When it rains, it pours. On January 23, 2023, the New York Department of Financial Services announced that it had issued certain Guidance on Custodial Structures for Customer Protection in the Event of Insolvency in which it emphasized the importance of sound custody and disclosure practices to protect customers in the event of an insolvency … Continue Reading
Both the head of the Commodity Futures Trading Commission (CFTC) and leader of the SEC agree that the crypto markets need regulating, and specific rules may help clarify which agency has authority to regulate various cryptocurrency activities. The client alert below discusses both CFTC Chairman Rostin Behnam’s comments and SEC Chair Gary Gensler’s remarks during … Continue Reading
With the enduring popularity of certain NFTs and the promise of their use in the Metaverse and beyond, the hype around the new technology has been accompanied by rising concerns over NFTs being the centerpiece of traditional financial crimes like money laundering and wire fraud. For example, on June 30th, 2022 the Justice Department indicted … Continue Reading
As cryptocurrencies continue to make their way into mainstream consciousness, individuals—even beyond those in the tech sector—have been interested in receiving their pay (or a part of it) in cryptocurrency. This has prompted an increasing number of employers to consider, compensating their employees with Bitcoin, Ethereum, or other cryptocurrencies. While a cryptocurrency compensation scheme may … Continue Reading
Kryptonite is a fictional substance that causes the mighty Superman to lose all his strength. According to a recent release from the U.S. Department of Labor Employee Benefits Security Administration (“DOL”), cryptocurrency might carry similar dangers for otherwise strong and healthy 401(k) plan accounts. That is, in DOL’s view, the benefits of cryptocurrency in 401(k) … Continue Reading
On March 9, 2022, the President issued an Executive Order (the “E.O.”) that articulates a high-level, wide-ranging national strategy for regulating and fostering innovation in the burgeoning digital assets space. The strategy is intended to encourage innovation yet still provide adequate oversight to control systemic risks and the attendant investor, business, consumer and environmental concerns. … Continue Reading
On December 17, 2021, the Financial Stability Oversight Council (“FSOC”) – a collaborative body formed under the Dodd-Frank Act composed of state and federal regulators and tasked with identifying risks and responding to emerging threats to financial stability – released its 2021 Annual Report (the “Report”). In the Report, the FSOC offered wide-ranging insight into … Continue Reading
With new types of digital assets and related business on the rise, federal authorities have been busy investigating. Recently, the SEC, FinCEN and the CFTC have imposed some notable settlements involving cryptocurrency trading platforms for allegedly operating without appropriate approvals from financial regulatory authorities. This may be the start of the next wave of government … Continue Reading
Kraken recently announced that it “is the first digital asset company in U.S. history to receive a bank charter recognized under federal and state law, and will be the first regulated, U.S. bank to provide comprehensive deposit-taking, custody and fiduciary services for digital assets.” Kraken obtained a charter from the State of Wyoming to operate … Continue Reading
On June 3, 2020, the Office of the Comptroller of the Currency (OCC) published an advance notice of proposed rulemaking (ANPR) to solicit public input on the “digital activities” of banks and the impact of emerging technologies on the banking industry. Among other technologies, the ANPR includes questions focused on distributed ledgers, cryptocurrencies and cryptoassets. … Continue Reading
In late May, the Global Shipping Business Network (GSBN), a consortium of ocean carriers and terminal operators, filed a petition with the Federal Maritime Commission (FMC) to obtain an antitrust exemption under the U.S. Shipping Act of 1984. The Act seeks to promote efficient ocean commerce and industry response to international shipping practices by, among … Continue Reading
In March, the Securities and Exchange Commission (SEC) announced proposed rule amendments to “harmonize, simplify, and improve the exempt offering framework to promote capital formation and expand investment opportunities while preserving and enhancing important investor protections,” which may increase the viability of conducting issuances of digital securities. Under the Securities Act of 1933, every offer … Continue Reading
Proskauer authored an in-depth Practice Note published by Practical Law, which details best practices for the use of smart contracts on blockchains. It discusses functional and legal considerations for both standalone smart contracts and smart contracts used in conjunction with traditional written contracts (hybrid smart contracts) and explores the extent to which smart contracts can independently be legally binding. The full text … Continue Reading
Blockstack On July 10, the Securities and Exchange Commission (the “SEC”) qualified Blockstack PBC’s (“Blockstack’s”) offering circular, enabling Blockstack to commence sales and distribution of up to $40 million worth of its Stacks Tokens (“Stacks”) under Regulation A. This marks the first time in history that the SEC has qualified a Regulation A offering of … Continue Reading
On June 26, the price of bitcoin surged to a 12-month high of nearly $13,900 (up about 35% on the month) before losing more than $1,700 in a span of 15 minutes, then rebounding slightly and closing the day at around $12,800. All the while, retail and institutional investors seeking to gain exposure to this … Continue Reading
On April 11, Blockstack Token LLC (“Blockstack”) filed a preliminary offering circular with the SEC for a $50 million token offering under Regulation A of the Securities Act. The offering circular is now under review with the SEC and must be qualified (i.e., cleared) by the SEC before sales of Blockstack’s tokens (“Stacks Tokens”) can … Continue Reading
Following up on their recent introduction of the Token Taxonomy Act, Representatives Darren Soto (D-FL) and Warren Davidson (R-OH) have teamed up again to introduce a new slate of bipartisan bills related to virtual currency. The two new bills, H.R. 922 and H.R. 923, were introduced on January 30, 2019 and are cosponsored by Representatives … Continue Reading
Two recent proposals for bitcoin exchange-traded funds (“ETFs”) are vying to become the first to receive approval from the U.S. Securities and Exchange Commission (“SEC”) – one filed by CBOE BZX Exchange, Inc. (“CBOE”) and the other by NYSE Arca, Inc. (“NYSE Arca”). The SEC has yet to approve a cryptocurrency ETF, although several applications … Continue Reading
The SEC recently announced its settlement of charges against boxer Floyd Mayweather and producer DJ Khaled for their failure to disclose payments they received for promoting Initial Coin Offerings (ICOs) on their social media accounts. The federal securities laws contain an “anti-touting provision,” which regulates paid promotions of securities offerings. Specifically, Section 17(b) of the Securities Act of 1933 … Continue Reading
Recently at a conference in Dubai, Brian Quintenz, who is a Commodity Futures Trading Commission (CFTC) Commissioner, expressed his personal opinion (rather than the views of the CFTC) on the conceptual challenges in applying the CFTC’s regulatory oversight to, and fostering accountability for, smart contracts that reside on decentralized blockchains. In particular, Quintenz conveyed his … Continue Reading
Despite the recent setback of having their Bitcoin ETF rejected by the SEC for the second time, the Winklevoss brothers remain undeterred in their efforts to bring cryptocurrency into the investment mainstream. Their latest project is the Virtual Commodity Association (VCA), a self-regulatory organization (SRO) for the virtual currency industry aiming to serve in the same capacity … Continue Reading
For digitally savvy investors itching to know whether U.S. courts would treat crypto-tokens as securities subject to the regulatory requirements of the Securities Act of 1933, the wait is over—sort of. The first federal judge to decide the issue in the class-action context landed on the same side as the SEC did back in 2017, … Continue Reading
Despite dealing in one of the most valuable asset classes in the world, the real estate industry largely relies on outdated real estate interest recording systems requiring paper-based filings with local government offices. The administrative burdens, inaccuracies and security issues raised by such systems are well known. Increasingly, both government actors and private parties have … Continue Reading
The Securities and Exchange Commission (the “SEC”) has taken to using humor and sarcasm to educate retail investors about the potential risks of purchasing tokens in initial coin offerings (“ICOs”). This week, the SEC issued a press release presenting “a hot investment opportunity.” The release pointed to a website touting the HoweyCoin—a fictional crypto token … Continue Reading
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