On Aug. 15, 2019, the staff of the Division of Investment Management at the U.S. Securities and Exchange Commission (the “Staff”) issued a significant no-action letter. The letter clarifies the treatment of certain assets held by an entity seeking to rely upon Section 3(c)(5)(C) to be exempt from registration as an investment company under the Investment … Continue Reading
Rocky Mountain States Make Headway in Blockchain-Related Legislation With Wyoming having become the first state to define “utility tokens” as a new asset class (see article in Blockchain & Cryptocurrency’s Winter 2019 Issue), Montana and Colorado are following close behind with their own cryptocurrency legislation. Both states have blockchain-related bills going into effect in July and August … Continue Reading
On July 22, 2019, the federal bank regulatory agencies and the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (collectively, the “Agencies”), issued a Joint Statement on Risk-Focused Bank Secrecy Act/Anti-Money Laundering (BSA/AML) Supervision. The Joint Statement emphasizes their risk-focused approach to examinations of banks’ BSA/AML compliance programs and is the third statement from … Continue Reading
The SEC’s Division of Trading and Markets and the Office of the General Counsel of FINRA (Financial Industry Regulatory Authority) published on July 8, 2019, a joint staff statement (Custody Release) on broker-dealer custody of digital assets. The statement has been eagerly awaited by market participants, including broker-dealers, given significant uncertainty in the application of … Continue Reading
In connection with the U.S. financial crisis 10 years ago, legislation was adopted to enhance the safety and soundness of the commercial banking system in the United States. Amendments to the Bank Holding Company Act of 1956 required five federal financial agencies to adopt joint regulations to (i) limit the authority of commercial banking institutions to … Continue Reading
In July 2019, the SEC qualified the first token offerings under Regulation A+, approving blockchain startup Blockstack’s bitcoin-like digital tokens on July 10, and live video streaming platform YouNow’s offering of its “Props” tokens on July 11. These decisions will likely serve as new fundraising templates for many blockchain businesses. Blockstack Blockstack describes its services … Continue Reading
A bill to amend the Act on Settlement of Funds and the Financial Instruments and Exchange Act (FIEA) has passed both the upper and lower houses of Japan’s National Diet and was enacted on May 31, 2019. The amendments enhance the regulations on ICOs (Initial Coin Offerings) by applying the securities regulations under the FIEA … Continue Reading
In 2018 the Financial Industry Regulatory Authority (FINRA) undertook efforts to have member firms contact FINRA before engaging in activities involving digital assets by issuing Regulatory Notice 18-20. That approach led to many discussions between FINRA staff and member firms, and FINRA found that process useful to help it become aware of developing practices and … Continue Reading
The use of blockchain technology and the issuance of cryptocurrencies have grown considerably in recent years, inviting heightened scrutiny and regulation. While federal securities, tax, and other financial services regulatory agencies, such as the SEC, the IRS, state securities commissioners and others, have begun applying their rules and regulations to cryptocurrency businesses, the cryptocurrency industry … Continue Reading
On May 23, 2019, the SEC’s Office of Compliance Inspections and Examinations (OCIE) issued a Risk Alert on the importance of storing customer and data in a cloud environment in a secure fashion. Titled “Safeguarding Customer Records and Information in Network Storage – Use of Third Party Security Features,” the risk alert addresses proper cloud … Continue Reading
On May 23, 2019, Florida Gov. Ron DeSantis signed SB 1024 (Florida Blockchain Bill) into law to establish the Florida Blockchain Task Force (Blockchain Task Force) within the Florida Department of Financial Services. The Blockchain Task Force will study if and how Florida’s state, county, and municipal governments can benefit from a transition to blockchain-based … Continue Reading
On May 9, 2019, the Financial Crimes Enforcement Network of the U.S. Department of the Treasury (FinCEN) issued “interpretive guidance” addressing how FinCEN’s money services business (MSB) regulations apply to a variety of business models that use convertible virtual currency (CVC) (2019 FinCEN Guidance). This is the first significant guidance FinCEN has issued regarding the … Continue Reading
In March 2019 the SEC’s Office of Compliance, Inspections and Examinations (OCIE) announced it would soon commence its annual “Cybersecurity Sweep” of registered investment advisers and broker-dealers. The reality of daily breaches and hacks combined with the watchful eye of the SEC and other regulatory and enforcement bodies means registrants should recommit to dedicating the … Continue Reading
On May 3, 2019, the Securities and Exchange Commission (SEC) proposed amendments to the financial disclosure requirements in Rule 3-05 (Acquired Company Financial Information), Rule 3-14 (Real Estate Operations), and Article 11 (Pro Forma Financial Information) of Regulation S-X for financial statements of businesses acquired or to be acquired and for business dispositions. The SEC … Continue Reading
A bill to amend the Japanese laws regulating cryptocurrency exchange businesses or financial instruments transactions, including the Act on Settlement of Funds (Settlement Act) and the Financial Instruments and Exchange Act (FIEA), was submitted to the Diet on March 15, 2019. The bill proposes to call cryptocurrencies “Crypto Assets” (CA) rather than “Virtual Currencies” (VC) … Continue Reading
On March 21, 2019, in Van Dyke v. Jesse White, the Illinois Supreme Court issued a long-awaited opinion relating to Illinois Securities Department authority to regulate annuities under the Illinois Securities Law of 1953 (Act). By way of background, in 2011, the Illinois Securities Department audited Richard Lee Van Dyke following complaints from the adult … Continue Reading
On April 1, 2019, the SEC provided additional guidance relating to its new rules that permit companies to file redacted material contracts without applying for confidential treatment of the redacted information provided the redacted information (i) is not material and (ii) would be competitively harmful if publicly disclosed. The new rules became effective upon their … Continue Reading
In 2018 the House of Lords announced it would set up an ad hoc Select Committee to conduct a post-legislative review of the Bribery Act 2010. Greenberg Traurig Shareholder Anne-Marie Ottaway was appointed Specialist Advisor to the Committee, which on 14 March 2019 published the report of its findings. The review confirms that the Bribery Act … Continue Reading
Departing from its historical practice but following the approach taken by the SEC and FINRA, the Commodity Futures Trading Commission (CFTC) on Feb. 12, 2019, announced its first release of examination priorities for each of its regulatory divisions. In making the announcement, CFTC Chairman J. Christopher Giancarlo indicated the release is part of CFTC’s “initiative … Continue Reading
2018 was a year of transformation for the blockchain industry. While the market continued to see technological advancements in smart contracts, platform functionality, scalability and security, regulators took a firmer rein in pursuing those seeking to exploit the uninitiated or those engaged in outright fraud. In this issue of Greenberg Traurig’s Blockchain & Cryptocurrency Newsletter, … Continue Reading
Colorado recently passed legislation that will facilitate the sale and transfer of digital tokens in Colorado. Under the Digital Token Act, Colorado businesses will be permitted to effect transactions involving the sale and transfer between certain persons of digital tokens secured through a decentralized ledger or database, with a focus on the production, distribution, and … Continue Reading
One of the consequences of a “no-deal” Brexit would be that the United Kingdom would no longer have access to the European financial market. This would affect LIBOR as a trusted and widely used benchmark. LIBOR vs. EURIBOR Currently, two relevant benchmarks exist in the European Union: LIBOR and EURIBOR. LIBOR stands for “London Interbank … Continue Reading
On Feb. 7, 2019, the UK’s National Crime Agency (NCA) confirmed that it had obtained account forfeiture orders over money held in bank accounts in the name of the former Moldovan prime minister’s son, Vlad Luca Filat. Part III of our ‘Prove It or Lose It’ series anticipated the use of UK law enforcement authorities’ … Continue Reading
On Jan. 22, 2019, the Financial Industry Regulatory Authority (FINRA) released its 14th Annual Risk Monitoring and Examination Priorities Letter, where it identifies its areas of examination focus for 2019. The FINRA president’s cover note points out the addition to the title of a reference to “risk monitoring.” While the Priority Letter describes the multiple … Continue Reading
