In a year-end change of course, the SEC identified the minimum steps that broker-dealers must take when acting as custodians of digital asset securities. By Stephen P. Wink, Naim Culhaci, Shaun Musuka, and Deric Behar On December 23, 2020, the US Securities and Exchange Commission (SEC) staff issued a statement (Custody of Digital Asset Securities by Special Purpose Broker-Dealers) (the Statement) outlining its position on how broker-dealers must operate when…

The paper identifies potential gaps in protections for consumers, with a focus on consumer-to-business payments via the Faster Payments System. By Christian F. McDermott, Claudia Sousa, and Alain Traill In November, Pay.UK, the retail payments authority, released a summary paper exploring the consumer protection landscape relating to disputed retail payments. The paper, titled “Consumer Protections in Payments”, was released in the context of changes in the usage of Pay.UK’s systems following recent regulatory…

In a new publication, ISDA explores the benefits of digitization and blockchain solutions for global foreign exchange derivatives markets. By Yvette D. Valdez, Adam Bruce Fovent, and Deric Behar As blockchain and distributed ledger technology (DLT) use cases continue to grow across the broad spectrum of financial markets, the International Swaps and Derivatives Association, Inc. (ISDA) is once again stepping into the crossroads of technology and derivatives with the publication of the ISDA …

A thorough dispute resolution model can help market participants navigate inevitable disputes in the blockchain network and minimize costly litigation.   By Jenny Cieplak Some of the biggest challenges in scaling blockchain solutions revolve around setting up an effective governance framework, particularly a component to manage the processes by which disputes among parties are properly settled. A new paper from the World Economic Forum (WEF) and Latham & Watkins explores forward-looking practical options for different dispute…

The no-action letter is the first to expressly permit token transfer off-platform to non-users and conversion to fiat currency by token holders. By Stephen P. Wink, Shaun Musuka, and Deric Behar As crypto prices surge, we find ourselves in the midst of another crypto wave. Given the unrelenting flow of news that accompanies such periods, it may have been easy to miss that the SEC staff recently granted no-action relief to another Ethereum-based…

The CFTC issues stringent guidelines for FCMs seeking to custody digital assets in connection with physically delivered futures contracts or swaps. By Yvette D. Valdez, Adam Bruce Fovent, and Deric Behar The US Commodity Futures Trading Commission’s (CFTC’s) Division of Swap Dealer and Intermediary Oversight (DSIO) issued CFTC Staff Letter No. 20-34 (the Advisory) on October 21, 2020, clarifying its views on the acceptance, holding, and reporting of virtual currency (e.g., bitcoin or…

Hong Kong’s Securities and Futures Commission introduces new licensing regime to regulate previously unregulated markets and restates expectations regarding security token offerings. By Simon Hawkins, Kieran Donovan, and Kenneth Y.F. Hui The second day of Hong Kong Fintech Week again brought together regulators and market participants from across the fintech industry for a range of insightful discussions. Ashley Alder, Chief Executive Officer of the Securities and Futures Commission (SFC), delivered the day’s biggest…