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In a settled enforcement case announced August 9, 2021, the SEC fined Poloniex, LLC, a crypto trading platform, for operating an unregistered securities exchange. Then, on August 10, 2021, the CFTC and FinCEN announced a settled enforcement case against crypto exchange BitMEX for anti-money laundering violations and failure to register with the CFTC as a trading platform. The cases highlight US regulators’ increased focus on cryptocurrency exchanges.…
Continue Reading Regulators Continue Crackdown on Crypto Exchanges

On July 20, 2021, New Jersey’s Acting Attorney General announced that the State’s Bureau of Securities issued a Summary Cease and Desist Order to stop BlockFi, Inc. from selling unregistered securities in the form of interest-bearing cryptocurrency accounts. While commentators frequently focus on the enforcement activities of the Securities and Exchange Commission in the crypto space, New Jersey’s action against DeFi platform BlockFi serves as a reminder that state securities regulators also actively police this marketplace.…
Continue Reading New Jersey Orders DeFi Platform to Cease Offering Interest-Bearing Crypto Accounts

Mark Alexander Hopkins, known as “Doctor Bitcoin,” pled guilty in the Northern District of Texas on June 29, 2021, to illegally operating a cash-to-cryptocurrency conversion business. According to a press release from the Department of Justice, Hopkins pled guilty to one count of operation of an unlicensed money transmitter business.…
Continue Reading “Doctor Bitcoin” Pleads Guilty to Illegal Crypto Conversion Scheme

On May 28, 2021, President Biden released some of the legislative items that would be added by his American Families Plan, which includes a provision that could impact tax information reporting for cryptocurrency asset exchanges and custodians. If enacted, this proposal could require substantial effort to implement and administer.…
Continue Reading President Biden’s Proposal to Enhance Cryptocurrency Information Reporting Regime on Form 1099

On June 10, 2021, the Texas Department of Banking issued an industry notice addressing the authority of Texas state-chartered banks to provide virtual currency services to customers. This is a notable development as Texas has the most state-chartered banks of any state in the country.…
Continue Reading Texas Department of Banking Clarifies Authority of State Banks to Provide Virtual Currency Custody Services

In the past month, the Federal Reserve, FDIC and OCC have each detailed their upcoming focus on digital asset activities in the banking industry. So far, state banking regulators have often outpaced their federal counterparts in terms of issuing formal regulations and guidance around digital assets. Many banks are waiting to explore potential digital asset products and services until the functional federal bank regulators provide concrete guidance to complete the picture. …
Continue Reading Federal Bank Regulators Move to Provide Further Guidance on Digital Asset Activities

On May 11, 2021, staff in the Division of Investment Management (IM) at the Securities and Exchange Commission issued a statement (the Statement) on “Funds Registered Under the Investment Company Act Investing in the Bitcoin Futures Market.” The Statement provides a series of warnings to retail investors about certain risks associated with investments in registered mutual funds whose portfolios include Bitcoin futures. But the Statement also provides further insight into the way SEC staff analyze the market for Bitcoin Futures more broadly.…
Continue Reading SEC Staff Issues Statement on Bitcoin Futures