Federal Regulation of Virtual Currency and Digital Tokens: Preemption, Jurisdiction, and Clarity. But will States Push Back?
Latest from FinTech Update
Virtual Currencies and Digital Assets: NFA Disclosure Requirements Further Evidence of Increasing Attention from Self-Regulatory Organizations
In March of this year, the NFA issued a notice reminded futures commission merchants (“FCM”), introducing brokers (“IB”), commodity pool operators (“CPO”) and commodity trading advisors (“CTA”) that trade in, solicit or accept orders in virtual currency products (spot and derivatives) of their ongoing obligation to notify the NFA of such activities by amending the annual questionnaire (please see Reed Smith client alert here). More recently, the NFA issued an August 2018 Interpretive Notice…
Regulation A+: A Path to Market for Crypto Companies?
Most companies considering an Initial Coin Offering to U.S. purchasers have resigned themselves to the fact that their proposed token or coin offering is likely to be considered an offering of securities by the Securities and Exchange Commission (“SEC”) and must be made in compliance with U.S. securities laws. The logical next question then becomes – “what are my options?”
Traditional IPO
A traditional initial public offering (“IPO”) of equity securities usually requires extensive meetings…
Reed Smith partner applies AI techniques to develop new type of contract – a Data Contract
Click here to see a demonstration of a simplified “AI and the Law: Data Contract”: https://lnkd.in/gRNDBk2 and the Companion Software Application. This demo shows how we can access contract information stored as fields of data on the Microsoft Azure cloud. (I use a credit agreement as an example, but the same principles work for any contract.) With the increased focus on digitization of contracts in financial services, healthcare, shipping, energy, entertainment, and other industries, efforts…
Ohio Enacts Blockchain Legislation
CFPB Picks Paul Watkins to Lead Office of Innovation
On July 18, 2018, Acting Director Mick Mulvaney of the Consumer Financial Protection Bureau (“CFPB”) announced that Paul Watkins will head the CFPB’s new Office of Innovation. According to the press release, the office, which Mulvaney created to focus on consumer-friendly innovation, “will focus on creating policies to facilitate innovation, engaging with entrepreneurs and regulators, and reviewing outdated or unnecessary regulations.” Watkins previously managed the first state fintech regulatory sandbox in the United States…
Bank of England Governor backs FinTech
In a speech delivered at Mansion House on 21 June 2018, Mark Carney, the Governor of the Bank of England (BofE), made the case for a modernised financial services sector, which would be underpinned by a thriving FinTech sector, especially in the area of payments.
The remarks reinforce the BofE’s plan for FinTech in central banking, which started last year when it partnered with a range of firms to look into the functionality the…
Digital Tokens and Coins Advisories and Regulatory Proposals – CFTC and Financial Stability Board Pronouncements
CFTC Customer Advisory
On Monday, the Commodity Futures Trading Commission (“CFTC” or “Commission”) issued its fourth virtual currency customer advisory, Customer Advisory 7756-18, as part of its outreach effort to educate market participants. Titled, Use Caution When Buying Digital Coins or Tokens, the advisory warns customers of the risks of speculation of future value and fraud; it ultimately advises that the best protection is to exercise caution and to extensively research digital tokens and…
Applying Howey, Court Concludes that Centra Token Likely a Security:
While the SEC continues to target fraudulent crypto-projects, we’ve seen a marked increase in the number of class actions targeting a wider-range of ICOs.[1] The crypto-industry is watching these cases intently; awaiting the judiciary’s play in the on-going game of “Are Crypto-Tokens Securities?”. Earlier this week, United States Magistrate Judge Andrea M. Simonton (Southern District of Florida) laid an early card in Rensel v. Centra Tech, Inc.[2] Although the Report and Recommendation[3]…
CFTC Issues Guidance on Listing Virtual Currency Derivatives
Last week, the Market Oversight and Clearing and Risk Divisions of the Commodity Futures Trading Commission (“CFTC” or “Commission”) issued Staff Advisory No. 18-14 regarding virtual currency derivative product listings. The advisory serves as guidance to exchanges and clearinghouses in the context of listing derivative contracts based on virtual currency under Commission Regulations 40.2 (self-certification) or 40.3 (voluntary submission for Commission review and approval) in order to promote effectiveness and efficiency in the emerging area…