On March 31, 2022, the staff of the Division of Corporation Finance and the Office of the Chief Accountant of the SEC issued Staff Accounting Bulletin No. 121 (SAB 121), which “adds interpretive guidance for entities to consider when they have obligations to safeguard crypto-assets held for their platform users.” SAB 121 highlights the enhanced technological, legal and regulatory risks associated with safeguarding digital assets, as compared with more traditional asset classes.
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Digital Assets
DOJ Brings Criminal Charges Against Two Defendants in NFT Fraud
On March 24, 2022, the US Attorney for the Southern District of New York announced charges against two defendants and alleged an ongoing fraud involving the sale of nonfungible tokens. The federal criminal case is among the first involving NFTs and foreshadows further regulatory scrutiny of the popular digital asset class.
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President Biden Issues Executive Order on Digital Assets
On March 9, 2022, the Biden Administration released its much-anticipated “Executive Order on Ensuring Responsible Development of Digital Assets”. The White House describes the Executive Order as the “first whole-of-government strategy” on digital assets and attempts to strike a balance between encouraging innovation and US leadership in the digital asset space, while signaling an appetite to protect against a variety of stated risks through additional regulation and legislation. …
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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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President’s Working Group Releases Report on Stablecoins
On November 1, 2021, the President’s Working Group released a long-awaited report on stablecoins. The Report outlines a number of significant legislative recommendations for Congress to consider as well as a number of interim measures that agencies should adopt under their existing authorities to protect against prudential risks in the near-term.
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Timely Trademarks Are Important to Crypto: Dogecoin Disputes Illustrate Potential Naming Issues
A recent dispute over trademark ownership to the name of meme-fueled Dogecoin highlights the importance of trademark rights in the ever-growing world of cryptocurrencies.
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CFTC Charges Crypto Platforms for Registration and Trading Violations
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.
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House Financial Services Committee Forms Digital Asset Working Group
Congresswoman Maxine Waters (D-CA), Chairwoman of the House Committee on Financial Services, recently announced the organization of the Committee’s Digital Assets Working Group. …
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Federal Bank Regulators Move to Provide Further Guidance on Digital Asset Activities
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. …
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SEC Chairman Testifies About Digital Assets
In a wide-ranging hearing before the House Financial Services Committee on May 6, 2021, SEC Chairman Gary Gensler answered a series of questions on cryptocurrency and digital asset regulation. His statements begin to shed some light on Chairman Gensler’s official approach to regulating digital asset securities. …
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