FinTech and Blockchain Law Watch | At the Crossroads of Law, Innovation and Commerce

SEC’s Stunning Enforcement Actions against Binance and Coinbase

Jun 07 2023

By Drew Hinkes, Cliff Histed, Judie Rinearson, Eden Rohrer, Max Black

In a stunning move, over the last two days, the Securities and Exchange Commission (“SEC”) has filed back-to-back enforcement actions against major crypto exchanges Binance (See https://www.sec.gov/files/litigation/complaints/2023/comp-pr2023-101.pdf) and Coinbase (See https://www.sec.gov/litigation/complaints/2023/comp-pr2023-102.pdf . This clearly indicates that the SEC is flexing its enforcement power over both international exchanges as well as those exchanges with a focus on the United States.

Australia: Expanding AML requirements for digital currency exchanges

Jun 07 2023

By Daniel Knight and Grace Hall

The Australian Government has committed to reforming Australia’s AML/CTF regime, with proposed reforms set to impact digital currency exchange (DCE) providers.

CFPB Raises Alarms Without Providing All the Facts

Jun 05 2023

By Judie Rinearson and Jeremy McLaughlin

The Consumer Financial Protection Bureau’s (CFPB) recent Consumer Alert was certainly well intentioned. Many consumers (including the authors) who hold funds in payment apps (such as Venmo and Paypal) should be made aware that the funds are usually NOT held in an FDIC-insured bank. But that doesn’t mean the funds are necessarily unprotected.

Does your Marketplace need to be “INFORM-ed” by June 27th? The New INFORM Consumers Act Could Significantly Impact Online Marketplace Operations

May 16 2023

By John ReVeal, Judie Rinearson, and Katie Staba

The Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers Act (the “INFORM Consumers Act” or “Act”) (https://www.congress.gov/117/bills/s936/BILLS-117s936is.pdf ) which passed on December 29, 2022 will come into effect on June 27, 2023. Originally intended to address increasing consumer complaints about online marketplace purchases of counterfeit or defective products from third party sellers, the Act requires both collection, verification and, in certain cases, disclosure of third party seller information to combat this perceived marketplace unaccountability.

Australia: ASIC revises its IDR reporting framework – are you ready?

May 15 2023

By Daniel Knight and Hugo Chow

All holders of an Australian Financial Services License (AFSL) with a retail client authorisation will need to comply with ASIC’s internal dispute resolution (IDR) reporting framework. Summary reports will need to be provided to ASIC on a 6 monthly basis, highlighting the status of each client complaint. Reporting obligations commence from 1 July 2023 (for reporting in January or February 2024). AFSL holders should put systems in place now to ensure all required information is being captured.

Central Bank of Ireland Issues Important Clarification Regarding Investments in Digital Assets including certain Cryptocurrencies

Apr 10 2023

By Judie Rinearson and Richard Kerr

On 4 April 2023, the Central Bank of Ireland (the Central Bank) published the 47th edition of its Alternative Investment Fund Managers Directive (AIFMD) Q&A document (the AIFMD Q&A). See: https://www.centralbank.ie/docs/default-source/regulation/industry-market-sectors/funds/aifs/guidance/qa/aifmd-qa–edition-47.pdf?sfvrsn=86eb991d_1

NFA Imposes New Compliance Obligations on Members Engaged in Digital Asset Commodity Activities

Apr 03 2023

By Clifford C. Histed and Cheryl L. Isaac

Last week, after years of silence on the issue of digital asset regulation, the National Futures Association (“NFA”) promulgated new anti-fraud, just and equitable principles of trade, and supervision requirements on NFA Members that engage in “digital asset commodity activities.” Compliance Rule 2-51 puts NFA Members on notice that the NFA will assert enforcement authority over any fraudulent, manipulative, or deceitful activity related to Bitcoin and Ether spot transactions, and requires that NFA Members “diligently supervise” their employees and agents in the conduct of these activities.

CFTC Chair Asserts Jurisdiction Over Fiat-Based Stablecoins

Mar 13 2023

By Cheryl L. Isaac and Maxwell J. Black

Last week, Commodity Futures Trading Commission (“CFTC”) Chair Rostin Behnam asserted that fiat-based stablecoins (such as USD Coin (USDC), Tether (USDT), and Binance USD (BUSD), all of which are pegged to an underlying fiat currency) should be considered as commodities, subject to the CFTC’s enforcement jurisdiction.

EU/Luxembourg Update: New Blockchain/ DLT Pilot Regime for Financial Instruments Becomes Effective on March 23

Mar 07 2023

By Dr. Jan Boeing and Maxime Barthez[1],

Luxembourg and the EU have taken an important step forward in the area of blockchain and Distributed Ledger Technology (“DLT”). With a view to removing regulatory hurdles to the issuance, trading and post-trading of many financial instruments for which an EU regulatory framework already exists (such as the regulation of transferable securities, units in collective investment undertakings and derivatives under MiFIR, MiFID II and CSDR[2]), the EU has put in place the DLT Pilot Regime through Regulation (EU) 2022/858 of 30 May 2022. The new DLT Pilot Regime applies (with certain limitations) to all (traditional) financial instruments within the meaning of MiFID II[3] that are issued, recorded, transferred and stored using blockchain or distributed ledger technology (“DLT Financial Instruments”).

In a Rare Decision On Abandoned Property Law, The US Supreme Court Rules Against Delaware

Mar 06 2023

By Judie Rinearson, Jennifer Crowder, and Jeremy McLaughlin

On February 28, 2023, the US Supreme Court issued its decision in the abandoned property lawsuit, Delaware v. Pennsylvania (see https://www.supremecourt.gov/opinions/22pdf/145orig_kjfl.pdf)

The question addressed by the Court focused on which state was entitled to collect unclaimed property, which arose from two financial products sold by banks on behalf of Moneygram: Agent Checks and Teller’s Checks (collectively, the “Checks”).