The Wyoming Division of Banking issued a No-Action Letter (NAL) in October 2020 in response to a request from a Wyoming-chartered public trust company seeking the Division of Banking’s position on the ability of the company to custody digital assets as well as hold itself out as a “qualified custodian.” The NAL prompted the Staff of the Securities and Exchange Commission to issue a public statement seeking public comment on matters concerning the definition of…

Wyoming recently awarded its second special-purpose depository institution (SPDI) charter to Avanti Bank. Kraken was the first institution to receive the newly created SPDI charter in September. As Wyoming had likely hoped when it passed a flurry of blockchain legislation, it appears that it is starting to take hold as a digital-asset-friendly banking state. The state has now chartered two new banks in less than two months; before September, the last newly chartered bank in…

Recently, a group of central bankers issued a report entitled “Central Bank Digital Currencies:  Foundational Principles and Core Features.”  Released on October 9, 2020, the report lays out common foundational principles and core features of a central bank digital currency, or CBDC.  It is a joint product of the Bank of Canada, European Central Bank, Bank of Japan, Swedish Riksbank, Swiss National Bank, Bank of England, the US Federal Reserve and the Bank for International…

PayPal released a press release on Wednesday, October 21, 2020, announcing the launch of a new cryptocurrency service that will enable its users to buy, hold and sell cryptocurrencies. The press release comes on the heels of the New York Department of Financial Services (NYDFS) announcement that PayPal was granted the state’s first “conditional BitLicense.”…

On Monday, October 19, the Financial Crimes Enforcement Network (FinCEN) announced a $60 million civil money penalty against Larry Dean Harmon, the founder, administrator and primary operator of unlicensed convertible virtual currency “mixers” for alleged violations of the Bank Secrecy Act (BSA) and its implementing regulations. Mr. Harmon allegedly operated and administered two separate convertible currencies from 2014 to 2020 without completing required registration with FinCEN.…

On October 8, 2020, the Department of Justice’s Cyber-Digital Task Force released an 83-page report entitled “Cryptocurrency: An Enforcement Framework.” In an accompanying press release, Attorney General Barr remarked, “Cryptocurrency is a technology that could fundamentally transform how human beings interact, and how we organize society.  Ensuring that use of this technology is safe, and does not imperil our public safety or our national security, is vitally important to America and its allies.” The…

In a closely-watched case, on September 30, 2020, federal judge Alvin Hellerstein ruled that Kik’s $100 million two-phase coin offering resulted in a sale of unregistered securities in violation of Section 5 of the US Securities Act of 1933.  Kik raised approximately $50 million through an initial private pre-sale effected via a Simple Agreement for Future Token, or SAFT, and the remainder through a subsequent public offering of the Kin token.  Concluding that the two-phase…