As has been widely reported, SEC Commissioner Hester Peirce (aka “Crypto Mom”) recently delivered a thoughtful speech entitled “Running on Empty: A Proposal to Fill the Gap Between Regulation and Decentralization,” including with it a model rule on digital token sales. The model rule has made waves in the crypto community because it proposes a three-year safe harbor from SEC registration while a development team builds out a functional, decentralized network.
Continue Reading

In connection with its annual meeting in Davos, Switzerland, on January 24, 2020, the World Economic Forum announced the creation of a Global Consortium for Digital Currency Governance. The initiative is touted as the first of its kind “to bring together leading companies, financial institutions, government representatives, technical experts, academics, international organizations, NGOs and members of the Forum’s communities on a global level.” The consortium will focus its efforts on developing solutions for what it describes as a fragmented regulatory system.
Continue Reading

On January 16, 2020, Reps. Suzan DelBene (D-Washington) and David Schweikert (R-Arizona) introduced H.R. 5635, the Virtual Currency Tax Fairness Act of 2020. Under current IRS guidance, taxpayers who sell virtual currency must recognize any capital gain or loss on the sale, subject to any limitations on the deductibility of capital losses. Taxpayers can also recognize gains due to fluctuations in exchange rates between virtual currencies and fiat currencies.
Continue Reading

In an investor alert issued on January 14, 2020, staff in the Securities and Exchange Commission’s Office of Investor Education and Advocacy warned investors in initial exchange offerings (IEOs) to “use caution before investing  . . . through online trading platforms.”  According to the SEC staff, “Claims of new technologies and financial products, such as those associated with digital asset offerings, and claims that IEOs are vetted by trading platforms, can be used improperly to entice investors with the false promise of high returns in a new investment space.”
Continue Reading

In a recent op-ed, Gita Gopinath, the IMF’s chief economist, posited that “digital currencies will not displace the dominant dollar.” In particular, the dollar’s status is supported by the “institutions, rule of law, and credible investor protection” that the United States provides. She also expressed her view that a synthetic hegemonic currency—a digital basket of reserve currencies recently proposed by outgoing Bank of England governor Mark Carney—faces steep obstacles to implementation. While the world would benefit from a greater role for the euro and the renminbi, Gopinath suggests that their institutions require greater development. Instead, the US may be developing an advantage in making the dollar the dominant digital currency through its efforts to combat money laundering and terrorism.
Continue Reading

On December 11, 2019, the New York Department of Financial Services (DFS) published proposed guidance regarding adoption or listing of virtual currency by holders of a BitLicense. Specifically, under the proposed guidance, DFS seeks comment regarding two proposed changes affecting coin listings, both of which are intended to streamline and expedite the process.
Continue Reading

In a television interview on November 19, 2019, CFTC Chairman Heath Tarbert discussed digital assets and the importance of U.S. leadership in this space. Notably, he stated:

“I want the United States to lead, particularly in the blockchain technology that underlies digital assets… [U]ltimately I could see it overtaking the internet or being effectively parallel to the internet in using a variety of different kinds of transactions, not just the financial system, but in other types of transactions as well… I think whoever ends up leading in this technology will end up writing the rules of the road for the rest of the world. My emphasis is on making sure that the United States is a leader.”
Continue Reading