Steptoe Blockchain Blog

Last week, U.S. District Judge Gonzalo Curiel of the Southern District of California reversed his previous November 2018 order and issued a preliminary injunction against Blockvest LLC (Blockvest) and its founder, Reginald Buddy Ringgold, III, after finding that the Blockvest token (BLV token) met the definition of an investment contract under the Howey test and was therefore a security.  While we are keen to see an example of a digital asset that falls outside the…
The Global Blockchain Business Council (GBBC) recently published its 2019 Annual Report, “Beyond the Hype: Building Blockchains for Real World.” The report provides a comprehensive update on the global regulatory landscape surrounding blockchain technology along with an overview of some of the blockchain solutions being built by GBBC members. Steptoe authored an overall insights piece, titled “Regulation in the US: Where are We, and Where are We Going?,” which looks at where the United States…
Last month the Texas Department of Banking published an updated supervisory memorandum discussing the application of the state’s money transmitter law to digital assets.  Nearly every state has a money transmitter statute regulating businesses engaged in the transfer of money within that state, but states vary considerably with respect to how their laws apply to digital assets.  A number of states, including Texas, have taken the position that their money transmitter laws apply only to…
Have you ever wondered how blockchains can be considered secure even though hacks of cryptocurrency exchanges routinely make headlines?  Or whether distributing a permanent ledger to every participant in a network might run afoul of privacy laws and regulations?  Data security and privacy are frequently part of the conversation about blockchain and technology in general, and they raise complicated legal issues for practitioners and clients to consider.…
Evan Abrams recently published an article on CIO Review titled “Blockchain and The Law: How a Simple Project can get Complicated Quickly.” In his article, Evan discusses a number of complex legal regimes that CIOs should consider when building enterprise blockchain applications. Companies should assess which legal regimes apply to their specific application from both a federal and state level and keep in mind the laws applying to blockchain technologies can change rapidly.…
Sanctions compliance considerations have always been an important factor for cryptocurrency companies, but a number of recent US government actions suggest regulators are increasingly focused on the intersection between digital currencies and economic sanctions.   This intensified focus highlights the importance of sanctions compliance for blockchain-related companies, particularly for those considered US persons. This increased focus has been building for a number of months.  For example, in March of 2018, President Trump issued an Executive Order
The Securities and Exchange Commission’s (SEC or Commission) November 16 announcement charging two cryptocurrency companies—CarrierEQ Inc. (d/b/a Airfox) and Paragon Coin Inc. (Paragon)—with conducting an initial coin offering (ICO) in violation of the securities registration rules should not come as a surprise to those in the industry. The SEC has repeatedly emphasized that issuers of securities—even those based on a blockchain or distributed ledger technology—must register such securities or comply with an applicable exemption from…
In a recent Client Alert, Alan Cohn, Jason Weinstein, and Meegan Brooks discuss the impact of blockchain technology in the retail industry, which will likely see more disruption in the next few years than it has seen in decades. What role will blockchain technology play in that disruption? Instead of completely disrupting the retail industry, blockchain technology could be used to aid compliance with new and evolving regulations. There are three specific applications within…
On November 8, the SEC issued a settled order against Zachary Coburn, the creator of the smart contract that powers the EtherDelta decentralized exchange.  In the settled order, the Commission found that Coburn’s EtherDelta smart contract, which enabled trading of Ether against any other ERC20 token, and the EtherDelta website through which buyers and sellers of ERC20 tokens met, operated as an unregistered “exchange” in violation of Section 5 of the Exchange Act.  Without admitting…