On July 8, 2019, the SEC’s Division of Trading and Markets and FINRA’s Office of General Counsel issued a Joint Statement on Broker-Dealer Custody of Digital Asset Securities. The Joint Statement discusses several provisions of the federal securities laws applicable to registered broker-dealers that may be implicated when such entities custody digital asset securities.
Continue Reading SEC and FINRA Staffs Release Guidance on Custody of Digital Asset Securities

As this short video explains, the “initial exchange offering,” or IEO, is the latest innovation in the offer and sale of cryptocurrencies. By partnering with a crypto exchange to aid in marketing and listing efforts, issuers engaging in an IEO hope to obtain better visibility and liquidity for their products. But like the ICOs they seek to replace, IEOs raise a host of potential issues under the US federal securities laws.
Continue Reading The Initial Exchange Offering

In a case being closely watched by the crypto community, a California federal judge reversed his earlier decision and, on reconsideration, issued a preliminary injunction against ICO issuer Blockvest LLC. Although the SEC has a high success rate in litigated cases, its action against Blockvest was notable because the judge initially declined to grant the SEC’s request for a preliminary injunction, then ruling that “at this stage, without full discovery and disputed issues of material facts, the Court cannot make a determination whether the BLV token offered to the 32 test investors was a ‘security.’” After reviewing new evidence, the judge subsequently reversed his position and found that Blockvest had indeed issued a security.
Continue Reading On Reconsideration, SEC Obtains Preliminary Injunction Against Blockvest ICO

At a recent securities regulation conference, Bill Hinman, Director of the SEC’s Division of Corporation Finance, indicated that the agency intends to release “plain English” guidance around the issue of whether an ICO is a security. The idea behind the plain English guidance appears to be to consolidate the SEC staff’s views into a single “how to” document for use by the lay person.
Continue Reading SEC Plans “Plain English” ICO Guidance

State and provincial securities regulators across the US and Canada have been actively policing the marketplace for ICOs and security token offerings, supplementing efforts at the federal level undertaken by the SEC. Colorado and North Dakota are among the latest states to announce enforcement actions in the crypto space.
Continue Reading Colorado and North Dakota Announce ICO Enforcement Actions

On November 8, 2018, the SEC announced settled charges against an unlicensed digital token exchange. It represents the SEC’s first enforcement action based on findings that such a platform operated as an unregistered national securities exchange. This action follows first-of-their kind enforcement actions that the SEC brought in September against an unregistered broker-dealer and an unregistered investment company that each transacted in digital securities.
Continue Reading SEC Brings First Enforcement Action Against Unregistered Token Exchange

The SEC’s Division of Enforcement (Division) released its latest Annual Report (Report) on November 2, 2018. The fiscal year that ended September 30, 2018, was a busy one for the SEC in the crypto and distributed ledger technology space, and the Report includes a discussion of the SEC’s initiatives on this front.
Continue Reading SEC Annual Enforcement Report Highlights Crypto and DLT Cases

A recent bipartisan letter from Members of Congress seeks clarification from SEC Chairman Jay Clayton as to the status of digital tokens and cryptocurrencies under the federal securities laws. The signatories expressed their view that not all digital tokens should be deemed securities, and voiced their concern that the SEC should not use its enforcement mechanism alone to craft policy on this issue.
Continue Reading Members of Congress Request SEC Guidance on Crypto Assets