Blockchain Legal Resource

As part of its ongoing effort to supervise broker-dealers conducting transactions in digital assets, FINRA recently issued Notice 20-23. The Notice encourages FINRA members to continue to keep FINRA updated on a firm’s activities relating to digital assets that have not been previously disclosed.

As we previously reported, for over a year the New York Attorney General has been seeking to enforce an investigative subpoena under New York’s expansive Martin Act against cryptocurrency exchange Bitfinex and its affiliated companies that issue the Tether stablecoin. Bitfinex and its affiliates have raised a number of procedural challenges to the NYAG’s authority to conduct its investigation.  In a case addressing important issues about the scope of the NYAG’s investigative authority over cryptocurrency businesses, a New York appellate court on July 9, 2020, rejected Bitfinex’s challenges and authorized the NYAG investigation to proceed.

On June 30, 2020, the full Senate Committee on Banking, Housing, and Urban Affairs held a virtual hearing entitled “The Digitization of Money and Payments.” The hearing focused on stablecoins and the prospects for a US central bank digital currency, or CBDC.

On June 24, 2020, the New York Department of Financial Services (DFS) announced a series of five initiatives involving virtual currency. The announcement was timed to coincide with the five-year anniversary of the launch of New York’s BitLicense for operators of certain virtual currency businesses.

As recently report on the Hunton Privacy & Information Security Law Blog, the European Commission (“the Commission”) submitted its first report on the evaluation and review of the EU General Data Protection Regulation (“GDPR”) to the European Parliament and Council. The report is required under Article 97 of the GDPR and will be produced at four year intervals going forward.

Last week, the Office of the Comptroller of Currency (the OCC), the primary federal regulator of national banks, issued an advanced notice of proposed rulemaking relating to the regulation of digital activities in banking, and in particular their activities involving cryptocurrency and distributed ledger technology.  The OCC is soliciting public feedback on how national banks and their customers are currently utilizing new digital technologies to inform future updates to OCC regulations and allow banks to better harness new technologies and innovations.  The OCC has requested public feedback by August 3, 2020.

On May 29, 2020, the Digital Dollar Project, an organization seeking to advance the development of a United States central bank digital currency (CBDC), published a detailed white paper entitled “Exploring a US CBDC.”  The white paper posits that if the US dollar is to remain the world’s primary reserve currency, it cannot remain an analog instrument and unit of account for assets increasingly denominated as digital tokens. Instead, the white paper reasons that the dollar must itself become a digital tokenized currency that measures, supports, and transacts with other digital assets.

Recently, staff of the US Senate’s Permanent Subcommittee on Investigations prepared a memorandum for subcommittee members in advance of its April 30, 2020 “Roundtable on Continuity of Senate Operations and Remote Voting in Times of Crisis.” The memo provides a description of Senate proposals to allow senators to participate and vote remotely during crises such as the ongoing COVID-19 pandemic, with an emphasis on potential technological solutions such as blockchain.

On March 28, 2020, the Commodity Futures Trading Commission (CFTC) issued final interpretive guidance (Guidance) clarifying its position with respect to retail commodity transactions and the “actual delivery” exception in the context of digital assets.

On April 14, 2020, the Financial Stability Board (FSB) issued a consultative paper entitled “Addressing the Regulatory, Supervisory and Oversight Challenges Raised by ‘Global Stablecoin’ Arrangements.” The paper considers various risks and vulnerabilities of global stablecoins, or GSCs, which are defined to include a crypto-asset that aims to maintain a stable value relative to a specified asset, or a pool or basket of assets, in each case with a potential reach and adoption across multiple jurisdictions and the potential to achieve substantial volume. The white paper then surveys existing regulatory, supervisory and oversight challenges, particularly in the cross-border context; contemplates the role of international standard setters in GSC governance; and makes high-level recommendations for regulatory, supervisory and oversight responses.