Jacob S. Farber

Latest Articles

On Monday, FinCEN issued two advisory rulings responding to requests for clarification regarding the money transmitter status of two virtual currency companies.  While the advisory rulings are technically limited to only the requesting companies, they strongly suggest that FinCEN considers both virtual currency payment processors and virtual currency exchange platforms to be money transmitters.  In practical terms, many virtual currency businesses that previously have argued that they are exempt from FinCEN regulations will now have…
Please join us for a webinar addressing recently-proposed regulations for virtual currency companies proposed by the New York Department of Financial Services and how these proposed regulations might impact not only companies operating in New York but also companies dealing with New York-based customers and business partners.…
At its public meeting today, the Federal Election Commission (FEC) voted unanimously to allow Make Your Laws PAC, a political action committee, to accept contributions of $100 or less in the form of bitcoins.  This is the third time the FEC has considered the issue, after deadlocking on a prior request filed last year by a different PAC, and then again on Make Your Laws’ request at its last meeting. Previously, the Commission’s three…
The Federal Election Commission has, for the second time, postponed ruling on whether  political candidates and PACs can accept bitcoins as political contributions, and if so, how they should be treated by the recipient.  During its open meeting yesterday, the FEC debated two different draft opinions addressing the request for an advisory opinion approving bitcoin contributions submitted in February by Make Your Laws PAC.  The FEC’s six commissioners, who are evenly divided between the two…
On April 2, the Small Business Committee of the House of Representatives held a hearing examining the benefits and risks associated with Bitcoin for small businesses. Surprisingly given the forum, the panel of speakers did not include a single small business. Rather, the speakers were comprised primarily of researchers and academics such as Jerry Brito of the Mercatus Center and Mark Williams of Boston University.…
The IRS issued Notice 2014-21 yesterday, which describes how the IRS will apply U.S. tax principles to transactions involving virtual currency.  The GAO had previously issued a report on virtual economies and currencies, calling for additional IRS guidance on the basic tax reporting requirements applicable to virtual currencies.…
The Washington State Department of Financial Institutions (“DFI”) issued a consumer alert warning of the risks of holding virtual currencies for investment or as a currency.  The Washington DFI specifically called out virtual currency’s volatility, lack of backing or guarantee, connection to criminal activity and potential tax repercussions.  This warning is the Washington DFI’s second announcement on virtual currencies following its earlier determination that it interprets Washington law to include digital or virtual currency in…
On March 10, the Securities Commissioner of the State of Texas issued an emergency order against Balanced Energy, LLC (“BE”), ordering it to immediately cease and desist its sale of working interests in oil wells (“C&D”). The primary basis for the C&D appeared to be that the working interests constituted unregistered securities, and that by offering them for sale without a qualified exemption, BE was violating both state and federal securities laws. However, the C&D…
On March 11, the New York State Department of Financial Services issued an Order announcing that that it “will consider formal proposals and applications in connection with the establishment of regulated virtual currency exchanges operating in New York.”  While the Order itself is silent on timing, an accompanying press release makes clear that the NYDFS will begin accepting applications from exchanges “immediately.”  The press release also makes clear that while exchanges can begin submitting applications…
This morning Superintendent Benjamin Lawsky of the New York Department of Financial Services (“DFS”) released a notice detailing the schedule and lineup of the virtual currency hearings he scheduled for next week (January 28th and 29th).  The hearings will be divided into “panels” comprised of investors, academics, law enforcement, regulatory authorities, and crypto currency entrepreneurs.  Some well-known investors (Barry Silbert, Jeremy Liew, Fred Wilson, and Cameron and Tyler Winklevoss) will kick off the hearings on…