On February 26, 2020, the Security and Exchange Commission’s (“SEC”) Division of Examinations (the “Division”) published a Risk Alert, “The Division of Examinations’ Continued Focus on Digital Asset Securities.” In the Risk Alert, the Division offered insight into its current examination focus with respect to the activities of market participants, including investment advisers, concerning digital assets that are securities (“Digital Asset Securities”) and distributed ledger technologies. The Alert outlines the observations of the Division,…

Late last year, the SEC filed a litigated action in the U.S. District Court for the Southern District of New York against Ripple Labs Inc. and two of its executive officers (collectively, “Ripple”), alleging that Ripple raised over $1.3 billion in unregistered offerings of the digital asset known as XRP. Ripple opted not to file a motion to dismiss the complaint, and based on recent filings it appears that the parties do not believe a…

On February 1, 2021, the U.S. Securities and Exchange Commission (SEC) announced that it had brought charges against several individuals involved in an alleged scheme to induce investors to transfer more than $11 million to buy into an unregistered initial coin offering (ICO) of B2G tokens, which the SEC claimed was merely an elaborate sham. (SEC v. Krstic, No. 21-0529 (E.D.N.Y. Filed Feb. 1, 2021)). The complaint, filed in the Eastern District of…

One driver for the first widely adopted cryptocurrency Bitcoin was to create a store of value that existed outside of government control. It is therefore no surprise that attempts to regulate the rapidly developing crypto asset market have required great efforts from regulators and legislators around the world to keep apace. In this blog, we compare key drivers and results of the regulatory approach being taken in the US and UK. While the U.S. is…

The U.S. Securities and Exchange Commission (“SEC”) issued a statement in response to the Wyoming Division of Banking’s No-Action Letter on Custody of Digital Assets and Qualified Custodian Status. in October, the Wyoming Division of Banking granted Two Ocean Trust, a Wyoming-chartered public trust company, “no action” relief setting forth the first opinion by a state or federal banking regulator to permit a financial institution to act as a “qualified custodian” under the Advisers…

Before the onset of the COVID-19 pandemic, companies were already exploring the promise of blockchain to modernize certain aspects of their supply chains.  Traditional supply chains can be inefficient, data intensive and costly, often characterized by burdensome paperwork, conflicting records and delays resulting from manual reconciliation processes involving a series of transactions and document exchanges among multiple parties.  Blockchain offers potentially substantial benefits in this context, including the secure and auditable validation of transactions, automated…

Kraken recently announced that it “is the first digital asset company in U.S. history to receive a bank charter recognized under federal and state law, and will be the first regulated, U.S. bank to provide comprehensive deposit-taking, custody and fiduciary services for digital assets.” Kraken obtained a charter from the State of Wyoming to operate the world’s first special purpose depository institution (SPDI). In 2019, Wyoming enacted a law to authorize the chartering of SPDIs…