Tag:US

1
Wyoming Moving to Exempt Virtual Currency from its Money Transmitter Law
2
A Small, But Promising, Step Towards State Money Transmitter Licensing Harmonization
3
The Shoe Finally Drops: CFPB Makes Final Changes to the Prepaid Account Rule and Delays the Effective Date until 2019
4
Starbucks – a trust legitimiser for blockchain?
5
CFPB Expects to Further Delay Prepaid Account Rule’s Effective Date
6
Comptroller Otting: A New Ally for a FinTech Charter?
7
FinTech outlook for 2018: US Banks look to AI
8
What the CFPB Leadership Dispute Means for the Prepaid Account Rule
9
SEC Cautions “Utility Token” Sponsors and ICO Market Intermediaries
10
New SEC Cyber Unit Obtains Emergency Action Against ICO

Wyoming Moving to Exempt Virtual Currency from its Money Transmitter Law

By Dan S Cohen

With unanimous support, the Wyoming House of Representatives passed House Bill 19, which exempts virtual currencies from the state’s money transmission law. HB 19 defines virtual currency as a digital representation of value that is used as a medium of exchange, unit of account, or store of value, and is not recognized by the federal government as legal tender. If enacted, the Wyoming Money Transmitter Act would no longer apply to the buying, selling, issuing, or taking custody of virtual currency, or receiving virtual currency for the purpose of transmitting that currency within or outside of the United States.

The proposed change comes almost two years after Coinbase announced its indefinite suspension of business in the state due to its belief that the Wyoming Division of Banking interpreted the Wyoming Money Transmitter Act to apply to entities offering hosted wallet services. Wyoming would become the first state to completely exempt virtual currency from its money transmitter law if the bill is adopted. To date, Illinois, Kansas, Tennessee, and Texas have issued guidance excluding some but not all virtual currency activities from their respective money transmitter laws.

HB 19 is one of several virtual currency and blockchain-related bills the Wyoming legislature is considering. Bills to exempt “utility tokens” from securities regulation, and to allow companies to store records and accept shareholder votes through blockchain technology are also under consideration. Wyoming political leaders are clearly moving quickly to adapt to the rise of virtual currency and blockchain technology.

A Small, But Promising, Step Towards State Money Transmitter Licensing Harmonization

By Jeremy M McLaughlin

The time and expense of applying for state money transmitter licenses can be an incredibly steep barrier to entry for many fintech and cryptocurrency businesses.  Seven states—Georgia, Illinois, Kansas, Massachusetts, Tennessee, Texas, and Washington (collectively, “Signatory States”)—have taken an initial step to lower that barrier.  They have signed an agreement (“Protocol”) aimed at expediting and simplifying the application process for money services businesses.  The Conference of State Bank Supervisors (“CSBS”) announced the agreement and indicated other states are expected to join.

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Starbucks – a trust legitimiser for blockchain?

By Cameron Abbott and Samantha Tyrrell

In a recent quarterly investor call, Starbucks’ Chairman Howard Schultz discussed the possibility of incorporating blockchain technology into Starbucks’ impressive digital repertoire.

Starbucks’ commitment to being a first mover when it comes to disruptive technology has already resulted in the hugely successful implementation of its mobile payment app, launched in 2015. The app allows users to order, pay and accrue rewards remotely and now accounts for nearly one third of Starbucks’ US transactions. According to Schultz, these figures may warrant a move towards integrating some entirely cashless stores throughout the US.

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CFPB Expects to Further Delay Prepaid Account Rule’s Effective Date

By Eric A. Love

On December 21, 2017, the Consumer Financial Protection Bureau (CFPB) issued a statement providing a status update about its comprehensive final rule amending the implementing regulations for the Electronic Fund Transfer Act (Regulation E) and the Truth in Lending Act (Regulation Z) as applied to prepaid accounts (Final Rule).

The Final Rule extends Regulation E protections to prepaid accounts, thus requiring financial institutions to give consumers easy access to account information, investigate and resolve erroneous charges, and limit consumer liability for unauthorized charges in certain circumstances.  In addition, the Final Rule applies Regulation Z protections to prepaid accounts that are linked to credit products.  The Final Rule also sets forth certain requirements concerning disclosures and account terms posting and submission.

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Comptroller Otting: A New Ally for a FinTech Charter?

By Dan Cohen

The FinTech charter may have an important new, if tepid, ally: U.S. Comptroller of the Currency Joseph Otting. Speaking at a press conference on December 20th, Comptroller Otting signaled a cautious openness to the charter, stating, according to various media outlets, that although he is “not sure what it [FinTech charter] looks like and how it’s funded…there’s a space there that a technology solution can solve.” The key question to him is “what is the requirement…to get that charter”, a topic on which he did not elaborate.

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FinTech outlook for 2018: US Banks look to AI

By Cameron Abbott and Harry Crawford

With 2017 at a close, US banks have set out their 2018 FinTech new year resolutions. According to American Banker, US banks are likely to focus their FinTech investment in 4 major areas in 2018:

  • Artificial intelligence and machine learning
  • Open banking
  • Cybersecurity and biometrics
  • Commercial banking innovation

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What the CFPB Leadership Dispute Means for the Prepaid Account Rule

By Eric A. Love and Dan S. Cohen

With Office of Management and Budget Director Mick Mulvaney in place as Acting Director of the Consumer Financial Protection Bureau (CFPB) and a legal challenge to his appointment to that position brought by CFPB Deputy Director Leandra English continuing to proceed through the courts, prepaid industry participants are rightly asking what this ongoing leadership dispute means for the CFPB’s sweeping Final Rule amending Regulation E and Regulation Z as applied to prepaid accounts.

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SEC Cautions “Utility Token” Sponsors and ICO Market Intermediaries

By Robert M. Crea

On December 11, 2017, the SEC released a cease-and-desist order against a purported “utility token” sold by Munchee Inc. (“Munchee”) and a statement by Jay Clayton on Cryptocurrencies and Initial Coin Offerings.  Two takeaways:

  1. The SEC will scrutinize so-called “utility tokens” under the Howey test, and Chairman Clayton believes that most token sales he’s seen constitute securities offerings.  The familiarity of the Munchee utility framework to other token offerings coupled with Chairman Clayton’s Statement could very well chill the market for utility tokens seeking to avoid application of federal securities laws.
  2. The SEC expects intermediaries operating in crypto, specifically law firms, accountants, consultants and broker-dealers, to be “gatekeepers” of investor protection.

We will be providing a fuller analysis in the next several days.

New SEC Cyber Unit Obtains Emergency Action Against ICO

By Robert M. Crea and Evan J. Glover

On December 4, 2017, the Securities and Exchange Commission’s (“SEC”) new Cyber Unit obtained an emergency asset freeze to halt a Canadian initial coin offering (“ICO”) called PlexCoin that had raised up to $15 million from thousands of investors.  The SEC filed its complaint (“Complaint”) in the Eastern District of New York, alleging that the sponsor and his company, PlexCorps, marketed and sold securities to investors in the U.S. and elsewhere under a variety of false pretenses, including that PlexCoin would yield a 1,354% profit in less than 29 days.  The complaint seeks permanent injunctions, disgorgement plus interest and penalties.

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