Blockchain Week in Review: Week of July 12, 2019

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 both federal securities laws and FINRA’s rules.

The joint statement highlights the importance of the Customer Protection Rule to protect investors from loss of assets and to help the SEC monitor for potential fraud. The joint statement discusses both broker-dealers seeking to have custody of digital assets and broker-dealers seeking to conduct noncustodial activities. For the latter, the Staffs mention several noncustodial models and note in the statement that generally these noncustodial activities “do not raise the same level of concern among the Staffs, provided that the relevant securities laws, SRO rules, and other legal and regulatory requirements are followed.” Continue Reading

Blockchain Week in Review: Week of June 28, 2019

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

Can Blockchain Survive the California Consumer Privacy Act?

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 & Data Security practice focused on getting your business ready to comply with this enigmatic statutory scheme. Attendees will receive an overview of the current state of legislative amendments, insight into the high burden of persuasion industries may face, and guidance on leveraging existing compliance and governance programs to build a global privacy program that incorporates responsible data usage and proactive privacy practices.

Register here for the entire series, or select the blockchain-specific webinar below.

The California Consumer Privacy Act and Blockchain

Thursday, July 18, 2019
1:00 p.m. PT | 3:00 p.m. CT | 4:00 p.m. ET

This webinar is an in-depth analysis of the intersection of the CCPA and blockchain technology—including the law’s applicability to businesses that utilize or offer blockchain technology solutions, as well as the legal obligations of, and potential methods of compliance for, subject businesses.


Joe Cutler | Partner, Privacy & Data Security
Charlyn Ho | Counsel, Technology Transactions & Privacy
Anna Mourlam | Associate, Securities Litigation
Marina Gatto | Associate, Privacy & Data Security

Blockchain Week in Review: Week of June 21, 2019

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 Libra network.  The Libra network will be administered by the Libra Association, a Swiss nonprofit organization whose initial members are anticipated to include Calibra and 27 other organizations.  Continue Reading

Blockchain Week in Review: Week of June 14, 2019

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 tracing was critical in two recent cases where the SEC was able to obtain preliminary injunctions to stop alleged potential frauds.

On June 6, Chairman Clayton appeared on CNBC, where he discussed virtual currency exchange-traded funds (“ETFs”). He stated that the SEC is engaging with those seeking ETFs but that core issues, such as custody of digital assets and prevention of market manipulation, continue to be sticking points that the SEC is working through. Continue Reading

Blockchain Week in Review: Week of June 7, 2019

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 an investment opportunity and failed to disclose material financial information about Kik’s business. Kik has argued previously that the Kin tokens were not sold as securities and should not be covered by federal law because they are not considered stocks or bonds under relevant definitions of the U.S. securities laws.

As previously reported on this blog, Kik submitted a Wells response to the SEC in November 2018 laying the groundwork for potential litigation with the SEC. Last month, Kik established a legal defense fund,, to assist with its legal bills incurred fighting the SEC’s suit. The fund has raised almost $5 million worth of various cryptocurrencies from backers. Continue Reading

Webinar – The Next Progression of Derivatives Markets – Distributed Ledger Technologies and Decentralized Exchanges

Join Perkins Coie and FIA for a webinar “The Next Progression of Derivatives Markets – Distributed Ledger Technologies and Decentralized Exchanges.”

Thursday, June 20, 2019
10:00 a.m. – 11:00 a.m. EST


Smart contracts, digital assets and distributed ledger technologies make it possible to execute financial transactions in a peer-to-peer fashion with little to no intermediation by third-parties.

Join us for this timely webinar, hosted by the Futures Industry Association’s Law & Compliance Division, as we discuss the mechanics of such platforms and how they fit within existing regulatory frameworks, including the application of the federal commodities, securities and money services laws to decentralized exchange platforms and technologies.


Andrew Cross
Perkins Coie, Partner
Kari Larsen
Perkins Coie, Partner
Michael Selig
Perkins Coie, Associate

Questions? Please contact Mary Freeman via email.

China Released First 197 Blockchain Information Service Providers

On March 30, 2019, the Cyberspace Administration of China (CAC) released the first list of 197 blockchain information service providers that successfully registered pursuant to the Administrative Regulations on Blockchain Information Services. The list includes well-known Chinese internet companies such as Baidu, Alibaba, Tencent and, financial institutions like Ping An, China Zheshang Bank and Webank, as well as other blockchain information service providers such as Wanxiang and Beijing Internet Court. There are no true foreign companies that are allowed to register, at least not at this time.

Such record filing is only for the registration of blockchain information services and is not interpreted to mean that any entity, product or service has been recognized or approved by the CAC. As a result, a registered entity or individual is prohibited from using the record filing for commercial purposes.

Read more to learn more about the liabilities of blockchain companies in China and more information of the record-filing management system.

Blockchain Week in Review: Week of May 31, 2019

U.S. Developments

U.S. Federal Regulatory Developments

SEC Staff Holds FinTech Forum to Discuss Blockchain Technology and Digital Assets

On May 31, 2019, the staff of the U.S. Securities and Exchange Commission (“SEC”) held a FinTech Forum to discuss distributed ledger technology and digital assets.  It was hosted by the SEC’s Strategic Hub for Innovation and Financial Technology.  The FinTech Forum’s agenda and its speakers can be found here.

Members of Congress Write a Letter to the National Economic Council in Favor of Blockchain Technology

On May 24, 2019, seven bipartisan members of the U.S. House of Representatives sent a letter to Lawrence Kudlow, the Director of the National Economic Council (“NEC”), urging the Administration, through the NEC, to hold a forum on blockchain technology.  Citing the President’s most recent State of the Union Address, the letter asks that blockchain technology be included in the Administration’s initiatives to promote emerging technology.  It also argues that while government agencies are already using blockchain technology in operations, more can be done to support the adoption and development of technology in the United States.  The letter suggests that the NEC host a forum including policymakers, the private sector, and academia to help promote technology innovations and identify how to appropriately update laws and regulations. Continue Reading

Blockchain Week in Review: Week of May 24, 2019

U.S. Developments

Regulatory Updates

SEC Files Enforcement Action Against Alleged Fraudulent Cryptocurrency Pyramid Scheme

On May 22, the Securities and Exchange Commission (“SEC”) filed a complaint in the U.S. District Court for the Central District of California against Daniel Pacheco, owner of two California-based companies known as IPro Solutions LLC and IPro Network LLC (collectively, “IPro”).  The SEC’s complaint alleges that IPro raised more than $26.5 million in investments via the offer and sale of “IPro packages,” which included instructional materials for e-commerce activities and a recruitment-based compensation plan that paid its members in a cryptocurrency called “PRO Currency.” According to the SEC, IPro’s activities constituted an unlawful unregistered sale of securities because the sale of IPro packages involved an investment in the form of the PRO Currency digital assets, which were not registered and were not eligible for a registration exemption.  The SEC also alleges that the sale of IPro packages involved an investment in a pyramid scheme.  Framed as a multilevel marketing campaign with the goal of developing a blockchain-based e-commerce network, IPro offered recruitment bonuses to its users in the form of points that could be converted into PRO Currency and also offered points and cash commissions to incentivize users to make additional investments in the network.  The SEC alleges that Pacheco and IPro misappropriated more than $5 million in funds, resulting in IPro having insufficient funds to pay commissions and bonuses to its users. Continue Reading