Effective August 1, 2020, Louisiana has adopted a Virtual Currency Business Act. In doing so it becomes the second state after New York to require certain operators of virtual currency businesses to obtain a virtual currency license in order to conduct business in the state.
The World Bank Group recently published a “FinTech Note” on Smart Contract Technology and Financial Inclusion in its “Finance, Competitiveness and Innovation” series. The note explores the potential of smart contracts to spur economic development and financial inclusion around the globe. The note explains the key technical and legal characteristics of smart contracts, delves into potential uses of the technology and, ultimately, raises important considerations for policymakers to weigh when implementing smart contract legislation. Below, we highlight a few of the key takeaways on the potential benefits of smart contracts and discuss how policy and legal decisions will impact the use of this technology.
On July 22, 2020, the Office of the Comptroller of the Currency (OCC) published an interpretive letter clarifying the authority of national banks to provide cryptocurrency custody services for customers. This latest guidance is just one of many recent developments coming out of the OCC focused on modernizing the regulatory framework at the national level. Since Brian Brooks took over as acting Comptroller of the Currency on May 29, 2020, the agency has announced a number of significant initiatives designed to allow national banks to capitalize on technology and innovation.
As part of its ongoing effort to supervise broker-dealers conducting transactions in digital assets, FINRA recently issued Notice 20-23. The Notice encourages FINRA members to continue to keep FINRA updated on a firm’s activities relating to digital assets that have not been previously disclosed.
As we previously reported, for over a year the New York Attorney General has been seeking to enforce an investigative subpoena under New York’s expansive Martin Act against cryptocurrency exchange Bitfinex and its affiliated companies that issue the Tether stablecoin. Bitfinex and its affiliates have raised a number of procedural challenges to the NYAG’s authority to conduct its investigation. In a case addressing important issues about the scope of the NYAG’s investigative authority over cryptocurrency businesses, a New York appellate court on July 9, 2020, rejected Bitfinex’s challenges and authorized the NYAG investigation to proceed.
On June 30, 2020, the full Senate Committee on Banking, Housing, and Urban Affairs held a virtual hearing entitled “The Digitization of Money and Payments.” The hearing focused on stablecoins and the prospects for a US central bank digital currency, or CBDC.
On June 24, 2020, the New York Department of Financial Services (DFS) announced a series of five initiatives involving virtual currency. The announcement was timed to coincide with the five-year anniversary of the launch of New York’s BitLicense for operators of certain virtual currency businesses.
As recently report on the Hunton Privacy & Information Security Law Blog, the European Commission (“the Commission”) submitted its first report on the evaluation and review of the EU General Data Protection Regulation (“GDPR”) to the European Parliament and Council. The report is required under Article 97 of the GDPR and will be produced at four year intervals going forward. Continue Reading European Commission Releases First Report on Evaluation of GDPR
Last week, the Office of the Comptroller of Currency (the OCC), the primary federal regulator of national banks, issued an advanced notice of proposed rulemaking relating to the regulation of digital activities in banking, and in particular their activities involving cryptocurrency and distributed ledger technology. The OCC is soliciting public feedback on how national banks and their customers are currently utilizing new digital technologies to inform future updates to OCC regulations and allow banks to better harness new technologies and innovations. The OCC has requested public feedback by August 3, 2020.
On May 29, 2020, the Digital Dollar Project, an organization seeking to advance the development of a United States central bank digital currency (CBDC), published a detailed white paper entitled “Exploring a US CBDC.” The white paper posits that if the US dollar is to remain the world’s primary reserve currency, it cannot remain an analog instrument and unit of account for assets increasingly denominated as digital tokens. Instead, the white paper reasons that the dollar must itself become a digital tokenized currency that measures, supports, and transacts with other digital assets.