stablecoins – FinTech and Blockchain Law Watch

California is Seeking Industry Input on New Crypto Rules

Nov 21 2023

The California Department of Financial Protection and Innovation (DFPI) is requesting comments on potential rules it will promulgate to implement the state’s recently-enacted Digital Financial Assets Law (DFAL), which establishes a formal licensing regime for digital asset service providers. Please review our client alert for a detailed analysis of the new law, which takes effect 1 July 2025.

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.

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.

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.

MiCA is Here: European Ground-breaking Rules for the Cryptocurrencies Market

Jul 11 2022

By Giovanni Campi, Mathieu Volckrick, Paula Estaban Gomez

On 30 June, European institutions reached a provisional political agreement on the proposal for a regulation on Markets in Crypto-Assets, also known as MiCA.[1]

On Heels of Crypto Legislative Activity, NYDFS Follows Up With Crypto Stablecoin Guidance

Jun 21 2022

By Jeremy M. McLaughlin, Andrew M. Hinkes, and Christian Zazzali

On June 8, 2022, the New York State Department of Financial Services (“NYDFS”) released regulatory guidance applicable only to payment stablecoins that are backed by the U.S. Dollar and issued by entities regulated by NYDFS. The guidance comes one day after Senators Kirsten Gillibrand (D-N.Y.) and Cynthia Lummis (R-Wyo.) released a bill calling for dramatic changes to federal regulation of the cryptocurrency industry (see our quick analysis here) and less than a week after New York’s legislature passed two bills aimed at crypto regulation. Focusing on three criteria—redeemability, reserves, and attestation—the NYDFS stablecoin guidance is intended to ensure that payment stablecoin issuers remain solvent so holders of those payment stablecoins can timely exercise their right to redeem. This guidance does not address a stablecoin’s trading price and does not mandate that the issuer take any active measures to ensure the price of the asset on markets.

10 Impactful Provisions of the Lummis-Gillibrand Bill

Jun 07 2022

By Andrew Hinkes, Eden Rohrer, and Judie Rinearson

The “Lummis-Gillibrand Responsible Financial Innovation Act,” announced this morning, lays out a bold agenda for legal reform across multiple regulatory regimes aimed at clarifying legal requirements for regulated entities to issue, trade, and provide services related to certain digital assets. Although a point by point summary of the 69 page bill is beyond the scope of this post, here’s a brief summary of 10 impactful provisions from the Bill:

The Future of Stable (Bank) Coins?: President’s Working Group on Financial Markets Urges Legislation Limiting Stablecoins to Insured Banks

Nov 03 2021

By Judith Rinearson, Jeremy M. McLaughlin, and Daniel S. Nuñez Cohen

On 1 November 2021, the President’s Working Group on Financial Markets (PWG), in conjunction with the Federal Deposit Insurance Corporation and the Comptroller of the Currency, issued a long-awaited joint “Report on Stablecoins” (Report). Per the press release (and a speech by Undersecretary of Treasury Nellie Liang), the Report is intended to “identify regulatory gaps related to “payment stablecoins” (defined as stablecoins that are designed to maintain a stable value and “therefore have potential to be used as widespread means of payment”), and to present recommendations for addressing those gaps.”

It’s Happening in the UK: UK Treasury to Regulate Stablecoins

Mar 02 2021

By Kai Zhang and Judie Rinearson

On 7 January, the UK Treasury published a consultation on its proposed approach to regulating stablecoins. https://www.gov.uk/government/consultations/uk-regulatory-approach-to-cryptoassets-and-stablecoins-consultation-and-call-for-evidence Although the title of the consultation includes “cryptoassets” – this is the just first stage in the consultative process for cryptoassets, which focuses on stablecoins referred to as “stable tokens”. The consultation closes on 21 March. For US readers, a “consultation” is the start of regulatory process, not unlike an “Advance Notice of Proposed Rulemaking” or “ANPR” in the US. The UK government sets out the supervisory perimeters, seeking input from the public, and leaving the detailed requirements to be designed by the regulators. Accordingly, the consultation discusses only general principles and the overall framework.

FATF report to the G20 on stablecoins

Jul 14 2020

By Giovanni Campi

Stablecoins have attracted much regulatory attention lately. The G7 working group on stablecoins, the International Organization of Securities Commissions, the Financial Stability Board (FSB) and the European Commission are among the international institutions pressing for global stablecoins regulation. The overarching regulatory problems they all identify are:

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