As we previously reported in our summary of the Ripple case, a federal district court judged determined that under certain circumstances the offering of a digital asset does not create a security. The reasoning in the Ripple case has been criticized by leading to an outcome that places institutional investors ahead of retail investors and employees.
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Crypto Exchanges
Court’s Ruling Splits Partly in Favor of SEC and Partly for Ripple
On July 13, 2023, the Federal District Court for the Southern District of New York issued the hotly anticipated ruling in the SEC’s case against Ripple Labs, Inc. On cross-motions for summary judgment, the court found that only Ripple’s sale of its XRP tokens to institutional buyers pursuant to sales contracts constituted unregistered sales of securities in violation of Section 5 of the Securities Act of 1933.
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CFTC Wins Default Judgment Against Ooki DAO
On June 8, 2023, Judge William H. Orrick of the U.S. District Court for the Northern District of California granted a default judgment in favor of the CFTC against Ooki DAO, a cryptocurrency decentralized autonomous exchange.
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CFTC Staff Issues Alert on Risks of Clearing Digital Assets
On May 30, 2023, the Commodity Futures Trading Commission Division of Clearing and Risk issued a staff advisory on the risks associated with the Derivatives Clearing Organization clearing of digital assets.
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SEC Steps up Oversight of Crypto Exchanges
On April 14, 2023, by a 3-2 party-line vote the US Securities and Exchange Commission reopened the public comment period and provided supplemental information on amendments proposed in January 2022 to the definition of “exchange” under Rule 3b-16. …
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FSOC Annual Report Discusses Digital Assets
On December 16, 2022, the Financial Stability Oversight Council (Council) published its 2022 annual report. The report highlights a number of key policy recommendations for federal financial regulators, including four recommendations for further legislation or regulation in the digital asset space.
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New York Enacts Crypto Mining Moratorium
On November 22, 2022, New York Governor Kathy Hochul signed into law a two-year moratorium against granting permits to crypto mining operations that “are operated through electric generating facilities that use a carbon-based fuel.” Renewable sources of energy are not impacted.
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CFPB Publishes Bulletin Analyzing Crypto Complaints
On November 10, 2022, the Consumer Financial Protection Bureau (“CFPB”) announced the publication of a “complaint bulletin” analyzing consumer complaints relating to crypto assets.
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European Commission Publishes Report on Decentralized Finance
On October 18, 2022, the European Commission published a report, titled Information Frictions and Public Policies: Approaching the Regulation and Supervision of Decentralized Finance (“DeFi”) (the “Report”). The Report discusses the need to adapt existing policy frameworks to account for the change brought about by DeFi to the underlying information structure upon which financial services are provided.
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New Cryptocurrency Information Reporting Regime Required on Form 1099 and Form 8300
On November 15, 2021, President Biden signed the Infrastructure Investment and Jobs Act, which significantly expands tax information reporting for certain cryptocurrency transactions. The Infrastructure Bill includes an information reporting requirement for cryptocurrency asset exchanges and custodians on an IRS Form 1099, and an information reporting requirement for certain persons who accept large payments in cryptocurrency in such person’s trade or business on an IRS Form 8300.
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