Cryptoassets

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The FinmadiG introduces material implementation measures for the European Digital Finance Package.

By Axel Schiemann and Lasse Winzer

On 18 December 2024, the German Parliament (Deutscher Bundestag) has passed the Financial Market Digitisation Act (Finanzmarktdigitalisierungsgesetz — FinmadiG). The FinmadiG serves as the German implementation of several European rules, inter alia, Regulation (EU) 2023/1114 on Markets in Crypto-Assets (MiCA) and Regulation (EU) 2023/1113 on information accompanying transfers of funds and certain cryptoassets (FTR). Under the amendments introduced by…

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The guidelines aim to ensure the consistent application of MiCA across the EU, including a standardised classification of cryptoassets.

By Axel Schiemann, Lasse Winzer, Thomas Vogel, Stuart Davis, and Gabriel Lakeman

On 10 December 2024, the European Banking Authority (EBA), the European Insurance and Occupational Pensions Authority (EIOPA), and the European Securities and Markets Authority (ESMA) (together, ESAs) have published new joint guidelines on explanations and opinions, and the standardised test for cryptoassets, under Article 97(1) of Regulation (EU) 2023/1114 on the Markets in Crypto-Assets Regulation (MiCA).

Article 97(1) of MiCA mandated the ESAs to jointly issue guidelines by 30 December 2024 that specify the content and form of the explanation accompanying the cryptoasset white paper referred to in Article 8(4), and the legal opinions on the qualification of ARTs as per Article 17(1), point (b)(ii), and Article 18(2), point (e) of MiCA.

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The court ruled OFAC overstepped its authority in sanctioning Tornado Cash, holding that its smart contracts are not “property” under the governing statutes.

By Eric Volkman, Jenny Cieplak, Stephen P. Wink, and Deric Behar

On November 26, 2024, a three-judge panel of the US Court of Appeals for the Fifth Circuit reversed a Texas District Court decision and overturned the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctions designations against certain smart contracts…

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With appropriate safeguards, distributed ledger technology may expand the use of non-cash assets as derivatives collateral, while mitigating certain market infrastructure inefficiencies.

By Yvette D. Valdez, Adam Bruce Fovent, and Deric Behar

On November 21, 2024, the Digital Asset Markets Subcommittee (the Subcommittee) of the Commodity Futures Trading Commission’s (CFTC) Global Markets Advisory Committee (GMAC) issued a report (the Report) that recommended expanding the use of non-cash collateral in derivatives markets through distributed ledger technology (DLT).

In the…

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In its third action involving NFTs, the SEC targets a restaurant membership token tied to fundraising and promises of potential price appreciation for buyers.

By Jenny Cieplak, Ghaith Mahmood, Nima H. Mohebbi, Stephen P. Wink, and Deric Behar

On September 16, 2024, the Securities and Exchange Commission (SEC) issued a cease-and-desist order (the Order) against Flyfish Club, LLC (Flyfish) for an unregistered offering of crypto asset securities relating to Flyfish’s sale of $14.8 million worth of non-fungible tokens (NFTs), in violation of Section 5 of the Securities Act of 1933 (and no exemption from registration was available). The SEC alleged that the NFTs were issued to the public to finance the construction and operation of a members-only restaurant and club in in New York City.

Flyfish neither admitted nor denied any wrongdoing as part of the settlement, which does not include any allegations of misleading or fraudulent statements.

The SEC obtained this settlement roughly a year after its first and second enforcement actions against NFT issuers (for more information, see this Latham blog post on the first enforcement and this Latham blog post on the second enforcement), and less than a month after issuing a Wells Notice against one of the industry’s largest NFT marketplaces.

Mica Tracker

Online resource provides overview of delegated acts, technical standards, and guidelines for cryptoasset businesses.

Latham & Watkins has launched the Markets in Crypto-Assets Regulation Tracker, a new online resource that provides cryptoasset businesses with critical information to help navigate MiCA — a robust and detailed regulatory framework for cryptoassets.

Since MiCA was first published in the EU Official Journal in June 2023, various delegated acts, technical standards, and guidelines have come into force in different stages. By 30 December 2024…

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The case involves substantive litigation that could yield important legal principles for the treatment of decentralised projects.

By Dominic Geiser, Simon Hawkins, Sam Maxson, and Truman Mak

Decentralised autonomous organisations (DAO) are unique structures that operate autonomously in accordance with preset rules, utilising a blockchain and coordinated through a distributed consensus model. Whilst numerous DAOs are operating in the blockchain industry, these organisations are still new in legal terms and their precise legal status (including ownership and…

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The government will enact the new legislation to bring issuers of fiat-referencing stablecoins into the regulatory perimeter.

By Simon Hawkins, Adrian Fong, and Sam Maxson

On 17 July 2024, the Financial Services and the Treasury Bureau and the Hong Kong Monetary Authority (HKMA) released the consultation conclusions on their legislative proposal for a regulatory regime governing stablecoin issuers in Hong Kong (Consultation Conclusions). The next day, the HKMA followed with its own press release announcing the first batch…

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Recent Supreme Court administrative law rulings change the power dynamic between the executive and the judiciary in critical areas of statutory interpretation, enforcement, and immunity from legal challenge.

By Jenny Cieplak, Arthur S. Long, Nima H. Mohebbi, Benjamin A. Naftalis, Marlon Q. Paz, Yvette D. Valdez, Stephen P. Wink, Douglas K. Yatter, Adam Fovent, and Deric Behar

The 2023-2024 US Supreme Court session has concluded the term with a series of…

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Proposed rule would be implemented by statute and would give primacy to parties’ choice of governing law and jurisdiction.

By Stuart Davis, Nell Perks, and Matthew Unsworth

There is at least a tentative consensus in English law that cryptocurrencies and other digital assets are capable of giving rise to property rights.[1] However, there remains considerable uncertainty around which laws should govern proprietary disputes about digital assets and which courts should have jurisdiction over those disputes.

The Financial Markets Law Committee (FMLC) explained the crux of this problem in their initial report on digital assets in 2018.[2] Traditionally, a question as to rights or entitlement to personal property is governed by the law of the place where the property is situated (lex situs).  But this rule is ill-suited to digital assets which, by their nature, are intangible, digitised, and constituted on a decentralised ledger shared across a network of participants in potentially any number of jurisdictions.