Virtual Currency Report

THE LAW OF BLOCKCHAIN SOLUTIONS AND DIGITAL CURRENCIES

U.S. Developments Regulatory Updates Texas Clarifies that Stablecoins Backed by Sovereign Currency Qualify as “Money” Under Money Transmission Statute The Texas Department of Banking recently issued a Supervisory Memorandum clarifying how its money transmission statute applies to stablecoins backed by sovereign currency. The Department reiterated—consistent with its 2014 guidance—that Texas’s money transmission statute only regulates “money” or “monetary value” and that most virtual currencies fall outside the statute’s scope. But the Department stated that stablecoins…
On Wednesday, December 12, 2018, the D.C. Bar hosted a panel to discuss current developments in the world of crypto.  Among the panelists were two senior SEC officers: Jonathan Ingram, Deputy Chief Counsel, Division of Corporation Finance, and Jennifer Leete, Assistant Director, Division of Enforcement.  Also participating on the panel was Era Anagnosti, a former senior manager in the Division of Corporation Finance of the SEC who in part oversaw the process relating to, among…
U.S. Developments Congressmen Introduce Legislation to Define “Digital Token” Under the Securities Laws On December 20, 2018, two congressmen introduced the “Token Taxonomy Act” (H.R. 7356) before the 115th Congress in an effort to define “digital token” under the federal securities laws.  H.R. 7356 was introduced by Rep. Warren Davidson (R-Ohio) and Rep. Darren Soto (D-Florida) and seeks to clarify that the Securities Act of 1933 (the “Securities Act”) and the Securities Exchange Act of…
On September 24, 2018, the French data protection authority, Commission Nationale de l’Informatique et des Libertés (CNIL), became the first data protection authority to issue written guidance on the intersection of the use of blockchain technology and the General Data Protection Regulation (GDPR).  Due to the decentralized and permanent nature of the blockchain, there is an inherent tension between blockchain technology and the GDPR, particularly with respect to data subject rights and data storage limitation…
Through their recent actions and statements, the Securities and Exchange Commission (SEC) has further clarified their position with respect to digital assets and ICOs. Following on from earlier enforcement efforts throughout 2017 and 2018, the SEC Enforcement Division settled cases with AirFox and Paragon, two issuers of unregistered securities in tokenized form, in addition to a settlement with the founder of a purported decentralized exchange, EtherDelta. The SEC Policy Divisions released a rare joint statement…
U.S. Developments SEC Remarks on International Virtual Currency Enforcement On December 5, 2018, Steven Peikin, Co-Director of the Division of Enforcement at the U.S. Securities and Exchange Commission (“SEC”), gave a speech at the IOSCO/PIFS-Harvard Law School Global Certificate Program for Regulators of Securities Markets on the topic of international cooperation in the enforcement of the US securities laws. In his remarks, Mr. Peikin described the SEC’s recent enforcement activities related to cryptoassets and initial…
On November 28, 2018, the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC), announced an action against two Iranian citizens, Ali Khorashadizadeh and Mohammad Ghorbaniyan, who facilitated the exchange of bitcoin ransom payments on behalf of Iranian malicious cyber actors.  This client update provides an overview of the OFAC action and identifies certain key issues raised by OFAC’s addition of digital currency addresses as associated information for the listings of Khorashadizadeh and Ghorbaniyan…
The following was posted on the Perkins Coie’s Asset Management ADVocate, to read the full post, please click here. 2018 Recap: Tokens, Coins, Cryptocurrencies, and Other Digital Assets under the Federal Securities Laws By Michael S. Didiuk on November 13, 2018 Posted in Compliance In this post we discuss where things stand regarding the treatment of tokens, coins, cryptocurrencies, and other digital assets under the federal securities laws.  This post reviews significant enforcement…
U.S. Developments Regulation Upcoming Bitcoin exchange-traded funds (“ETF”) Decisions On January 4, 2018, NYSE Arca filed a proposed rule change to list 9 Bitcoin ETFs. Subsequently, the time for the Security Exchange Commission (“SEC”) to approve or disapprove was pushed back in March, April, July, and September. On August 22, 2018, the SEC disapproved the listings and the rule change. The following day, the SEC notified NYSE that it would be reviewing the ETFs pursuant…
The following was posted on the Perkins Coie’s Asset Management ADVocate, to read the full post, please click here. EtherDelta Founder Sanctioned for Operating an Unregistered Securities Exchange By Michael S. Didiuk and Conor O’Hanlon on November 9, 2018 Posted in Compliance In this post we discuss how on November 8, the SEC announced an enforcement action charging the founder of a digital “token” trading platform for operating as an unregistered national securities…