Weekly Focus:

  • Members of Congress Request SEC Clarity On Digital Securities Custody
  • Digital Asset ‘Stacks’ Plans 2.0 Launch as Non-Security
  • Secretary Mnuchin Emphasizes G7 Coordination on Digital Currencies
  • CFTC and SEC Leaders to Step Down
  • DOJ Indicts ICO Promoter for Tax Fraud, SEC Files Civil Suit
  • France Strengthens Anti-Money Laundering (AML) Requirements for Digital Asset Companies
  • Thailand Plans to Incorporate Blockchain into Tax Revenue Collection Systems

Continue Reading Blockchain Week in Review: Week of December 11, 2020

Weekly Focus:

  • The OCC Announces New Acting Comptroller and Includes FinTech Charters Among Focuses
  • The OCC Requests Comments to Update Outdated Regulatory Requirements and New Digital Technology and Innovation
  • SEC Commissioner Hester Peirce Nominated for Second Term
  • SEC Freezes Assets in a Multi-Level Marketing Cryptocurrency Scheme
  • Financial Services Committee Discusses Digital Dollar for Stimulus Payments
  • Russia Continues to Embrace Blockchain, Moscow Citizens to Cast Blockchain Secured E-Votes on Constitutional Amendments and Russian Supreme Court Uses Blockchain Technology to Vote for First Time
  • Ontario Securities Commission Blames Fraud Following Investigation of QuadrigaCX Downfall

Continue Reading Blockchain Week in Review: Week of June 12, 2020

On March 10, the New York State Department of Financial Services (DFS) issued guidance and a request for assurance to financial institutions engaged in virtual currency business activity in New York. The request requires regulated virtual currency businesses to prepare and submit a plan of preparedness to manage the risk of disruption to services and operations caused by the novel coronavirus known as “COVID-19”.
Continue Reading Client Alert: COVID-19 Preparedness Plan Requirements For NY Virtual Currency Businesses

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

Mark Zuckerberg Testifies Before U.S. House of Representatives Regarding Libra

On October 23, Facebook, Inc. CEO, Mark Zuckerberg, testified before the House Committee on Financial Services regarding Facebook’s efforts to launch Libra, a blockchain-based payments system.  Mr. Zuckerberg’s testimony described Libra as a tool for financial inclusion, which would also comply with relevant U.S. regulatory requirements.

Early in his testimony, Mr. Zuckerberg promised that Libra would not launch anywhere in the world until it had received approval from regulators in the United States.  Later, he asserted that Facebook would be willing to quit the Libra project if the product launched prior to receiving regulatory approval.  Mr. Zuckerberg also addressed concerns related to consumer protection over the financial information generated via the Libra network.  He said that Facebook was in the process of building compliance systems for the Calibra wallet application.  He also noted that Facebook was building out strong consumer protections, customer support, and password recovery services designed to ensure that Libra met or exceeded consumer protection standards.
Continue Reading Blockchain Week in Review: Week of October 25, 2019

The U.S. Securities and Exchange Commission (SEC) Strategic Hub for Innovation and Financial Technology (FinHub) published a framework on April 3, 2019, for analyzing whether a digital asset is offered and sold as a security under the federal securities laws.

The framework includes “common sense guidance” that provides greater detail and clarity regarding the application

The Ethereum Classic blockchain was the victim of a 51% attack (often called a majority or Sybil attack) last month that reorganized portions of the blockchain and allowed the attackers to double-spend 219,500 ETC ($1.1 million). As a result of this attack, and similar majority attacks over the past year, the concept of immutability within

U.S. Developments

 Flood of State Virtual Currency Legislation

Since the start of the new year there have been roughly nine virtual currency bills introduced or passed in four different states. Overall, the bills demonstrate a growing interest among the states in supporting virtual currency businesses through the codification of blockchain terminology for legal effect or by proposing regulatory exemptions for certain virtual currency activities. The bills also show that many state legislatures are interested in learning about how blockchain and distributed ledger technology (DLT) can support state governments.Continue Reading Blockchain Week in Review: Week of January 14-18, 2019

On September 24, 2018, the French data protection authority, Commission Nationale de l’Informatique et des Libertés (CNIL), became the first data protection authority to issue written guidance on the intersection of the use of blockchain technology and the General Data Protection Regulation (GDPR).  Due to the decentralized and permanent nature of the blockchain, there is an inherent tension between blockchain technology and the GDPR, particularly with respect to data subject rights and data storage limitation principles.  Therefore, the CNIL guidance provides some welcome clarification on how it views these inherent tensions, although the CNIL left open certain important issues that will require deeper analysis and explanation in the future.  The summary below has been updated to reflect the English translation of the CNIL guidance released on November 8, 2018. Our high-level takeaways based on the CNIL guidance are as follows:

  • The legal analysis of whether the GDPR applies to a blockchain must be conducted on a participant-by-participant basis. Some participants on a blockchain may be subject to the GDPR while others may not.
  • The greater the ability of a participant to intervene and influence blockchain transactions, the more likely such a participant is subject to the GDPR.
  • Whether a participant is a controller or a processor as such terms are defined under the GDPR is a determination based on the particular facts and circumstances, influenced by the architecture of the blockchain and the types of users who engage with it.
  • Data minimization principles apply to some but not all aspects of blockchain technology. Notably, there is no data minimization requirement for public addresses and public keys.

Continue Reading French Data Protection Authority Issues Guidance on Application of Blockchain to the GDPR