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U.S. Developments

Legislative Updates

Facebook’s David Marcus Testifies Before Congress on Libra

David Marcus, the Facebook blockchain chief in charge of its planned Libra cryptocurrency and Calibra-branded digital wallet, testified for two days before Congress last week to answer questions about the social media giant’s plans for a cryptocurrency. U.S. Senator Mike Crapo, Chairman of the U.S. Senate Committee on Banking, Housing, and Urban Affairs, delivered remarks at the hearing entitled “Examining Facebook’s Proposed Digital Currency and Data Privacy Considerations.” In the hearing, Marcus described how Congress asked Facebook for more information about how the Libra system would work, how it would access and use consumer financial information, and the privacy implications for consumers. Marcus stated that the Libra Association, a nonprofit based in Switzerland, would be tasked with managing the Libra network, and added that Facebook would be one of many members of the association involved with the project. It is not yet clear whether Facebook will implement a moratorium on Libra’s development pending the government’s probe into the proposed cryptocurrency. Despite Marcus’s extended testimony before Congress, there have been calls from congressional members to have Facebook CEO Mark Zuckerberg testify on Capitol Hill to provide lawmakers with additional information about how Libra and Calibra will work and how they could be regulated.
Continue Reading Blockchain Week in Review: Week of July 19, 2019

The following summary is available in our sister blog, The Fintech Report.

State Bank Regulators and NYDFS to renew litigation against OCC

Blockchain Week in Review: Week of September 10-14, 2018

U.S. Developments

Regulatory Updates

U.S. Judge Says Initial Coin Offerings May Be Covered by Securities Law

On September 11, U.S. District Judge Raymond Dearie ruled that U.S. securities laws may cover an initial coin offering and stated that a reasonable jury should be able to apply the “Howey Test” to determine whether the ICO at issue was a security. The ruling came in criminal prosecution of Maksim Zaslavskiy, a Brooklyn businessman charged with conspiracy and two counts of securities fraud for his role in allegedly defrauding investors in two initial coin offerings.  Zaslavskiy’s attorneys had argued that securities law didn’t apply because the ICOs at issue were currencies, not securities and that federal securities laws are unconstitutionally vague as applied to cryptocurrency. In allowing the criminal charges to proceed, Judge Dearie rejected those arguments. However, acknowledging the early procedural stage of the case, the Court made no ruling on whether the virtual currencies offered by REcoin and DRC were securities under the U.S. Supreme Court’s Howey test. The Court did provide some discussion in the dicta previewing a possible Howey analysis. Additional thoughts on this case can be found in Perkins Coie’s latest client update. In March, another federal judge in Brooklyn ruled that cryptocurrencies could be regulated as commodities by the U.S. Commodity Futures Trading Commission. These cases underscore the importance of fact-specific and contextual analysis when addressing the regulatory treatment of any token or token sale.Continue Reading Blockchain Week in Review: Week of September 10-14, 2018