Blockchain Legal Resource

At the conclusion of its February meeting in Riyadh, the Group of Twenty (G20) Finance Ministers and Central Bank Governors issued a communiqué discussing a wide range of topics, including digital assets and stablecoins. The G20 reiterated its view that technological innovations can deliver significant benefits to the financial system and the broader economy. It remains vigilant to potential risks arising from financial innovations, including those risks related to financial stability, consumer and investor protection, anti-money laundering and countering the financing ...

As recently reported on the Hunton Privacy & Information Security Law Blog, the European Commission released a suite of documents including its White Paper on Artificial Intelligence and two communications—its European strategy for data and a Digital Strategy document.

The materials note that decentralized digital technologies such as blockchain offer a further possibility for both individuals and companies to manage data flows and usage, based on individual free choice and self-determination. Such technologies will make dynamic data portability in real time possible ...

As has been widely reported, SEC Commissioner Hester Peirce (aka “Crypto Mom”) recently delivered a thoughtful speech entitled “Running on Empty: A Proposal to Fill the Gap Between Regulation and Decentralization,” including with it a model rule on digital token sales. The model rule has made waves in the crypto community because it proposes a three-year safe harbor from SEC registration while a development team builds out a functional, decentralized network.

Most retailers have yet to fully embrace blockchain technology. Perhaps for good reason. Applying new technology, particularly that aimed at changing legacy systems, comes with certain risks. That being said, cryptocurrencies and blockchain have the potential to transform retail and commercial real estate. As previously shared by the Hunton Retail Industry Law Blog, blockchain can be used to streamline inventory management, administer consumer loyalty programs and authenticate high-value assets or the supply chain, generally. Blockchain can also be used more simply to boost consumer sales or process tenant rent payments. Shifting away from the consumer end of retail, below are some novel ways blockchain technology, specifically tokenization, can modernize real estate acquisitions, dispositions and financing.

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.

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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.”