In a closely-watched case, on September 30, 2020, federal judge Alvin Hellerstein ruled that Kik’s $100 million two-phase coin offering resulted in a sale of unregistered securities in violation of Section 5 of the US Securities Act of 1933.
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Regulatory
SEC Staff Provides Guidance on Non-Custodial Digital Asset Settlement
By Scott H. Kimpel on
Posted in Regulatory
Providing additional clarity on the role of an alternative trading system (ATS) in the settlement of digital asset security trades, the staff of the SEC’s Division of Trading and Markets issued a no-action letter to FINRA on September 25, 2020. In brief, the SEC staff endorsed a three-step settlement process for digital asset securities held in a third-party’s custody if certain customer-protection conditions are met.…
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OCC and SEC’s FinHub Issue Guidance on Stablecoins
By Patrick J. Boot & Marysia Laskowski on
Posted in Cryptocurrencies, Regulatory
On Monday, September 21, 2020, the Office of the Comptroller of the Currency issued an interpretive letter on the authority of national banks and federal savings associations to hold stablecoin reserves. That same day, the Securities and Exchange Commission’s Strategic Hub for Innovation and Financial Technology issued a statement on the OCC’s interpretive letter. While not an official joint statement, the federal agencies were clearly aligned as FinHub’s statement on the OCC Interpretive Letter was posted on its website before the OCC published its letter.…
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The First Cryptocurrency Bank
By Patrick J. Boot & Marysia Laskowski on
Posted in Crypto Exchanges, Regulatory
On Wednesday, September 16, 2020, the cryptocurrency exchange Kraken Financial became the first crypto company to obtain a bank charter.…
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Senate Banking Committee Shows Continued Interest in Cryptoassets
By Scott H. Kimpel on
Posted in Cryptocurrencies, Regulatory
As a show of continued interest in the development of cryptoasset solutions, Senator Mike Crapo (R-ID), Chairman of the Senate Committee on Banking, Housing and Urban Affairs, recently sent a letter to Acting Comptroller of the Currency Brian Brooks. Chairman Crapo’s letter requested an update on findings of the Office of the Comptroller of the Currency and information regarding next steps the OCC intends to take with respect to blockchain and distributed ledger technology.…
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Louisiana Adopts Virtual Currency Business Act
By Scott H. Kimpel on
Posted in Cryptocurrencies, Regulatory
Effective August 1, 2020, Louisiana adopted the 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 Act is perhaps notable not so much for the conduct it covers, but rather the very broad classes of persons and businesses granted exemptions from regulation.…
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OCC Releases Guidance on the Authority of National Banks to Provide Cryptocurrency Custody Services
By Patrick J. Boot on
Posted in Cryptocurrencies, Regulatory
On July 22, 2020, the Office of the Comptroller of the Currency 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. …
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FINRA Issues Regulatory Notice on Digital Assets
By Scott H. Kimpel on
Posted in Regulatory
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.…
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Appellate Court Greenlights NYAG’s Bitfinex Investigation
By Scott H. Kimpel on
Posted in Crypto Exchanges, Regulatory
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.…
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Senate Banking Committee Considers Digitization of Money
By Scott H. Kimpel on
Posted in Cryptocurrencies, Regulatory
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.…
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