Blockchain and the Law

Smart Contracts: Best Practices

By Jeffrey Neuburger, Wai Choy & Kevin Milewski

November 12, 2019

Proskauer authored an in-depth Practice Note published by Practical Law, which details best practices for the use of smart contracts on blockchains. It discusses functional and legal considerations for both standalone smart contracts and smart contracts used in conjunction with traditional written contracts (hybrid smart contracts) and explores the extent to which smart contracts can independently be legally binding. The full text of our Practice Note is available here: Smart Contracts: Best Practices …

Blockchain and the Law

CFTC, FinCEN, and SEC Warn of Crypto AML Enforcement

By Kevin Milewski

November 7, 2019

Based on a recent regulatory statement, entities involved with cryptocurrency or digital assets should revisit their anti-money laundering and countering the financing of terrorism obligations (AML/CFT) compliance under the Bank Secrecy Act (BSA). On October 11, the leaders of the Commodity Futures Trading Commission (CFTC), the Financial Crimes Enforcement Network (FinCEN), and the Securities and Exchange Commission (SEC) issued a joint statement (the “Joint Statement”) regarding the application of the BSA to activities involving digital…

Blockchain and the Law

SEC Attempts to Halt Telegram’s Planned Token Distribution

By Allen S. Li & Seok Whee (Jason) Nam

October 31, 2019

On October 11, 2019, the SEC filed an emergency action to stop Telegram (Telegram Group Inc. and its wholly owned subsidiary TON Issuer Inc.) from continuing its offering of tokens. Telegram raised approximately $1.7 billion in early 2018 through the sale of its tokens, dubbed “Grams”, which it originally committed to deliver to purchasers from the sale by the end of this month. The SEC brought the action to prevent Grams from “flood[ing] the U.S.…

Blockchain and the Law

IRS Answers Some, but Not All, Questions in Long-awaited Cryptocurrency Guidance

By Michael Fernhoff, Jeremy Naylor & Kathleen R Semanski

October 18, 2019

The first official guidance on the taxation of cryptocurrency transactions in more than five years has been issued. The guidance includes both a Revenue Ruling (Rev. Rul. 2019-24, 2019-44 I.R.B. 1) and answers to Frequently Asked Questions on Virtual Currency Transactions (the “FAQs,” together with Revenue Ruling 2019-24, the “Guidance”) was issued on October 9, 2019 by the U.S. Internal Revenue Service (the “IRS”). The Guidance provides much sought information concerning the tax…

Blockchain and the Law

CFTC Chairman States Ether is a Commodity

By Jonathan Mollod

October 11, 2019

In remarks made at the Yahoo! All Markets Summit in New York, Heath Tarbert, Chairman of the U.S. Commodity Futures Trading Commission (CFTC), said that he believed the Ether cryptocurrency was a “commodity” and should be regulated under the Commodity Exchange Act (CEA). This statement follows the agency’s December 2018 announcement that it was seeking public comment to better understand the technology, mechanics and markets for virtual currencies beyond Bitcoin, namely Ether and the Ethereum…

Blockchain and the Law

New York State Department of Financial Services Establishes New Research and Innovation Division

By Trevor Dodge

July 31, 2019

On July 23, the New York State Department of Financial Services (the “DFS”) issued a press release announcing the establishment of a new Research and Innovation Division (the “Division”) within the DFS. The Division will take on the responsibility of licensing and supervising entities engaged in “virtual currency business activity” that fall within the scope of New York’s BitLicense regime, in addition to supporting market innovation within the state’s financial services industry more generally. Newly…

Blockchain and the Law

Utah Passes the Third State-Run “Sandbox” for Innovative Financial Products and Services

By Allen S. Li

July 31, 2019

Utah’s governor recently signed into law H.B. 378, which created a sandbox program for companies providing “innovative financial products or services” in the state. The program, run by Utah’s Department of Commerce, requires companies to apply and meet certain requirements in order to participate in the sandbox. Importantly, H.B. 378 specifically includes “blockchain technology” within its scope. The Utah Sandbox Companies accepted into Utah’s sandbox are permitted to test their business models without any…

Blockchain and the Law

SEC Qualifies Blockstack and YouNow Regulation A Offerings

By Trevor Dodge & Allen S. Li

July 12, 2019

Blockstack On July 10, the Securities and Exchange Commission (the “SEC”) qualified Blockstack PBC’s (“Blockstack’s”) offering circular, enabling Blockstack to commence sales and distribution of up to $40 million worth of its Stacks Tokens (“Stacks”) under Regulation A. This marks the first time in history that the SEC has qualified a Regulation A offering of blockchain-native digital assets. We previously covered the initial public filing of Blockstack’s April 11, 2019 preliminary offering circular (which…

Blockchain and the Law

As Bitcoin’s Price Moves Dramatically, ETF Proposals Remain at a Standstill

By Emily Chan

June 28, 2019

On June 26, the price of bitcoin surged to a 12-month high of nearly $13,900 (up about 35% on the month) before losing more than $1,700 in a span of 15 minutes, then rebounding slightly and closing the day at around $12,800. All the while, retail and institutional investors seeking to gain exposure to this volatile asset class through an exchange traded product continued their wait. The Securities and Exchange Commission’s (“SEC”) evaluation of the…

Blockchain and the Law

Cover Article: Practical Law – The Journal, June/July Issue | “Supply Chain Management – Implementing Blockchain Technology”

By Jeffrey Neuburger & Wai Choy

June 18, 2019

We are happy to report that our recent in-depth Practice Note on Blockchain as applied to Supply Chain Management was selected to appear as the cover story for the June/July issue of Practical Law – The Journal. Read the full text here. …

Blockchain and the Law

Blog Authors

Smart Contracts: Best Practices

CFTC, FinCEN, and SEC Warn of Crypto AML Enforcement

SEC Attempts to Halt Telegram’s Planned Token Distribution

IRS Answers Some, but Not All, Questions in Long-awaited Cryptocurrency Guidance

CFTC Chairman States Ether is a Commodity

New York State Department of Financial Services Establishes New Research and Innovation Division

Utah Passes the Third State-Run “Sandbox” for Innovative Financial Products and Services

SEC Qualifies Blockstack and YouNow Regulation A Offerings

As Bitcoin’s Price Moves Dramatically, ETF Proposals Remain at a Standstill

Cover Article: Practical Law – The Journal, June/July Issue | “Supply Chain Management – Implementing Blockchain Technology”

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