Cryptocurrency | FinTech and Blockchain Law Watch

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: 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

AUSTRALIA: Treasury Releases Token Mapping Consultation Paper

Feb 23 2023

By Daniel Knight and Oliver Herrmann

New licensing requirements for crypto service providers are coming, following a series of consultations launched last week by Treasurer, Jim Chalmers. The Government approach focuses on strengthening enforcement, bolstering consumer protection and ultimately establishing a new licensing framework.

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

Jan 27 2023

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.

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

Jan 11 2023

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.

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

Jan 04 2023

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

Federal Reserve Doubles Down on Oversight of Crypto Activities for Banks

Aug 18 2022

By Grant F. Butler, Jeremy McLaughlin, Anthony R.G. Nolan, and Judie Rinearson

The Federal Reserve Board (the “FRB”) issued Supervision and Regulation Letter 22-6 (“SR 22-6”), providing guidance for FRB-supervised banking organizations (referred to collectively herein as “FRB banks”) seeking to engage in activities related to cryptocurrency and other digital assets. The letter states that prior to engaging in crypto-asset-related activities, such FRB banks must ensure that their activities are “legally permissible” and determine whether any regulatory filings are required. SR 22-6 further states that FRB banks should notify the FRB prior to engaging in crypto-asset-related activities. Any FRB bank that is already engaged in crypto-asset-related activities should notify the FRB promptly regarding the engagement in such activities, if it has not already done so. The FRB also encourages state member banks to contact state regulators before engaging in any crypto-asset-related activity.

FDIC Warns Banks on Crypto-Related Deposit Insurance Customer Confusion

Aug 03 2022

By Grant F. Butler

On July 29, the FDIC issued an advisory to FDIC-insured financial institutions regarding deposit insurance and dealings with cryptocurrency companies. The FDIC also issued an accompanying fact sheet for consumers regarding FDIC deposit insurance and cryptocurrency companies.

SEC v. Wahi: An Enforcement Action That Could Impact the Broader Crypto / Digital Assets Industry

Jul 29 2022

By Andrew M. Hinkes and Josh Durham

The SEC has made a new crypto move. On July 21, the SEC filed a complaint in the U.S. District Court, Western District of WA against Wahi, a Coinbase employee, and two others alleging insider trading and charging them with securities fraud. The SEC alleged that nine of the crypto assets that Wahi and other defendants traded were “crypto asset securities”: AMP, RLY, DDX, XYO, RGT, LCX, POWR, DFX and KROM. This action is unique; unlike prior SEC enforcement actions brought against Poloniex, Coburn, TokenLot and others, which alleged the existence of digital asset securities being traded on various types of trading platforms, but failed to identify the specific alleged securities at issue or include any legal analysis of those alleged securities, here, the SEC “names names” and offers some analysis, but does not add the issuers of those 9 assets, or the platform upon which they are traded, as defendants.

Tag: Cryptocurrency