Blockchain Legal Resource

On January 1, the Blockchain Technology Act went into effect in the state of Illinois, creating a statewide framework for the use of blockchain technology and blockchain based contracts, or “smart contracts.” Similar to other recent state legislation addressing the use of blockchain and smart contracts, the Act recognizes the validity of smart contracts and blockchain based records and signatures in commerce. The legislation also prevents smart contracts both from being denied legal effect and from being excluded as evidence in a legal proceeding solely because a blockchain was used to create, store or verify the contract.

As reported last week on the Hunton Insurance Recovery Blog, crypto-asset losses continue to rise and the industry is taking steps to protect clients and investors through insurance. Crypto-exchange and custody provider, Gemini Trust Company, LLC (“Gemini”), recently launched its own captive insurance provider, Nakamoto, Ltd. Captive insurance is an alternative to self-insurance whereby a company creates a licensed insurance company to provide coverage for itself.

Continue Reading

In connection with its annual meeting in Davos, Switzerland, on January 24, 2020, the World Economic Forum announced the creation of a Global Consortium for Digital Currency Governance. The initiative is touted as the first of its kind “to bring together leading companies, financial institutions, government representatives, technical experts, academics, international organizations, NGOs and members of the Forum’s communities on a global level.” The consortium will focus its efforts on developing solutions for what it describes as a fragmented regulatory system ...

In 2019, Hunton Andrews Kurth LLP’s structured finance and securitization team closed a number of substantial transactions, developed novel structures for our clients and advised on important tax, regulatory and other industry developments, including emerging uses of blockchain solutions.

On January 16, 2020, Reps. Suzan DelBene (D-Washington) and David Schweikert (R-Arizona) introduced H.R. 5635, the Virtual Currency Tax Fairness Act of 2020. Under current IRS guidance, taxpayers who sell virtual currency must recognize any capital gain or loss on the sale, subject to any limitations on the deductibility of capital losses. Taxpayers can also recognize gains due to fluctuations in exchange rates between virtual currencies and fiat currencies. H.R. 5635 would provide some relief from this tax treatment to encourage small consumer transactions in virtual ...

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.

Continue Reading

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.