On September 21, 2021, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) issued an Updated Advisory on Potential Sanctions Risks for Facilitating Ransomware Payments (the “Updated Advisory”) on the sanctions risks associated with facilitating ransomware payments.
On September 13, 2021, New York Attorney General (NYAG) Letitia James announced the entry of a default judgment against crypto platform Coinseed and its CEO. The default judgment includes broad injunctive relief against Coinseed’s future operations in New York state. The case is one of many that regulators have recently brought against crypto trading platforms.
On August 23, 2021, CFTC Commissioner Dawn Stump released a helpful primer on the CFTC’s regulatory authority over digital assets. The statement emphasizes that the CFTC does not typically regulate the spot market for cash commodities (including digital assets), and instead focuses on oversight of derivatives. But, Commissioner Stump cautioned that the CFTC does retain antifraud authority over the spot markets. Tracing through the CFTC’s authority (and that of other sister regulators) in ten steps, the statement concludes that “with respect to a digital asset, ask not whether a digital asset is a commodity or security—ask whether a futures contract or other derivative product is involved.”
Commissioner Stump’s complete statement is available here.
The National Credit Union Administration (NCUA) recently published a request for information in the Federal Register that encourages credit unions and other industry participants to provide information on the current and potential impact of digital assets and related technologies on federal credit unions.
In a settled enforcement case announced August 9, 2021, the SEC fined Poloniex, LLC, a crypto trading platform, for operating an unregistered securities exchange. Then, on August 10, 2021, the CFTC and FinCEN announced a settled enforcement case against crypto exchange BitMEX for anti-money laundering violations and failure to register with the CFTC as a trading platform. The cases highlight US regulators’ increased focus on cryptocurrency exchanges.
On July 20, 2021, New Jersey’s Acting Attorney General announced that the State’s Bureau of Securities issued a Summary Cease and Desist Order to stop BlockFi, Inc. from selling unregistered securities in the form of interest-bearing cryptocurrency accounts. While commentators frequently focus on the enforcement activities of the Securities and Exchange Commission in the crypto space, New Jersey’s action against DeFi platform BlockFi serves as a reminder that state securities regulators also actively police this marketplace.
Mark Alexander Hopkins, known as “Doctor Bitcoin,” pled guilty in the Northern District of Texas on June 29, 2021, to illegally operating a cash-to-cryptocurrency conversion business. According to a press release from the Department of Justice (DOJ), Hopkins pled guilty to one count of operation of an unlicensed money transmitter business.
On May 28, 2021, President Biden released some of the legislative items that would be added by his American Families Plan, which includes a provision that could impact tax information reporting for cryptocurrency asset exchanges and custodians. If enacted, this proposal could require substantial effort to implement and administer.
Congresswoman Maxine Waters (D-CA), Chairwoman of the House Committee on Financial Services, recently announced the organization of the Committee’s Digital Assets Working Group. At this time, the working group’s roster appears limited to Democratic Members.
On June 10, 2021, the Texas Department of Banking issued an industry notice addressing the authority of Texas state-chartered banks to provide virtual currency services to customers. This is a notable development as Texas has the most state-chartered banks of any state in the country.