Category:FinTech Industry & Regulation

1
High-Level Summary: Solving Common Failures in NFT Licensing
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Crypto Platform Kraken Pays $30 Million and Ceases Staking Services to Settle SEC Charges
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The CFPB Proposes New Credit Card Late Fee Limits
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“MetaBirkin” NFT Maker Liable in TM Dispute
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Federal Reserve Issues Policy Statement Limiting Crypto-Activities of State Member Banks
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DeFi Regulatory Alert: CFTC Files Its First Ever Oracle Manipulation Case
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“Joint Statement on Crypto-Asset Risks to Banking Organizations” Will Significantly Impact Cryptocurrency Companies and Their Banking Relationships
8
Alaska Will Require Licensing for Crypto Money Transmitters
9
CFTC Ordered to Serve Former Founders in Ooki DAO Case
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California Legislators Continue To Assess How To Regulate Digital Assets

High-Level Summary: Solving Common Failures in NFT Licensing

By Drew Hinkes, Elizabeth Thomsen, Josh Durham

As blockchain and nonfungible tokens (NFTs) are still new technologies, their legal infrastructure is still developing, creating potential vulnerabilities. Three such vulnerabilities were exposed in our previous article, available here. We have now issued a follow-up Alert that explores solutions to such licensing failures.  This blog is a high-level summary;  the full alert can be found here.

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Crypto Platform Kraken Pays $30 Million and Ceases Staking Services to Settle SEC Charges

By Drew Hinkes, Carly Howard, and Judie Rinearson

The Securities and Exchange Commission (SEC) announced a settlement with the digital assets/cryptocurrency exchange Kraken whereby Kraken agreed to cease offering or selling securities through its crypto asset staking services, and agreed to pay a penalty of $30 million (comprising disgorgement, prejudgment interest, and civil penalties).

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The CFPB Proposes New Credit Card Late Fee Limits

By John ReVeal

On February 1, 2023, the CFPB proposed new rules to reduce the late fees that credit card issuers may charge to consumers (the “Proposed Rules”).  The CFPB refers to current late fees as “over the top” and “exorbitant.”  The CFPB indicates that it believes it has the authority to limit late fees under the CARD Act of 2009, which amended the Truth in Lending Act to require that late fees and other penalty fees be “reasonable and proportional to” the consumer’s violation of the cardholder agreement.     

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“MetaBirkin” NFT Maker Liable in TM Dispute

By Terrance D. Roberts

On February 8, 2023, a Manhattan federal jury found Mason Rothschild liable for trademark infringement for his non-fungible tokens (“NFTs”) called ‘MetaBirkins’. After only 3 days of deliberation, the 9 person jury sided with Hermѐs International and found Rothschild liable for trademark infringement, trademark dilution, and for unlawfully cybersquatting on the domain name MetaBirkins.com.

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Federal Reserve Issues Policy Statement Limiting Crypto-Activities of State Member Banks

By Grant F. Butler, Carly E. Howard, Andrew M. Hinkes

The Board of Governors of the Federal Reserve (the “FRB”) issued a policy statement that interprets Section 9(13) of the Federal Reserve Act to limit state member banks to engage as principal in only activities that are (a) permissible for a national bank or (b) explicitly permissible for state banks under federal law.  The activity restrictions apply equally to insured and uninsured state member banks supervised directly by the FRB. 

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DeFi Regulatory Alert: CFTC Files Its First Ever Oracle Manipulation Case

By Andrew M. Hinkes, Clifford C. Histed, Cheryl L. Isaac, and Maxwell J. Black

The Commodity Futures Trading Commission (“CFTC”) filed a civil enforcement action this week against Avraham Eisenberg, charging him with a scheme to defraud others and engage in price manipulation (as announced by the CFTC here). While there have been other enforcement actions related to decentralized finance (“DeFi”) protocols, this is the first case in which the CFTC has charged a person for fraud in connection with “oracle manipulation” on a decentralized exchange.  In addition to this CFTC action, the U.S. Department of Justice previously charged Eisenberg with criminal fraud and commodity price manipulation in connection with this same alleged scheme.

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“Joint Statement on Crypto-Asset Risks to Banking Organizations” Will Significantly Impact Cryptocurrency Companies and Their Banking Relationships

By Grant F. Butler, Andrew M. Hinkes, Jeremy McLaughlin, Judie Rinearson

The US Board of Governors of the Federal Reserve System (FRB), Office of the Comptroller of the Currency (OCC) and Federal Deposit Insurance Corporation (FDIC) (the “Agencies”)  today issued a joint statement reiterating their ongoing concerns with crypto-asset activities entering the banking sector.  See: https://www.federalreserve.gov/newsevents/pressreleases/files/bcreg20230103a1.pdf

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Alaska Will Require Licensing for Crypto Money Transmitters

By Jeremy M. McLaughlin and Brenden R. Chainey

On November 30, Alaska amended its money transmitter regulations to, among other things, include virtual currency transactions within the definition of money transmission.  With this new change (effective January 1, 2023), companies engaged in money transmission involving virtual currency will be required to obtain a money transmission license.

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CFTC Ordered to Serve Former Founders in Ooki DAO Case

By Andrew M. Hinkes, Clifford C. Histed, Carly E. Howard, Cheryl L. Isaac, Maxwell J. Black

Following the unprecedented Ooki DAO enforcement action by the Commodity Futures Trading Commission (“CFTC”), the district court, after entertaining argument by several amici, clarified its position on another novel legal issue in the DeFi space:  how to serve process on a DAO.  On 12 December 2022, the United States District Court for the Northern District of California ordered the CFTC, as part of its efforts to serve the OOKI Dao, to personally serve the former founders of Ooki DAO as individually identifiable token holders. 

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California Legislators Continue To Assess How To Regulate Digital Assets

By Jeremy McLaughlin and Josh Durham

For the fifth time since June 2022, California Senators have amended their proposed “Digital Financial Assets Law,” signaling a genuine desire to pass the bill as the Senate inches toward workable legislation.

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