Cryptocurrencies & ICOs – Page 12 – FinTech and Blockchain Law Watch

K&L Gates Adds Leading FinTech Partners

Jul 28 2016

Global law firm K&L Gates welcomes Judith Rinearson and Linda C. Odom as partners in the firm’s FinTech and Consumer Financial Services practices. Rinearson joins K&L Gates’ New York and London offices, and Odom, joins the Washington, D.C. office. “Judie Rinearson and Linda Odom are highly respected authorities in numerous key regulatory and commercial areas within the FinTech ecosystem,” stated Robert Zinn, co-leader of K&L Gates’ global corporate and transactional practice area as well as of the firm’s market-leading global FinTech practice.

To read our full press release please click here.

Increasing investment in blockchain initiatives

Jul 07 2016

By Jim Bulling

Over US$1B is likely to be collectively spent on bringing blockchain technology to capital markets in 2016, according to a recent survey of 134 global market participants. Of the businesses with bitcoin projects, 32% have an annual budget in excess of US$5 million, and 47% top US$2 million. This significant level of investment has been motivated by the various advantages presented by bitcoin technology and its potential to revolutionise global capital markets. Indeed, a majority of businesses surveyed predicted blockchain would create ‘meaningful change’ in capital markets within five years. Furthermore, the survey participants were mostly unconvinced that legal regulation would significantly impede blockchain adoption. As such, the nascent interest in blockchain use in capital markets seems likely to continue.

Public financial institutions are also getting involved. At a recent international summit of international bankers, the US Chairperson encouraged attendees to educate themselves on blockchain. In Canada, the central bank is working alongside private banks and R3 (a blockchain company). They are trialling a digital currency (Cad-Coin) and allowing limited participants to engage in interbank payments with blockchain technology. The Bank of England is also looking into possible applications of the technology, with the deputy governor raising the possible consequences of a digital pound in a recent speech.

EU movement on virtual currencies and distributed ledger technologies

Jun 07 2016

By Jim Bulling and Michelle Chasser

The EU Parliament has called for the creation of a task force to be led by the EU Commission to monitor distributed ledger technologies (DLT) and virtual currencies (VC). The EU Parliament proposed that the task force consist of technical and regulatory experts who will:

provide the necessary expertise to support EU member states’ efforts to monitor DLT;
bring together stakeholders;
foster awareness and analyse the benefits and risks of DLT;
identify best practice standards;
assess existing EU regulation with a view to updating it in response to increased DLT use; and
develop stress tests for widely used VCs and DLT schemes.

The EU Parliament also recommended that the EU Commission revise EU legislation on payments in light of new technological developments with a view to furthering competition and lowering transaction costs possibly by means of promoting a universal and non-proprietary electronic wallet. The EU Commission is currently considering proposals to include VC exchange platforms in the EU Anti-Money Laundering Directive to end the anonymity that has been traditionally associated with such platforms.

This recent regulatory activity in the EU reflects the increased attention that VCs and DLT have been receiving from governments around the world. Australia has recently focused on anti-money laundering and tax implications for VCs and Japan introduced regulations on VC exchanges in March.

AML review targets digital currencies

May 17 2016

By Jim Bulling and Michelle Chasser

The Australian Attorney General’s Department (AG) has released its statutory review of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML Act). Recommendations have been made to better incorporate digital wallets and digital currencies in the AML Act.

The AG has recommended that:

the AML Act be amended to ensure that digital wallets are comprehensively captured. Some digital wallets are already caught by the AML Act where they are considered to be ‘accounts’ provided by traditional financial product providers such as banks and credit unions. However, a potential regulatory gap was identified for new types of digital wallets inspired by technological advances. For example, digital wallets which store digital currency are not regulated under the AML Act;

CFPB Takes Aim at Marketplace Lenders

May 16 2016

By David Christensen

Last Fall, in its 2015 Rulemaking Agenda, the Consumer Financial Protection Bureau (“CFPB”) signaled its intent to “to develop rules to define larger participants in markets for consumer installment loans.”[1] Under the Dodd-Frank Act, the CFPB is authorized to issue “larger participant” rules to define entities in a particular market for consumer financial products or services. The issuance of such rules opens the door for supervisory and examination authority over such entities. Fast forward to Spring 2016, when the CFPB announced that it is accepting complaints from consumers regarding alleged problems with online marketplace loans, and it appears that the CFPB has marketplace lenders squarely in its sights.[2]

Digital currency and GST

May 09 2016

By Jim Bulling and Michelle Chasser

The application of consumption tax to digital currencies varies between countries. The UK and countries in the EU have made Bitcoin exempt from such taxes, while other countries such as Japan, Singapore, Canada and Australia treat digital currencies as intangible property which is subject to the tax.

In Australia, this has resulted in consumers paying Goods and Services Tax (GST) when they exchange money for digital currencies and again when they use the digital currency to make a purchase. Treasury has released a discussion paper on the application of GST on digital currencies. While the proposals are very different technically, they both result in removing the double taxation.

New European virtual currency trade body

Apr 26 2016

By Jonathan Lawrence

A new trade body designed to aid regulatory understanding of virtual currencies has been launched in response to increased government interest in Europe.

The Brussels-based European Digital Currency & Blockchain Technology Forum (EDCAB) is a public policy platform for digital currencies and distributed ledger technologies. It also co-organised an industry expo for policymakers in the European Parliament from 18 to 21 April 2016.

Virtual currencies have rapidly risen up the European policy agenda in all the major institutions:

The Council of the European Union put virtual currencies at the top of a list of targeted areas for rapid progress at its February 2016 meeting, and has called for legislation to be tabled by the end of June 2016.
The European Parliament is preparing its own initiative report on virtual currencies, with the Committee on Economic and Monetary Affairs scheduled to vote on the report on 25 April 2016. Additionally, the Committee for Internal Market and Consumer Protection is also considering the issue later in April.
The European Commission has been considering regulation of virtual currencies through its Action Plan and proposals to combat terrorist financing, with legislation ready for the end of June 2016.

EU Fintech developments

Apr 19 2016

By Jacob Ghanty

In the linked article, Jacob Ghanty discusses some UK and EU regulatory developments affecting the FinTech sector. This article was first published on Thomson Reuters Regulatory Intelligence on 1 April 2016.

Lost cryptocurrency – Can you get your “money” back?

Apr 14 2016

By Jonathan Lawrence

Will English courts recognise cryptocurrency in tort and restitution claims? An article by Peter Susman QC in the March 2016 issue of the Butterworths Journal of International Banking and Financial Law considers that English common law is robust enough to facilitate the development of legal remedies for lost cryptocurrency (“Virtual money in the virtual bank: legal remedies for loss” (2016) 3 JIBFL 152).

A more complex issue is whether English law is ready to provide effective remedies in tort or restitution for misappropriated cryptocurrency. English courts have previously had difficulty applying criminal law to intangible assets. The Fraud Act 2006 helped remove any confusion by focusing on what has been done, rather than the type of property which has been affected.

So it should not be difficult to argue that the law of contract developed under English common law will apply on the same basis to cryptocurrencies. Principles developed under contract law may be used to answer questions about whether contractual obligations have been incurred, on what terms and what remedies may be available in relation to cryptocurrency.

In any event, many transactional and litigation lawyers tend to think of money less as personal property, and more as obligations owed by and to persons in respect of that money. The focus of courts should be then on remedies rather than proprietary rights.

PREPAID ACCESS GARNERS REGULATORY ATTENTION

Mar 25 2016

By Sean Mahoney

Bank regulators are paying more attention to the role of banks in the prepaid card industry as evidenced by their new guidance on the applicability of know your customer requirements and proposed regulations on record-keeping with respect to master deposit accounts for prepaid cards and other products utilizing “pass-through” deposit insurance.

To learn more about the Interagency Guidance to Issuing Banks on Applying Customer Identification Program Requirements to Holders of Prepaid Cards, which provides a framework to determine whether or not a bank must apply its customer information program to holders of prepaid products for which the bank is the issuer, please visit our Consumer Financial Services Watch Blog at Prepaid Access Garners Regulatory Attention.

Category:Cryptocurrencies & ICOs