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 … Continue Reading
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 … Continue Reading
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 … Continue Reading
U.S. Legislation U.S. House Bill Seeks Classification of “Managed Stablecoins” as “Securities” Texas Representative Sylvia Garcia introduced legislation in the U.S. House of Representatives that would amend the definition of a “security” within the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Company Act of 1940, and the Investment Advisers Act … Continue Reading
U.S. Developments The Fed Chairman Comments on Potential for a US-backed Digital Currency Jerome Powell, Chairman of the Federal Reserve, wrote to Congress this week discussing the merits of implementing a central bank digital currency (CBDC) in the U.S. The letter responds to a number of questions posed by lawmakers regarding the value that a … Continue Reading
U.S. Developments Telegram Submits Answer to SEC Complaint Regarding TON Blockchain Network On November 12, Telegram Group Inc. (Telegram) submitted its answer and affirmative defenses to a complaint filed against it by the U.S. Securities and Exchange Commission (SEC) in federal court. The SEC previously filed an emergency action against Telegram and received a temporary … Continue Reading
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 … Continue Reading
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 … Continue Reading
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 … Continue Reading
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 … Continue Reading
U.S. Developments REGULATORY House Passes Bill to Review How Blockchain Technology Can Improve FinCEN The U.S. House of Representatives passed a bill sponsored by Anthony Gonzalez (R-OH) that requires the Director of the Financial Crimes Enforcement Network (“FinCEN”) to carry out a study on the status of implementation and internal use of blockchain and other … Continue Reading
U.S. Developments Regulatory VanEck/SolidX Bitcoin ETF Proposal Withdrawn. Facing an October 18 deadline for the Securities and Exchange Commission (“SEC”) to approve or disapprove, Cboe BZX Exchange withdrew the proposed rule change to list and trade SolidX Bitcoin Shares issued by VanEck SolidX Bitcoin Trust on September 13, 2019. The decision had already been delayed … Continue Reading
U.S. Developments VanEck and SolidX to Offer Bitcoin ETF to Qualified Institutional Buyers On September 3, 2019, VanEck Securities Corp. and SolidX Management LLC announced that they are seeking to use Rule 144A of the Securities Act to issue shares in the VanEck SolidX Bitcoin Trust to qualified institutional buyers. According to a joint statement … Continue Reading
U.S. Developments Enforcement and Litigation Developments Craig Wright Faces Sanctions Craig Wright, the self-proclaimed inventor of Bitcoin, has been tied up in litigation since February 2018 related to his partnership with the late David Kleiman. The case alleged that Wright worked to seize bitcoin owned by Kleiman after his death. On August 27, 2019, in … Continue Reading
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 … Continue Reading
U.S. Regulatory Kik Files Answer to SEC Complaint On August 7, Canadian messaging company Kik Interactive Inc. (“Kik”) filed its answer to the U.S. Securities and Exchange Commission’s (“SEC”) complaint filed in the Southern District of New York. In its 131-page answer, Kik argues for a narrow reading of the Howey test and maintains that … Continue Reading
U.S. Developments Regulatory Developments Commissioner Hester Peirce Speaks Before the SUSS Convergence Forum: Inclusive Blockchain Finance, and Emerging Technologies On August 1, 2019, Securities and Exchange Commission (“SEC”) Commissioner Hester Peirce gave a speech before the Singapore University of Social Sciences Convergence Forum: Inclusive Blockchain, Finance, and Emerging Technologies. In her remarks, she discussed the … Continue Reading
U.S. Developments Regulatory Developments SEC Issues Second No Action Letter for Blockchain-Based Project On July 25, 2019, the staff of U.S. Securities and Exchange Commission (SEC) issued its second ever no-action letter to a company planning to issue blockchain-based tokens. The letter was issued to Pocketful of Quarters (PoQ), a gaming start-up. PoQ seeks to … Continue Reading
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 … Continue Reading
U.S. Developments Regulatory Developments SEC and FINRA Issue Joint Statement on Digital Asset Custody Issues On July 8, 2019, the U.S. Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) (collectively, “the Staffs”) issued a joint statement addressing questions each has received from market participants regarding proper custody of digital assets under … Continue Reading
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 … Continue Reading
U.S. Developments Facebook Announces Formation of Calibra and Launch of Libra On June 18, 2019, Facebook announced the launch of Libra, a new cryptocurrency designed to have a stable value and be widely accepted internationally, and the formation of a new subsidiary, Calibra, which will provide digital wallets and other services for users in the … Continue Reading
U.S. Developments Regulatory Developments SEC Chair’s Recent Comments on Digital Assets Securities and Exchange Commission (“SEC”) Chairman Jay Clayton touched on digital asset issues during two recent appearances. On June 4, Chairman Clayton addressed the Mid-Atlantic Regional Conference, where he noted the work of SEC staff to trace transactions across blockchains. Specifically, he mentioned that … Continue Reading
U.S. Developments SEC Sues Social Media Company Kik over Digital Coin Offering The Securities and Exchange Commission (“SEC”) sued Kik Interactive Inc. (“Kik”) in federal court in Manhattan this week, arguing that Kik’s sale of “Kin tokens” in late 2017 was a sale of unregistered securities. The complaint alleges that Kik marketed its tokens as … Continue Reading
