Global Fintech & Digital Assets Blog

Digital Commodities Consumer Protection Act Seeks to Empower CFTC

Posted in Cryptoassets

The latest bipartisan crypto bill would give the CFTC new tools and authorities to regulate digital commodities, with a focus on market integrity and consumer protection.

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

On August 3, 2022, a bipartisan group of US senators[1] introduced the Digital Commodities Consumer Protection Act of 2022 (the Bill). The Bill is the latest legislative proposal seeking to bring clarity to digital asset markets and the allocation of regulatory responsibility with respect to such markets. In comparison to other recent proposals, the Bill goes further toward the creation of a comprehensive supervisory regime for digital asset platforms, with a particular focus on market integrity and consumer protection (although it does not directly address securities issues). Continue Reading

OFAC Sanctions Decentralized Virtual Currency “Mixer”

Posted in Cryptoassets

The US Treasury opens a Pandora’s box of legal issues as it targets a decentralized finance protocol used for both licit and illicit means.

By Eric Volkman and Deric Behar

On August 8, 2022, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced sanctions against decentralized virtual currency “mixer” Tornado Cash (and 44 associated USDC and ETH addresses) — the first action of its kind against a decentralized finance (DeFi) protocol. Continue Reading

The UCC Gets a Digital Asset Refresh

Posted in Cryptoassets

A new Article 12 and amendments to Article 9 regarding “controllable electronic records” would govern transactions and security interests in digital assets.

By Lawrence Safran and Deric Behar

On July 13, 2022, the Uniform Law Commission (in partnership with the American Law Institute) approved amendments intended to modernize the Uniform Commercial Code (UCC). The amendments principally cover transactions involving emerging digital asset technologies such as virtual (non-fiat) currencies, non-fungible tokens (NFTs), and digital assets with embedded payment rights, although a handful of unrelated updates are also included. Importantly, a new UCC Article — Article 12 — is dedicated to governing transfers of most digital assets, including sales and financings as well as security interests and competing claims in those assets. Related amendments to UCC Article 9 would govern transfers of payment rights. Continue Reading

BIS Issues Final Guidance on Stablecoin Regulation

Posted in Blockchain, Cryptoassets

The global central bank cooperative body would bring stablecoins within the international standards for payment, clearing, and settlement systems.

 By Alan W. Avery, Stuart Davis, Simon Hawkins, Yvette D. Valdez, Stephen P. Wink, Pia Naib, and Deric Behar

On July 13, 2022, the Bank for International Settlements (BIS) Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) published a joint report on the regulation of stablecoin arrangements titled “Application of the Principles for Financial Market Infrastructures to stablecoin arrangements” (the BIS Report). The BIS Report is the outcome of a consultation previously published in October 2021 (see this previous post for more information). It is intended for use by market participants as they design, develop, and operate their products and services that are (or have the potential to become) systemically important after launch; and by regulatory, supervisory, and oversight authorities as they assess and oversee stablecoin arrangements.
Continue Reading

Responsible Financial Innovation Act Offers Clarity, Safeguards for Digital Assets — Taxation

Posted in Cryptoassets

The RFIA could ease tax compliance burdens for parties transacting in digital assets and defer or eliminate tax on some transactions.

 By Jiyeon Lee-Lim, Elena Romanova, Ted Gkoo, and Jacob Nagelberg

Latham & Watkins presents a blog series on the Responsible Financial Innovation Act, which was introduced in the US Senate on June 10, 2022, to create a framework for digital assets, cryptocurrency, and blockchain technology. This fifth post in the series covers taxation issues.

Taxation

Taxation issues are covered in Title II of the bill (Responsible Taxation of Digital Assets), which incorporates the new definitions for digital asset and virtual currency provided for in Title I of the bill (see discussion in this previous post).

The RFIA would modify the Internal Revenue Code (the Code) to provide new rules and extend certain existing rules to cover digital assets. It would also require that the Internal Revenue Service (IRS) issue guidance on several topics frequently requested by the digital asset industry. Continue Reading

Hong Kong Formalises Legal Framework to Regulate Virtual Asset Exchanges

Posted in Cryptoassets

Hong Kong’s licensing regime for virtual asset service providers to take effect in March 2023.

By Simon Hawkins, Adrian Fong, and Shirley Wong

On 24 June 2022, the Hong Kong government gazetted the Anti-Money Laundering and Counter-Terrorist Financing (Amendment) Bill 2022 (Amendment Bill). The Amendment Bill proposes changes to the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Chapter 615) (AMLO) in order to introduce a licensing regime for virtual asset service providers (VASP) and impose statutory anti-money laundering and counter-terrorist financing (AML/CTF) obligations on the VASP sector. Continue Reading

Webcast: Insurtech Insights

Posted in Cryptoassets, Data Privacy, Cybersecurity, and AI, Payments

Latham lawyers explore the latest insurtech trends and regulatory developments impacting the sector in Europe and Asia.

Disruptive technology is revolutionizing insurance, enabling insurers to achieve growth by leveraging big data and creating innovative solutions to enhance customers’ digital experience. We are pleased to launch Insurtech Insights, a series of webcasts to discuss the most recent trends in the insurtech space and how to navigate regulatory developments. Continue Reading

Responsible Financial Innovation Act Offers Clarity, Safeguards for Digital Assets — Banking and Payment Stablecoins

Posted in Blockchain, Cryptoassets

The RFIA could make it easier for fintechs dealing in digital assets and stablecoins to access Federal Reserve bank services.

 By Alan W. AveryPia Naib, and Deric Behar

Latham & Watkins presents a blog series on the Responsible Financial Innovation Act, which was introduced in the US Senate on June 10, 2022, to create a framework for digital assets, cryptocurrency, and blockchain technology. This fourth post in the series covers banking and payment stablecoin issues. Continue Reading

Responsible Financial Innovation Act Offers Clarity, Safeguards for Digital Assets — CFTC and Commodities

Posted in Blockchain, Cryptoassets

The CFTC would take center stage in the regulation of spot digital asset markets under Title IV of the RFIA.

 By Yvette D. Valdez, Adam Bruce Fovent, and Emily Viola

Latham & Watkins presents a blog series on the Responsible Financial Innovation Act, which was introduced in the US Senate on June 10, 2022, to create a framework for digital assets, cryptocurrency, and blockchain technology. This third post in the series covers CFTC and commodities regulatory issues.

Title IV of the Responsible Financial Innovation Act ( RFIA) is arguably the keystone of the proposed regulatory framework and would make various amendments to the Commodity Exchange Act (CEA), ultimately giving the Commodity Futures Trading Commission (CFTC) principal regulatory authority over digital asset markets. Continue Reading

Responsible Financial Innovation Act Offers Clarity, Safeguards for Digital Assets — Consumer Protection and State Money Transmission Laws

Posted in Blockchain, Cryptoassets

The RFIA would define consumer protection standards for digital assets and introduce new requirements regarding digital asset use in interstate money transfers.

By Jenny Cieplak, Parag Patel, Barrie VanBrackle, and Deric Behar

Latham & Watkins presents a blog series on the Responsible Financial Innovation Act, which was introduced in the US Senate on June 10, 2022, to create a framework for digital assets, cryptocurrency, and blockchain technology. This second post in the series covers consumer protection and state money transmission laws.

Consumer Protection: Disclosures

Consumer Protection issues are covered in Title V of the bill (Responsible Consumer Protections) of the Responsible Financial Innovation Act (RFIA). The RFIA’s customer protection standards are to be enforced by the federal or state licensing, registration, or chartering authority of a digital asset intermediary, or by the appropriate state or federal banking supervisor if a depository institution or other financial institution. Continue Reading

LexBlog