cryptocurrency

Subscribe to cryptocurrency via RSS
Virtual-Currency-B-Single

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.

feature-11

The SEC’s long-awaited green light for spot bitcoin ETPs is welcomed by the market, but the ambivalent decision raises more questions than it answers.

By Jenny Cieplak, Aaron Gilbride, Yvette D. Valdez, Stephen P. Wink, and Deric Behar

On January 10, 2024, the Securities and Exchange Commission (SEC) issued, on an accelerated basis, an Omnibus Approval Order (the Order) for proposed NYSE Arca, Nasdaq, and Cboe BZX rule changes seeking to list and trade shares of 11 spot bitcoin trusts. Spot bitcoin trusts hold actual bitcoin, as opposed to bitcoin futures trusts, which hold derivatives tied to the price of bitcoin.

The approval of these rule change requests represents a green light for spot bitcoin-based exchange traded products (ETPs) to trade on national securities exchanges for the first time in bitcoin’s 15-year history, after a decade of attempts by market participants to obtain such approval.

In the Order, the SEC found the proposals to be “consistent with the Securities Exchange Act of 1934 (the Exchange Act) and rules and regulations thereunder applicable to a national securities exchange,” including the requirement that the exchanges’ rules be designed to “prevent fraudulent and manipulative acts and practices.”

A federal court’s dismissal of claims against a decentralized cryptocurrency platform and its investors for the actions of scam token issuers is a case of first impression with wider significance.

By Jenny Cieplak, Benjamin A. Naftalis, Stephen P. Wink, Douglas K. Yatter, Gregory Mortenson, and Deric Behar

On August 29, 2023, the US District Court for the Southern District of New York dismissed a proposed class action lawsuit against Uniswap Labs and its CEO, foundation, and three venture capital backers[1] (the Defendants) brought by plaintiffs who sought damages from alleged exposure to scam tokens that originated with anonymous third-party token issuers on the company’s decentralized cryptocurrency trading protocol.

The Monetary Authority of Singapore announced a new framework that seeks to ensure value stability for stablecoins regulated in Singapore.

By Simon Hawkins, Farhana Sharmeen, Tan Gen Huong, and Adrian Fong

On 15 August 2023, the Monetary Authority of Singapore (MAS), Singapore’s primary regulator for banks and payment services, announced its new stablecoin regulatory framework. The new framework introduces licensing and other requirements for stablecoin issuers with operations in Singapore.

This framework follows a consultation paper in October 2022, on the MAS’ proposed approach to the regulation of stablecoin issuers and intermediaries, and a consultation paper on the scope of e-money and digital payment tokens in December 2019, in which the MAS considered the need to review its regulatory approach to accommodate stablecoins with the potential to become more widely used as payment instruments. These publications, together with the Hong Kong Monetary Authority’s discussion paper on its proposed approach to the regulation of stablecoins, (see Latham’s blog post), indicate that Asian regulators continue to consider appropriate guardrails for cryptocurrencies in light of significant consumer interest.

feature-3

A legislative initiative in Illinois would establish licensing and consumer protection requirements for digital asset businesses serving consumers in the state.

By Jack Barber, Parag Patel, Arthur S. Long, John J. Sikora, Stephen P. Wink, Pia Naib, and Deric Behar

On February 21, 2023, the Illinois Department of Financial and Professional Regulation (IDFPR) announced the Consumer Financial Protection and Innovation Package, which was introduced in both chambers of the Illinois General Assembly, consisting of…

feature-3

The Guidance clarifies the regulator’s expectations on safekeeping customer digital assets, and the disclosures that must accompany such arrangements.

By Arthur S. Long, Parag Patel, Marlon Q. Paz, Yvette D. Valdez, Barrie VanBrackle, Pia Naib, Donald Thompson, and Deric Behar

On January 23, 2023, the New York Department of Financial Services (NYDFS) published Guidance on Custodial Structures for Customer Protection in the Event of Insolvency (the Guidance). It guides virtual currency entities (VCEs)…

feature-4

Digital asset activities of licensed institutions must be approved and will be assessed for potential safety and soundness risks.

By Arthur S. Long, Pia Naib, and Deric Behar

On December 15, 2022, the New York State Department of Financial Services (NYDFS) issued final guidance to covered institutions engaging in (or seeking to engage in) virtual currency-related activity (the Guidance). Such covered institutions are New York “banking organizations” — New York-chartered banks, trust companies, private bankers, savings banks, safe…

Latham lawyers discuss the state of the crypto industry and the challenges for companies.

Turbulent market conditions are presenting novel challenges for companies in the cryptocurrency space. What are the factors contributing to the downturn, the implications for companies, and the legal rights and remedies that companies may have?

Restructuring & Special Situations Practice partners George Klidonas, Andrew Sorkin, and Suzzanne Uhland, together with Digital Assets & Web3 Practice Co-Chair and partner Yvette Valdez, recently hosted an in-depth discussion on…

In a long-awaited paper, the FRB continues its exploratory approach and emphasizes the need for congressional support.

By Alan W. Avery, Pia Naib, and Deric Behar

On January 20, 2022, the Board of Governors of the Federal Reserve System (FRB) published its long-awaited discussion paper (the Paper) on the potential benefits and risks of issuing a US central bank digital currency (CBDC). The Paper, titled “Money and Payments: The U.S. Dollar in the Age of Digital Transformation,” is intended to initiate a discussion around the various factors the FRB is considering with respect to a potential US CBDC rather than “advance a specific policy outcome.”

Popular and institutional interest in digital assets, decentralized applications, NFTs, and blockchain technology skyrocketed, and regulators sprinted to catch up.

By Todd Beauchamp, Yvette D. Valdez, Stephen P. Wink , Adam Bruce Fovent, Adam Zuckerman, and Deric Behar

For the digital asset markets, 2021 was a banner year. Among the milestones:

•  Bitcoin prices hit an all-time high, exceeding $65,000, up from about $30,000 at the end of 2020.

•  Total value locked in decentralized finance (DeFi) surged from under $20 billion to over $250 billion in 12 months.

•  Market capitalization for all digital assets reached $3 trillion.

•  Non-fungible tokens (NFTs) went from crypto curiosity to mainstream phenomenon, with a single NFT selling for $69 million at a traditional auction house and notable NFT collections reaching trading volumes in the billions.

•  Valuations for crypto companies and cryptoassets soared, with at least 40 unicorns (valuation of $1 billion or more) minted.

•  Venture capital (VC) firms invested an estimated $32.8 billion into crypto and blockchain-related startups, including $10.5 billion in Q4 2021 (up from an estimated $8 billion for all of 2020). Furthermore, 49 new crypto-focused VC funds were raised, with three of those funds raising over $1 billion and two topping $2 billion.