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Category Archives: Cryptoassets

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ESG and Cryptocurrency: Considerations for Market Participants

For market participants pivoting toward ESG and digital assets, weighing the issues at the crossroads of these two megatrends is critical. By Paul A. Davies, Stuart Davis, Simon Hawkins, Nicola Higgs, Yvette D. Valdez, Thomas Vogel, Stephen P. Wink, and Deric Behar The huge rise in popularity of Bitcoin — and the growing interest by … Continue Reading

NFTs: A Beginner’s Guide to Understanding the Hottest Crypto Craze

An NFT is a special, one-of-a-kind digital asset that raises a number of novel legal questions. By Christian F. McDermott and Calum Docherty Earlier this month, a blockchain firm bought a US$95,000 print by the British street artist Banksy, only to burn it in a livestreamed video and re-sell it for US$380,000 as a virtual … Continue Reading

Creative Crypto: IP Implications of Selling Creative Works Tied to Non-Fungible Tokens

As the market heats up for art-related NFTs, buyers should be aware of limitations on their rights to use those works. By Ghaith Mahmood, Jordan Naftalis, and Veronica Ye The convergence of blockchain technology and creative intellectual property (IP) through a non-fungible token (NFT) is having a mainstream moment. Media stories abound with reports of … Continue Reading

NFTs: But Is It Art (or a Security)?

As the market for NFTs heats up, market participants should remain mindful of the regulatory implications of complex schemes. By Stephen P. Wink, Miles P. Jennings, Shaun Musuka, and Deric Behar As the current crypto boom has progressed, it seemed Decentralized Finance (DeFi) had cemented its position as the dominant new narrative of this cycle. … Continue Reading

2020 Digital Asset Regulatory Lookback (US Edition)

Regulators once again offered piecemeal guidance, while focusing on risks and enforcement. Meanwhile, innovation and institutional adoption took off. By Stephen P. Wink, Todd Beauchamp, Yvette D. Valdez, Eric S. Volkman, Adam Bruce Fovent, and Deric Behar Last year, Latham & Watkins sounded a hopeful note that 2020 would provide a clearer vision than 2019 … Continue Reading

FinCEN Looks to Rein In Cryptocurrency Transactions

A new proposal would subject financial institutions and exchanges to onerous recordkeeping and reporting requirements for certain digital currency transactions. By Miles P. Jennings, Benjamin A. Naftalis, Eric S. Volkman, Margaret Allison Upshaw, and Deric Behar In a surprise release in the waning days of the Trump administration, the Financial Crimes Enforcement Network (FinCEN) division … Continue Reading

A VCOIN for Your Thoughts: Ethereum-Based Token Wins SEC No-Action Relief

The no-action letter is the first to expressly permit token transfer off-platform to non-users and conversion to fiat currency by token holders. By Stephen P. Wink, Shaun Musuka, and Deric Behar As crypto prices surge, we find ourselves in the midst of another crypto wave. Given the unrelenting flow of news that accompanies such periods, … Continue Reading

CFTC Adds Another Building Block to its Digital Asset Framework

The CFTC issues stringent guidelines for FCMs seeking to custody digital assets in connection with physically delivered futures contracts or swaps. By Yvette D. Valdez, Adam Bruce Fovent, and Deric Behar The US Commodity Futures Trading Commission’s (CFTC’s) Division of Swap Dealer and Intermediary Oversight (DSIO) issued CFTC Staff Letter No. 20-34 (the Advisory) on … Continue Reading

Hong Kong Fintech Week 2020: SFC Announces New Crypto Regulatory Regime for Virtual Asset Exchanges

Hong Kong’s Securities and Futures Commission introduces new licensing regime to regulate previously unregulated markets and restates expectations regarding security token offerings. By Simon Hawkins, Kieran Donovan, and Kenneth Y.F. Hui The second day of Hong Kong Fintech Week again brought together regulators and market participants from across the fintech industry for a range of … Continue Reading

DOJ’s Evolving Framework for Cryptocurrency Enforcement

US Department of Justice’s sprawling report reveals regulatory enforcement priorities for cryptocurrencies and highlights multi-agency cooperation. By Susan Engel, Miles Jennings, Benjamin Naftalis, Yvette Valdez, Eric Volkman, Stephen Wink, Douglas K. Yatter, and Deric Behar On October 8, 2020, the US Attorney General’s Cyber-Digital Task Force of the Department of Justice (DOJ) published an extensive … Continue Reading

MiCA: EU Commission Publishes Comprehensive Cryptoasset Market Regulation Proposal

The proposed regulation will provide greater consumer and investor protection and lessen the risks of participating in digital finance. By Stuart Davis The EU Commission has published a proposal for a wide-ranging EU regulation covering cryptoassets and e-money tokens, both of which are currently largely unaddressed in EU financial services legislation. The draft Markets in … Continue Reading

Settlement of Digital Asset Trading Just Got Easier

SEC relief streamlines noncustodial settlement of digital asset trades, but broker-dealer custody is still off-limits. By Stephen P. Wink, Naim Culhaci, and Deric Behar On September 25, 2020, the US Securities and Exchange Commission (SEC) issued a no-action letter (the Letter) granting more leeway to registered alternative trading systems (ATSs) that settle trades involving digital … Continue Reading

Banks Can Hold Stablecoin Reserves, OCC States in Crypto-Friendly Letter

The US OCC allows banks, with certain restrictions, to hold assets in reserve for stablecoin issuers. By Alan W. Avery, Todd Beauchamp, Stephen P. Wink, Pia Naib, Loyal T. Horsley, Charles Weinstein, and Deric Behar On September 21, 2020, the US Office of the Comptroller of the Currency (OCC) issued Interpretive Letter #1172 (the Letter), … Continue Reading

From Safe Deposit Boxes to Cold Wallets, Bank Custody Evolves

The OCC greenlights bank custody of cryptoassets, opening a significant door to mainstream adoption and innovation. By Alan W. Avery, Todd Beauchamp, Yvette D. Valdez, Pia Naib, Loyal T. Horsley, Charles Weinstein, and Deric Behar On July 22, 2020, the US Office of the Comptroller of the Currency (OCC) issued Interpretive Letter #1170 (the Letter), … Continue Reading

What the CFTC Interpretation of “Actual Delivery” Means for Crypto

The long-awaited guidance clarifies the application of the “actual delivery” exception to leveraged virtual currency transactions with retail purchasers. By Yvette D. Valdez, J. Ashley Weeks, and Deric Behar Earlier this year, the US Commodity Futures Trading Commission (CFTC) approved final interpretive guidance (Guidance) concerning retail commodity transactions involving certain digital assets. The Guidance clarifies … Continue Reading

UK Government Proposes to Strengthen Protections Around Promotion of Financial Products and Cryptoassets

HM Treasury is planning significant changes to the financial promotion regime, including expanding its scope to certain cryptoassets, and amending the approval process for promotions of unauthorised firms. By Stuart Davis, Sam Maxson, and Anna Lewis-Martinez On 20 July 2020, HM Treasury published two consultation papers on a regulatory framework for approval of financial promotions … Continue Reading

SEC Greenlights Investment Fund Delivered in Security Tokens

The milestone fund structure portends a reduced role for broker-dealers, who may be sidelined by innovators unwilling to wait for regulators. By Stephen P. Wink and Deric Behar On July 6, 2020, asset management firm Arca announced that the US Securities and Exchange Commission (SEC) granted it approval under the Investment Company Act of 1940 … Continue Reading

Webcast: Stablecoins, CBDCs, and the Future of Payments

Latham fintech lawyers and key industry leaders explore the progress and potential of CBDCs, use cases for stablecoins, and the global regulatory landscape. Many central banks around the world are currently considering central bank digital currency (CBDC). According to the Bank of International Settlements’ recent survey of 66 central banks, 80% of surveyed central banks … Continue Reading

European Parliament Calls for New EU Common Framework for Cryptoassets

An ECON draft report on digital finance recommends legislative action in relation to cryptoassets and cyber resilience and a framework for digital onboarding. By Stuart Davis, Sam Maxson, and Anna Lewis-Martinez On 4 June 2020, the European Parliament’s Economic and Monetary Affairs Committee (ECON) published a draft report setting out its recommendations to the European … Continue Reading

Webcast: Tokenization and Distributed Business Models ― Recent Case Studies and Legal Insights

Latham fintech partners explore tokenization and distributed business models with guest speakers from Energy Web Foundation, ConsenSys, and The LAO. Tokenization of assets, as well as the innovation of blockchain-based distributed business models, have the potential to unlock asset liquidity, create more efficient, trustless and transparent processes, and reshape systems and entire industries by minimizing … Continue Reading

Singapore: Payment Token Derivatives – to Offer or Not to Offer?

MAS confirms regulatory approach for derivative contracts on payment tokens. By Farhana Sharmeen and Marc Jia Renn Tan On 15 May 2020, the Monetary Authority of Singapore (the MAS) issued its response to feedback about its proposed regulatory approach for derivative contracts that reference payment tokens as underlying assets (Payment Token Derivatives), confirming that it … Continue Reading

FSB Launches Consultation on Global Stablecoins

The report encourages the G20 to consider a broad set of supervisory principles when evaluating global stablecoin arrangements. By Todd Beauchamp, Stuart Davis, Christian F. McDermott, Yvette D. Valdez, Stephen P. Wink, Simon Hawkins, and Deric Behar On April 14, 2020, the G20’s Financial Stability Board (FSB) published a consultation on the regulation, supervision, and … Continue Reading

Telegram: Court Halts Grams Delivery

SEC’s motion for a preliminary injunction is granted, prohibiting delivery of Telegram tokens to purchasers. By Stephen P. Wink, Shaun Musuka, Carolina Bernal and Deric Behar On March 24, the Court in the Southern District of New York sided with the SEC and granted an injunction prohibiting Telegram Group Inc. and TON Issuer Inc. (together, Telegram) from delivering … Continue Reading

A CFTC Helping Hand: DSIO Offers to Review Digital Asset Products

Product innovation (including in pooled investment vehicles) is encouraged, but innovation must be consistent with the law. By Yvette D. Valdez, Douglas K. Yatter, J. Ashley Weeks, and Deric Behar The US Commodity Futures Trading Commission’s (CFTC’s) Division of Swap Dealer and Intermediary Oversight (DSIO) Director Joshua B. Sterling issued a statement on February 10, … Continue Reading
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