On March 24, the Commodity Futures Trading Commission (“CFTC”) released its Final Interpretive Guidance on Actual Delivery for Digital Assets (“Final Interpretation”), addressing longstanding questions regarding which digital asset transactions could be deemed “retail commodity transactions” under the Commodity Exchange Act (“CEA”). The Final Interpretation comes two years after the CFTC issued proposed interpretive guidance (“Proposed Interpretation”).…

Cleary FinTech Update

From the Expected to the Surprises: Highlights of SEC OCIE’s 2020 Priorities

By Richard S. Lincer, Robin M. Bergen & Zachary Baum

January 10, 2020

On January 7, 2020, the U.S. Securities and Exchange Commission (“SEC”) Office of Compliance Inspections and Examinations (“OCIE”) released its 2020 Examination Priorities (“2020 Priorities”). While at first blush the themes appear consistent with and predictable from their 2019 priorities, on closer read OCIE has provided some new insights and some unexpected focus areas. The themes for the 2020 Priorities are: retail investors, information security, financial technology (“Fintech”) and innovation (including digital assets and electronic…

Cleary FinTech Update

Leaders of the SEC, CFTC, and FinCEN Issue Joint Statement Reminding Market Participants of Their AML/CFT Obligations for Digital Asset Activities

By Michael H. Krimminger, Alexis Collins & Graham Bannon

October 21, 2019

On October 11, 2019, the leaders of the Commodity Futures Trading Commission, Financial Crimes Enforcement Network, and Securities and Exchange Commission issued a joint statement to remind businesses that engage in digital asset activities of their anti-money laundering (“AML”) and countering the financing of terrorism (“CFT”) obligations under the Bank Secrecy Act (“BSA”). As market participants increasingly become involved with digital assets and related activities or services, the agencies clarified that their regulatory treatment is…

Cleary FinTech Update

SEC Files First Suit Against Alleged Unregistered Broker-Dealer Operating in Digital Asset Markets

By Michael H. Krimminger, Katherine Mooney Carroll, Alexis Collins, Carl F. Emigholz & Jim Wintering

October 10, 2019

On September 18, 2019, the Securities and Exchange Commission (“SEC”) filed its first civil suit alleging violations of broker-dealer registration requirements in U.S. digital asset markets. In a case filed in the U.S. District Court for the Central District of California, the SEC alleged that Defendants ICOBox and its founder, Nikolay Evdokimov, illegally conducted an unregistered public securities offering for their 2017 initial coin offering (“ICO”), and have operated an unregistered brokerage service facilitating the…

Cleary FinTech Update

SEC Provides Second No-Action Letter in the Digital Asset Space

By Colin D. Lloyd & John Lightbourne

July 31, 2019

On July 25, 2019, staff of the Securities and Exchange Commission (“SEC”) granted its second no-action letter in the digital asset space to Pocketful of Quarters, Inc. (“POQ”), permitting POQ to sell digital tokens (“Quarters”) recorded on the Ethereum blockchain without satisfying registration requirements under the Securities Act of 1933 and the Securities Exchange Act of 1934 (the “Acts”). Like the SEC’s prior no-action letter to TurnKey Jet, Inc. (“TKJ”), which permitted TKJ to sell…

Cleary FinTech Update

Are Cryptoassets Property Under English Law?

By Ferdisha Snagg & Anne Lim

July 19, 2019

In May 2019, the UK Jurisdiction Taskforce (the “UKJT”) of the LawTech Delivery Panel published its public consultation paper on the status of cryptoassets and distributed ledger technology, as well as the enforceability of smart contracts, under English private law. While much of the literature around cryptoassets in the legal context has been centred on their regulation, the UKJT’s consultation paper focuses on the legal characterization of these instruments themselves. In this article, we consider…

Cleary FinTech Update

Federal District Court Rules OCC Lacks Authority to Issue FinTech Charters

By Michael H. Krimminger, Patrick Fuller & John Lightbourne

May 9, 2019

On May 2, 2019, a court in the Southern District of New York (“SDNY”) held that the Office of the Comptroller of the Currency (“OCC”) lacked the statutory authority to charter nondepository special purpose national banks (the so-called “FinTech Charter”). In denying, with one exception, the OCC’s motions to dismiss claims by New York’s Department of Financial Services (“DFS”), the Court held that the OCC could not charter a nondepository “national bank” because the National…

Cleary FinTech Update

France’s Parliament Adopts an Innovative New Framework for Approving Initial Coin Offerings

By Mark A. Adams & Jeanne Theuret

April 25, 2019

On April 11, 2019, the French parliament adopted a law (the “Loi Pacte”or “Law”)[1] that establishes a new regulatory framework for initial coin offerings (“ICOs”) of blockchain based tokens by entities established or registered in France. At the heart of the Law’s ICO provisions is an innovative framework that will allow issuers to request an optional visa from the French Financial Markets Authority (the “AMF”) prior to undertaking an ICO. ICOs of tokens that…

Cleary FinTech Update

SEC Expands on Its Digital Asset Guidance: At Inception, (Nearly) Every New Token Is a Security

By Colin D. Lloyd, Pamela L. Marcogliese, Michael H. Krimminger, Giovanni P. Prezioso, Zachary Baum & Jim Wintering

April 5, 2019

On April 3, 2019, staff of the Securities and Exchange Commission released (1) a framework providing principles for analyzing whether a digital asset constitutes an investment contract, and thus a security, as defined in SEC v. W.J. Howey Co. and (2) a no-action letter permitting TurnKey Jet, Inc., without satisfying registration requirements under the Securities Act of 1933 and the Securities Exchange Act of 1934, to offer and sell “tokenized” cards that are recorded on a permissioned…

Cleary FinTech Update

The Conference of State Banking Supervisors Seeks to Improve Consistency of FinTech Regulation, but Questions Remain

By Michael H. Krimminger, Patrick Fuller & John Lightbourne

March 22, 2019

The United States offers an innovative and diverse marketplace along with a sound infrastructure for new cryptocurrency and digital asset businesses. However, the U.S. regulatory framework for digital asset businesses creates significant barriers to innovation and risks frittering away the potential benefits of the U.S. markets’ creativity. One of the chief challenges for today’s cryptocurrency businesses, especially those offering exchange, trading, or custody services, is the fragmented and inconsistent state law framework currently applied to…

Cleary FinTech Update

The Latest Insights Into Innovation in Financial Services

Blog Authors

CFTC Issues Final Interpretive Guidance on Actual Delivery for Digital Assets

From the Expected to the Surprises: Highlights of SEC OCIE’s 2020 Priorities

Leaders of the SEC, CFTC, and FinCEN Issue Joint Statement Reminding Market Participants of Their AML/CFT Obligations for Digital Asset Activities

SEC Files First Suit Against Alleged Unregistered Broker-Dealer Operating in Digital Asset Markets

SEC Provides Second No-Action Letter in the Digital Asset Space

Are Cryptoassets Property Under English Law?

Federal District Court Rules OCC Lacks Authority to Issue FinTech Charters

France’s Parliament Adopts an Innovative New Framework for Approving Initial Coin Offerings

SEC Expands on Its Digital Asset Guidance: At Inception, (Nearly) Every New Token Is a Security

The Conference of State Banking Supervisors Seeks to Improve Consistency of FinTech Regulation, but Questions Remain

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