The plan directs the agency to develop a robust regulatory framework to prevent market misconduct, as SEC officials’ public comments keep advancements in technology high on the agenda.

By Marlon Q. Paz, Stephen P. Wink, Donald Thompson, and Deric Behar

On August 25, 2022, the Securities and Exchange Commission (SEC) published a draft Strategic Plan (the Plan) for fiscal years 2022–2026. The Plan focuses on three goals that, according to SEC Chairman Gary Gensler, advance the SEC’s

Latham lawyers discuss the state of the crypto industry and the challenges for companies.

Turbulent market conditions are presenting novel challenges for companies in the cryptocurrency space. What are the factors contributing to the downturn, the implications for companies, and the legal rights and remedies that companies may have?

Restructuring & Special Situations Practice partners George Klidonas, Andrew Sorkin, and Suzzanne Uhland, together with Digital Assets & Web3 Practice Co-Chair and partner Yvette Valdez, recently hosted an in-depth discussion on

The Court held that software developers do not owe a duty of care to bitcoin owners who lost their private keys.

By Christian F. McDermott, Andrew C. Moyle, and Nara Yoo

In Tulip Trading Ltd (TTL) v. Bitcoin Association for BSV and others, TTL claimed that personal computers of its CEO, Dr. Craig Wright, were hacked and the encrypted private keys to two addresses holding around 111,000 bitcoin (currently worth over £3.6 billion) belonging to TTL were stolen. TTL also claimed that the hackers deleted copies of the keys, preventing Dr. Wright and TTL from accessing the digital assets at those addresses.

TTL brought action against 16 core developers (Developers) that allegedly control the software in respect of the four relevant digital asset networks (Networks), consisting of one “original” network and three subsequent blockchain copies. In this case, the Court looked at the extent of the Developer’s liability to TTL for the stolen/lost keys.

The Executive Order aims to strengthen consumer protection and cultivate innovation in digital assets and related financial products and services.

By Christopher D. Frey, Scott D. Joiner, Barrie VanBrackle, Katherine A. Sawyer, and Scott Kanchuger*

On May 4, 2022, California Governor Gavin Newsom issued an Executive Order (California Order) calling upon California state agencies to develop stronger regulatory and enforcement mechanisms for blockchain technology, cryptoassets, and related financial products and services. Recognizing the historical costs of reactive government regulation for new technologies, the California Order seeks to draw upon the benefits of early engagement by public institutions to “manage emerging risks and opportunities, with the twin goals of strengthening consumer financial protection and cultivating responsible innovation.”

The California Order is the first of its kind in any state and follows President Biden’s March 2022 Executive Order on Digital Assets, which calls for greater federal regulation and enforcement activity over digital assets and related technologies. The California Order aims to create a “transparent and consistent business environment for companies operating in blockchain … that harmonizes federal and California laws” and “balances the benefits and risks to consumers.” Governor Newsom ordered California state agencies to “work with, and concurrently to, the federal government” to “establish a comprehensive, thoughtful, and harmonized regulatory and business environment for crypto assets.”

Assertive regulators are bringing greater clarity and new challenges as they step up oversight of fintech innovation.

By Stuart DavisTom D. EvansNicola HiggsChristian F. McDermottDavid J. WalkerBrett CarrCatherine Campbell, and Charlotte Collins

As the fast-growing fintech industry thrives, the sector has begun to attract greater regulatory scrutiny. We expect new legal and regulatory focus and oversight of those players operating on the unregulated perimeter of financial services.

While the level of supervision is set to increase and pose challenges for industry participants, a more robust regulatory environment could play into the hands of PE buyers and create opportunities for portfolio companies best able to navigate this rising regulation. In our view, PE firms must pay heed to the tone of more assertive regulators, but that approach coupled with new regulation will create a space in which firms in nascent fintech verticals can legitimately pursue their aims with greater certainty, no longer looking over their shoulders.

While the UK government is keen to stress that the new regulation will be applied proportionately, proposals are likely to result in the redirection of resources and attention of firms, and buyout firms should remain alert to changes that may impact a range of fintech investments.

The promise of faster and cheaper remittances may accelerate crypto adoption in many emerging markets, including those that have not historically utilized credit and debit payments, notably Latin America.

 By Gianluca Bacchiocchi, Barrie VanBrackle, Nima H. Mohebbi, and Deric Behar

One of the most promising benefits of digital assets is the ability to move value over the global internet nearly instantaneously, in immutably recorded transactions. For many people in warzones or geographies with limited access to banking or payment card infrastructure, this capability is critical and can often be life-saving.

Regulators released comprehensive guidance to banks, intermediaries, and insurers on virtual asset-related activities.

By Simon Hawkins and Adrian Fong

On 28 January 2022, Hong Kong’s principal financial services regulators issued much-anticipated guidance to banks, securities firms, and insurers looking to undertake activities related to virtual assets (VAs). In particular:

  • The Hong Kong Monetary Authority (HKMA) issued a circular to banks on “Regulatory approaches to Authorized Institutions’ interface with Virtual Assets and Virtual Asset Service Providers” (HKMA Circular).
  • The HKMA and

HM Treasury has confirmed that it will bring certain unregulated cryptoassets within scope of the financial promotions regime.

By Stuart Davis, Rob Moulton, and Charlotte Collins

On 18 January 2022, the UK government confirmed its intention to bring the promotion of certain cryptoassets into scope of regulation. HM Treasury has been considering for some time whether, and if so how, to bring unregulated cryptoassets within the regulatory perimeter, having originally consulted on these proposals in 2020.

The Clarity for Digital Tokens Act of 2021 would give token issuers the guardrails they need to innovate with far less regulatory anxiety.

By Stephen P. Wink and Deric Behar

US Securities and Exchange Commission (SEC) Commissioner Hester Peirce has always been something of a maverick. She has been a lone dissenting voice on the Commission on many topics, applying her libertarian leanings to question the need for regulations that could hobble free markets or stifle innovation.

Those who follow the digital assets markets also know Commissioner Peirce by her nickname “Crypto Mom,” for her relentless support of digital asset innovation and calls for clear regulatory guidance when she perceives they are lacking. To remedy some of those issues, Commissioner Peirce published a Token Safe Harbor Proposal on February 6, 2020, and reissued a revised version (Proposal 2.0) on April 13, 2021 (previously discussed in this post).

Proposal 2.0 never quite gained traction at the SEC, but it has found an ally in Congress. On October 5, 2021, Representative Patrick McHenry, the ranking member on the House Financial Services Committee, introduced a bill titled the Clarity for Digital Tokens Act of 2021 (the Bill) that substantially embodies Commissioner Peirce’s Token Safe Harbor Proposal 2.0.

NFT creators should craft strategies to avoid minting or auctioning NFTs that use the likeness of an individual without their consent.

By Ghaith Mahmood, Nima H. Mohebbi, and Tara McCortney

As non-fungible tokens (NFTs) increase in popularity, the so-called common law “right of publicity” may create additional legal risks for NFT minters. The common law right of publicity prevents the commercial exploitation of an individual’s identity without that person’s consent.[1] Most U.S. states have defined a right of publicity and, correspondingly, a standard tort for violation of that right — frequently referred to as the tort of appropriation.

While the law is similar across most US jurisdictions, California — the heart of the entertainment industry — has particularly well-developed authority in this area. For this reason, this blog post focuses on California law in describing the unique issues that NFTs may present.