Amid the rise of digital currency services, the US Department of the Treasury’s Office of Foreign Assets Control published a cautionary tale on December 30, 2020, discussing a recent settlement with BitGo, Inc., a California-based technology company that facilitates digital currency transactions and provides non-custodial digital wallet management services.
Continue Reading OFAC Settlement Highlights Risks for Those Dealing in Digital Currencies

The President’s Working Group (PWG), a federal interagency working group of financial regulators established by Executive Order in 1988, has issued a statement outlining key regulatory and supervisory considerations related to stablecoins and digital payment systems. Beginning with a declaration that the United States encourages responsible payments innovation, the statement outlines various high-level regulatory principles that participants in stablecoin arrangements need to account for.
Continue Reading Designing Stablecoins: Federal Regulators Issue Statement Highlighting Key Regulatory and Supervisory Considerations

Newly-proposed federal legislation would require all issuers of stablecoins and certain other digital asset companies to obtain a bank charter as a condition to operation. Referred to as the Stablecoin Tethering and Bank Licensing Enforcement Act, the draft legislation is intended to shift certain digital currency activities into the regulated banking framework.
Continue Reading New Legislation Proposes to Merge Crypto and Banking

The Wyoming Division of Banking issued a No-Action Letter in October 2020 in response to a request from a Wyoming-chartered public trust company seeking the Division of Banking’s position on the ability of the company to custody digital assets as well as hold itself out as a “qualified custodian.” The NAL prompted the Staff of the Securities and Exchange Commission to issue a public statement seeking public comment on matters concerning the definition of “qualified custodian” under the Investment Advisers Act of 1940 and Rule 206(4)-2 thereunder.
Continue Reading SEC and Wyoming Division of Banking Address Custody of Digital Assets

Wyoming recently awarded its second special-purpose depository institution charter to Avanti Bank. Kraken was the first institution to receive the newly created SPDI charter in September. As Wyoming had likely hoped when it passed a flurry of blockchain legislation, it appears that it is starting to take hold as a digital-asset-friendly banking state.
Continue Reading Wyoming Issues Second Crypto Bank Charter

On Monday, October 19, the Financial Crimes Enforcement Network announced a $60 million civil money penalty against Larry Dean Harmon, the founder, administrator and primary operator of unlicensed convertible virtual currency “mixers” for alleged violations of the Bank Secrecy Act and its implementing regulations.
Continue Reading FinCEN Issues $60M Fine for Convertible Virtual Currency BSA Violations

On October 8, 2020, the Department of Justice’s Cyber-Digital Task Force released an 83-page report entitled “Cryptocurrency: An Enforcement Framework.” The DOJ report highlights many of the legal and enforcement risks posed in the burgeoning crypto marketplace, and includes various enforcement case studies as well as informative graphics.
Continue Reading DOJ Releases Cryptocurrency Enforcement Report