In 15 recent enforcement actions, the Commodity Futures Trading Commission announced charges against various digital asset exchanges for failure to register appropriately as futures commission merchants. This series of actions is the latest in an ongoing regulatory crackdown across federal agencies involving cryptocurrency and other digital asset trading platforms.
Continue Reading CFTC Charges Crypto Platforms for Registration and Trading Violations

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

A recent Bloomberg article reported that average prices for nonfungible tokens, or NFTs, are down approximately 70 percent from recent highs. A wide range of NFTs have begun to enter the marketplace over the past several months. A digital work of art represented by an NFT recently sold at auction for over $69 million, and even a professional sports league has begun to issue NFTs. A fascinating debate about the social and economic utility of NFTs has emerged, but what are some of the legal issues associated with this new digital asset class?
Continue Reading The Nonfungible Token

In some of her first remarks on the subject of digital assets since Senate confirmation, Treasury Secretary Janet Yellen sounded an alarm on Bitcoin. In an interview with CNBC’s Andrew Ross Sorkin, Secretary Yellen described Bitcoin as frequently used “for illicit finance” and “an extremely inefficient way of conducting transactions.”
Continue Reading Treasury Secretary Skeptical of Bitcoin

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 New York Proposes Virtual Currency Guidance

On June 18, 2019, the Commodity Futures Trading Commission (CFTC) announced the commencement of a civil enforcement action (the Complaint) against two United Kingdom-based defendants, a purported Bitcoin trading company and its principal (collectively, the Defendants). The CFTC alleges that the Defendants perpetrated a wide-ranging fraud involving at least $147 million in Bitcoin from more than 1,000 customers.
Continue Reading CFTC Brings Charges in Fraudulent Bitcoin Trading Scheme

In a letter released to the public on April 10, 2019, New York’s Department of Financial Services (DFS) denied Bittrex’s two separate applications to engage in a virtual currency business and to engage in money transmission activity in New York state.
Continue Reading DFS Denies Bittrex Applications for New York Virtual Currency and Money Transmitter Licenses

To date, virtual currency exchanges in the United States have structured their operations in an effort to avoid being required to register as an exchange with either the Securities and Exchange Commission or the Commodity Futures Trading Commission. While these efforts may be entirely legal, without the regulatory protections of exchange registration, they could create enhanced risks for customers, particularly in the case of a fund’s insolvency or collapse.
Continue Reading Federal Court Lacks Personal Jurisdiction Over Defunct Virtual Currency Exchange

On January 30, 2019, a Florida appellate court reversed the trial court’s dismissal of State v. Espinoza, instead holding that a Bitcoin business was both a money transmitter and a payment instrument seller, subject to Florida’s statutes governing money services businesses.
Continue Reading Florida Court Finds Virtual Currency Subject to Money Service Businesses Law