On October 9th, the IRS released a revenue procedure ruling and related FAQ, clarifying tax treatment related to cryptocurrency in certain instances. The ruling focused on tax treatment of hard forks and airdrops, and provided that in the event of a “hard fork”—where a cryptocurrency’s blockchain protocol is changed, or split, creating two distinct and incompatible versions of the underlying software—no taxable income is created, so long as no new cryptocurrency is received. In…

The method by which cryptocurrency and digital asset companies issue their blockchain-based tokens into the market has evolved, pushed along by regulatory developments and technological advancements.  We have observed the popularity ebb-and-flow of direct token sales, Simple Agreements for Tokens (‘SAFTs’), genesis tokens convertible into principal tokens, and gifted distributions.  This article summarizes a different method for issuing initial stakes of tokens and strengthening the health and distribution of blockchain networks—the “Node Agreement”.  Over the…

On July 26, 2019, the Internal Revenue Service (“IRS”) published a release announcing that it has begun to send notices to virtual currency traders that potentially failed to: (i) report income and pay the resulting tax from virtual currency transactions; or (ii) properly report their virtual currency transactions. In its release, the IRS noted that, by the end of August 2019, more than 10,000 notices will be issued to relevant taxpayers, the names of whom…

On Apr. 11, 2019, the plan d’action pour la croissance et la transformation des entreprises (Action Plan for Business Growth and Transformation act), also known as Loi PACTE, has introduced in French law the possibility for issuers of initial coin offering (ICOs) to apply for an optional visa from the Autorité des marchés financiers (AMF – French market authority). This new framework applies to public token offerings that are not subject to another legal regime,…

Last week, Northeast Bank became the fourth banking organization in two years to eliminate its holding company. Previously, ZB, N.A. (now Zions Bancorporation, N.A.) (September 2018), BancorpSouth Bank (October 2017), and Bank of the Ozarks (June 2017) also eliminated their holding companies. All of the transactions were motivated, at least in part, by the desire to improve efficiency by eliminating redundant corporate infrastructure and activities, as well as the associated supervision and oversight of the…

On May 9, 2019, Commissioner Hester Peirce of the U.S. Securities and Exchange Commission (“SEC”) expressed concern that the SEC is moving too slowly in providing meaningful guidance for the digital token industry. Commissioner Peirce acknowledged that the SEC has provided some direction to date by: (1) issuing the DAO Investigative Report in 2017; [1] (2) bringing a handful of enforcement actions where token offerings were deemed to be securities issuances without registration or an…

Goodwin will be out in full force at Consensus 2019 taking place next week in New York. We are sponsoring an informative all-female panel featuring Goodwin Partner Meghan Spillane and Counsel Tami Goldberg, as well as guest speakers from Coinbase and the SEC’s Division of Corporation Finance, discussing engaging with the SEC with regards to digital assets. The SEC has historically accepted requests from companies to provide confirmation that a yet-to-be-launched product or program…