On April 14, 2023, by a 3-2 party-line vote the US Securities and Exchange Commission reopened the public comment period and provided supplemental information on amendments proposed in January 2022 to the definition of “exchange” under Rule 3b-16.
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Bank Turmoil Brings Increased Risk of Litigation and Investigations
Hunton Andrews Kurth LLP continues to assist clients and monitor developments in the financial markets arising from the liquidity challenges and market volatility currently facing the banking industry. Late Tuesday brought the first inevitable wave of lawsuits and government investigations. There will be many more in the days ahead.
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Proposed SEC Custody Rules for Crypto Assets
On February 15, 2023, by a 4-1 vote, the SEC proposed new rules regarding an investment adviser’s obligation to custody assets. Unlike the existing rules, if adopted, the new rules would apply to all crypto assets.
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CFPB Investigates Crypto Lender
On December 1, 2022, the Consumer Financial Protection Bureau (Bureau) made public an administrative order denying Nexo Financial LLC’s (Nexo) petition to modify the Bureau’s civil investigative demand.
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State Securities Regulators Oppose Federal Digital Asset Bill
In recent months, members of Congress have introduced a wide variety of bills seeking to create a new federal regulatory regime for digital assets. NASAA, which is an umbrella organization for state and provincial securities regulators in the US, Canada and Mexico, recently submitted a letter to Congress critical of one such bill that lays out a series of arguments more broadly against federal action.
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SEC and CFTC Propose Digital Asset Reporting on Form PF
On August 10, 2022, 3-2 majorities of the SEC and CFTC voted to propose amendments to Form PF reporting for certain investment advisers to private investment funds. Among the many proposed amendments to the form, the proposed rules would for the first time require covered investment advisers to report on certain digital asset investments.
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Government Brings First Cryptocurrency Insider Trading Charges
In a series of parallel actions announced on July 21, 2022, the Department of Justice (DOJ) and Securities and Exchange Commission (SEC) initiated criminal and civil charges against three defendants in the first cryptocurrency insider trading case.
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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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Designing Stablecoins: Federal Regulators Issue Statement Highlighting Key Regulatory and Supervisory Considerations
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.
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DOJ Releases Cryptocurrency Enforcement Report
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.
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