million token offering that would use the SEC’s Regulation A+ exemption. The sale would enable Blockstack to raise capital through the U.S. securities markets via a subsidiary, Blockstack Token LLC, and would be the first SEC-qualified token offering of its kind.

While Blockstack’s offering requires further regulatory review, a Regulation A+ offering provides an alternative to a traditional IPO. Passed as part of the 2012 Jumpstart Our Business Startups (JOBS) Act, the exemption is intended to give companies wider access to the public investing community and to support small business growth and employment by lowering regulatory hurdles for companies trying to raise capital. In addition to exemption from registration, a company filing under Regulation A+ may confidentially submit its offering memorandum to the SEC, undergo an expedited review process, and have fewer ongoing public disclosure requirements.
Continue Reading Blockchain Week in Review: Week of April 8-12, 2019