Governor Newsom Signs Blockchain Executive Order

By James Gatto, Moorari Shah, Sarah Aberg, A.J. Dhaliwal and Gabriel Khoury on May 6, 2022 Posted in Cryptocurrency

In an apparent follow up to President Biden’s March Executive Order on Digital Assets (which we previously discussed here), this week, California Governor Gavin Newsom signed a similar executive order aiming to foster responsible innovation, bolster California’s innovation economy, and strengthen consumer protection through creating a transparent regulatory and business environment for Web3 companies. Newsom’s executive order credits Biden’s executive order as paving the way for the assessment of key issues raised by crypto-assets and sets California on a path to harmonize its nascent crypto regulatory framework with forthcoming federal rules and guidelines and, hopefully, create regulatory clarity for businesses and consumers. Continue Reading

New York’s Superintendent of Financial Services Addresses BitLicense Delays

By Sarah Aberg and Gabriel Khoury on April 28, 2022 Posted in Cryptocurrency, Regulatory

This January, Adrienne A. Harris was confirmed as superintendent of New York’s Department of Financial Services, which administers New York’s BitLicense program, among others. In a March 28 interview, Harris discussed the BitLicense program in detail and addressed some of its longstanding issues, including its slow response times to applicants and updating some of the outdated regulatory and operational aspects of the program. Continue Reading

Uniswap and VC Backers Sued For Selling Unregistered Securities

By James Gatto on April 18, 2022 Posted in Regulatory, SEC

A recent class-action lawsuit alleges that the “Uniswap Protocol” exchange is one of the largest crypto-asset exchanges in the world, which permits the unlawful promotion, offer, and sale of crypto tokens as unregistered securities. According to the complaint, Uniswap has no barriers to entry for users looking to trade or swap crypto tokens on the exchange. It requires no verification of an individual’s identity and conducts no “know-your-customer” (KYC) process, leading to rampant fraud. The complaint further alleges that Uniswap has enriched itself and the other defendants (including its VC backers) by collecting fees for issuers on every transaction executed on the exchange that is not disclosed in a transparent manner, in violation of securities laws. Other allegations are that Uniswap offered and sold unregistered securities throughout the United States on its exchange without registering as a national securities exchange or as a broker-dealer and without there being any registration statements in effect for the tokens it was selling, all in violation of applicable law. Continue Reading

Tokenization and the Law: Legal Issues with NFTs

By James Gatto, Yasamin Parsafar, Gabriel Khoury and Pouneh Almasi on April 14, 2022 Posted in NFTs

As the world economy increasingly goes digital, innovators and existing market participants are finding new ways to tokenize assets and expand upon their uses, particularly with non-fungible tokens (NFTs). NFTs have commonly been used to represent digital art, photos, videos, audio files, collectibles, game items, tickets, and other digital assets, but can also represent virtually any digital or physical asset as well as entitlements (e.g., tickets, subscriptions, exclusive access, etc.). Continue Reading

The Second U.S. NFT Property Is Ready To be Auctioned

By Gabriel Khoury and Jared Wachtler on April 11, 2022 Posted in Blockchain, NFTs

Propy has announced that the second U.S. NFT-backed property (see our blog about the first NFT sale here in which we discussed blockchain technology, and specifically how the sale works) is set to be auctioned, with a starting price of 185,000 USDC. USDC is a stablecoin backed by the United States Dollar (we previously discussed stablecoins here). Continue Reading

SEC Announces 2022 Examination Priorities, Includes Crypto-Assets

By Sarah Aberg and Gabriel Khoury on March 31, 2022 Posted in Cryptocurrency, NFTs, Regulatory, SEC

The U.S. Securities and Exchange Commission (“SEC”) has announced its examination priorities for the fiscal year 2022. Among them is crypto-assets. Specifically, the SEC is targeting robo-advisers, fractionalization, and other crypto-custody arrangement practices.

When Does Cryptocurrency Mining Create a Taxable Event? IRS Does Not Clarify

By James Gatto, Sarah Aberg and Gabriel Khoury on March 28, 2022 Posted in Regulatory, Virtual Currency

A couple rejected a refund settlement offer from the IRS over its tax treatment of tokens they earned from mining. Instead, the couple has sought formal adjudication on the issue from the federal courts. The government has filed a motion to dismiss claiming the issue is moot. The relevant issue is whether tax is due when crypto tokens are mined and awarded to the miners, as the IRS contended, or whether tax is due when the mined tokens are converted to fiat or cryptocurrency or otherwise used. Continue Reading

Recent Transaction Transfers Ownership of Digital Mortgage Loans via Blockchain

By Moorari Shah, A.J. Dhaliwal and Gabriel Khoury on March 25, 2022 Posted in Cryptocurrency

In a novel transaction for the blockchain and mortgage industries, a blockchain-focused financial services company and an investment firm announced the completion of a transaction involving the origination of digital mortgage loans and transfer of ownership via blockchain technology. The eNote digital mortgage assets were originated on the Provence Blockchain and registered on the financial services company’s Digital Asset Registration Technologies (DART) platform. DART monitors blockchain-based asset transfers and is intended to enable an efficient alternative to the existing loan tracking database systems. Continue Reading

President Biden Signs Executive Order Outlining Crypto Policy

By Gabriel Khoury and James Gatto on March 9, 2022 Posted in Regulatory, Virtual Currency

On March 9, President Biden signed a highly anticipated executive order outlining his administration’s cryptocurrency policy. We have previously blogged about the Biden administration’s working group on stablecoins and the Federal Reserve’s report on a potential U.S. central bank digital currency (“CBDC”). Continue Reading

House Financial Services Committee Focuses on PWG Stablecoin Report

By Moorari Shah, A.J. Dhaliwal and Gabriel Khoury on March 3, 2022 Posted in Cryptocurrency

On February 8, the House Financial Services Committee held a hearing titled, “Digital Assets and the Future of Finance: The President’s Working Group on Financial Markets” to consider legislative recommendations from the President’s Working Group (PWG) report on stablecoins (we previously discussed the report in an earlier Consumer Finance & FinTech Blog post here). Continue Reading