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Why Blockchain Custody Is So Difficult—Paths Forward?” was recently posted on Perkins Coie’s Asset Management ADVocate blog. The blog post completes the analysis of the difficult question of how to comply with regulations requiring independent custody of cryptocurrency. This series focuses on the custody requirements for registered investment companies in an attempt to respond to important questions raised by the SEC’s Director of Investment Management. This installment discusses three possible approaches to trading…
In the first post on this topic, we provided a simple answer to a question posed by the Director of the SEC’s Division of Investment Management (the “Division”): To the extent a fund plans to hold cryptocurrency directly, how would it satisfy the custody requirements of the 1940 Act and relevant rules?” Our simple answer was to treat cryptocurrencies as “financial assets” under Article 8 of the Uniform Commercial Code. In the second post,…
From Uncertainty toward Regulatory Clarity: Senior SEC Officials Provide Regulatory Clarity for Digital Assets Summary is below, please click here for the full alert narrative. On June 14, 2018, the Director of the Division of Corporation Finance of the Securities and Exchange Commission delivered a speech outlining the framework used by the SEC Staff in evaluating whether a given token sale qualifies as a securities offering.  The Director clarified that a token sale may qualify…
From Uncertainty toward Regulatory Clarity: Senior SEC Officials Provide Regulatory Clarity for Digital Assets Summary is below, please click here for the full alert narrative. On June 14, 2018, the Director of the Division of Corporation Finance of the Securities and Exchange Commission delivered a speech outlining the framework used by the SEC Staff in evaluating whether a given token sale qualifies as a securities offering.  The Director clarified that a token sale may qualify…
On July 25, 2017, the Securities and Exchange Commission (“SEC”) released groundbreaking materials relating to blockchain tokens. These materials provide significant and welcome insight to the SEC’s and its staff’s thinking in this area, although they leave a number of important questions unanswered. The SEC released a detailed investigative report under Section 21(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and accompanying staff statement concluding that the 2016 token sale by The…
Read our new article in The Investment Lawyer to learn more about the legal and regulatory implications of emerging technologies, including blockchain and digital ledger technology, investing in fintech companies, robo-advisers and algorithms, and cybersecurity.…
The Securities and Exchange Commission announced today that it would deny a proposed rule change that would have permitted the first exchange traded fund to track digital currency.  If granted it would have permitted the Bats BZX Exchange, Inc. (“Exchange”) to list and trade shares issued by the Winklevoss Bitcoin Trust on the Exchange.  The SEC found that the proposed rule change was inconsistent with the Securities Exchange Act of 1934 as the Exchange would be…
Fund groups face disruptive developments, as advances in financial technology, often called fintech, continue at an ever more rapid pace. Even as new efficiencies and opportunities blossom, regulators have pushed financial firms to recognize the dangers of technological failures. To help prepare investment management firms for changes ushered in by fintech, we offer our primer on the latest key developments and potential risks.  Read our new article in The Investment Lawyer to learn more about the…
Yesterday, the SEC announced a number of political contribution-related settlements with investment advisers, both registered and exempt.  As background, Rule 206(4)-5 under the Investment Advisers Act of 1940 limits the size of political contributions that certain personnel of an investment adviser may make to state and local officials, among other things.  Specifically, limits apply to contributions to officials or candidates (such as a Governor or State Treasurer) who can influence the investment decisions of public…