Blockchain Legal Resource

In an investor alert issued on January 14, 2020, staff in the Securities and Exchange Commission’s Office of Investor Education and Advocacy warned investors in initial exchange offerings (IEOs) to “use caution before investing  . . . through online trading platforms.”  According to the SEC staff, “Claims of new technologies and financial products, such as those associated with digital asset offerings, and claims that IEOs are vetted by trading platforms, can be used improperly to entice investors with the false promise of high returns in a new investment space.”

As reported last week on our Privacy and Information Security Law Blog, 2019 was the “Year of the CCPA” as companies around the world worked tirelessly to comply with the California Consumer Privacy Act of 2018.

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In a recent op-ed, Gita Gopinath, the IMF’s chief economist, posited that “digital currencies will not displace the dominant dollar.” In particular, the dollar’s status is supported by the “institutions, rule of law, and credible investor protection” that the United States provides. She also expressed her view that a synthetic hegemonic currency—a digital basket of reserve currencies recently proposed by outgoing Bank of England governor Mark Carney—faces steep obstacles to implementation. While the world would benefit from a greater role for the euro and the renminbi, Gopinath suggests that their institutions require greater development. Instead, the US may be developing an advantage in making the dollar the dominant digital currency through its efforts to combat money laundering and terrorism.

On December 10, 2019, FinCEN Director Kenneth Blanco delivered prepared remarks to a banking conference held in Washington, DC. Among topics he discussed were trends in suspicious activity reporting (SARs) since FinCEN published updated guidance on convertible virtual currency (CVC) in May 2019.

On December 11, 2019, the New York Department of Financial Services (DFS) published proposed guidance regarding adoption or listing of virtual currency by holders of a BitLicense. Specifically, under the proposed guidance, DFS seeks comment regarding two proposed changes affecting coin listings, both of which are intended to streamline and expedite the process.

On December 10, 2019, the Swiss Financial Market Supervisory Authority (FINMA) published its inaugural report on market risk in the Swiss economy. The report provides an overview of what FINMA believes are the most important risks currently facing Swiss supervised institutions and describes the resulting focus of its supervisory activity.

At a mutual fund industry conference held on December 3, 2019, Dalia Blass, director of the Securities and Exchange Commission’s Division of Investment Management, previewed a new structure for registered mutual funds seeking to invest substantially in digital assets and related investments.

In particular, Director Blass indicated that an unnamed registered closed-end interval fund with a bitcoin futures strategy is preparing to launch. As a result of recent industry feedback and engagement, and in response to issues the SEC staff previously identified:

• The fund expects to ...

In a television interview on November 19, 2019, CFTC Chairman Heath Tarbert discussed digital assets and the importance of U.S. leadership in this space. Notably, he stated:

“I want the United States to lead, particularly in the blockchain technology that underlies digital assets… [U]ltimately I could see it overtaking the internet or being effectively parallel to the internet in using a variety of different kinds of transactions, not just the financial system, but in other types of transactions as well… I think whoever ends up leading in this technology will end up writing ...

The Federal Reserve Board’s most recent semi-annual Financial Stability Report, issued November 15, 2019, includes a lengthy discussion of potential systemic risks posed by stablecoins. In the report, the Fed observed that innovations fostering faster, cheaper and more inclusive payments could complement existing payment systems and improve consumer welfare if appropriately designed and regulated. But the Fed also warned that the emergence of global stablecoin payment networks introduces important challenges and risks related to financial stability, monetary policy, money laundering and terrorist financing, and consumer and investor protection.

The United Kingdom tax authority, HM Revenue & Customs (HMRC), has issued revised guidance regarding the tax treatment of cryptocurrency.

Separate guidance has been published for individuals on the one hand, and businesses on the other.

The revised guidance represents more of an elaboration of the basic principles set out in prior guidance than any significant change in HMRC’s approach to the taxation of the receipt and disposal of cryptoassets.