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

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 President Biden Signs Executive Order Outlining Crypto Policy

The Office of the Comptroller of the Currency (“OCC”) recently signaled its approval for banks to fully wade into the cryptocurrency custodian space.  On in a July 22, 2020 interpretive letter, the OCC concluded that a national bank may provide cryptocurrency custody services on behalf of its customers, including by holding the unique cryptographic keys associated with cryptocurrency, so long as the institution is able to effectively manage the risks and complies with applicable law.
Continue Reading Office of the Comptroller of the Currency Affirms Authority of a National Bank to Provide Cryptocurrency Custody Services

Key Takeaways

  1. The United States-Mexico-Canada Agreement (USMCA) provides for financial and digital trade regulations that harmonize the treatment of fintech companies.
  2. North American companies leveraging digital assets for payments should consider strategic regional opportunities available under the new USMCA fintech Framework.
  3. The USMCA Parties (member countries) continue to license fintech companies using cryptocurrency and create regulatory sandboxes to incentivize experimentation with the new technology under relaxed regulatory conditions.

Continue Reading The United States-Mexico-Canada Agreement – Paving the Way for a Cross-Border Fintech Sandbox

Last week we reported that FinCEN had issued new guidance addressing cryptocurrency and other convertible virtual currency. The need for compliance was reinforced this week. In a speech by Sigal Mandelker, Under Secretary for Terrorism and Financial Intelligence, during blockchain week in NY, a stern warning was issued. The message was clear. Regulatory compliance is not an option and you must do it right from the start – not just after you got a call from regulators or law enforcement.
Continue Reading FinCEN – We Will Identify Where Compliance Is Not Taking Place And Take Appropriate Action

FinCEN has issued  2 new guidance documents addressing cryptocurrency and other convertible virtual currency (CVC). The guidance does not establish any new regulatory expectations. Rather, it consolidates current FinCEN regulations, guidance and administrative rulings that relate to money transmission involving virtual currency, and applies the same interpretive criteria to other common business models involving CVC. FinCEN’s rules define certain businesses or individuals involved with CVCs as money transmitters subject to the same registration requirements and a range of anti-money laundering, program, recordkeeping, and reporting responsibilities as other money services businesses. It also warns of threats posed by virtual currency misuse.
Continue Reading FinCEN Updates Guidance on Crypto

Distributed ledger technology is continuing to be thought of as the technology that can address some of the issues that plague the music and content-creation space. Our Music Festival (“OMF”) is relying on this technology to develop a music festival and fan-interaction network that will be powered by its currency token, known as an “OMF Token.” OMF was founded by Justin Blau (the DJ known as 3LAU), Adam Lynn and Kevin Edelson and they are backed by a team of individuals from the talent management, music and festival sectors.
Continue Reading Our Music Festival- Empowering a Decentralized Fanbase with Blockchain

As we have previously reported, the number of blockchain patents being filed and granted is continuing to increase. According to a Thomson Reuters report, 225 out of the 406 blockchain patents (55.4%) filed in 2017 came from China, followed by 91 (22.4%) from the U.S. and 13 (3.2%) from Australia. The following is a brief summary of a few such patents that have been recently filed or granted in the U.S.
Continue Reading Recent Blockchain Patents of Note

Much uncertainty exists throughout the world on the legality and legal classification of crypto tokens. In the United States, Ripple was sued recently for allegedly selling unregistered tokens (XRP) in a violation of U.S. securities laws.  The US SEC and CFTC have held hearings and are assessing whether to classify certain tokens as securities and/or commodities. Both agencies have issued guidance on this (see, for example SEC and CFTC), but many issues remain.

Some industry experts have commented on the classification of three of the biggest tokens- bitcoin, ether and ripple. Many believe bitcoin and ether are not a security. However, debates exist as to whether ether or ripple are. Over 1500 crypto tokens exist, each with a different set of characteristics, function and purpose. The SEC has said most tokens are likely securities under the Howey Test.
Continue Reading How Crypto Token Function and Transferability Could Impact Classification as a Security

The Commodity Futures Trading Commission’s LabCFTC recently released, “A CFTC Primer on Virtual Currencies.” This primer provides an overview of virtual currencies and their potential use-cases, helps outline the CFTC’s role and oversight of virtual currencies, and cautions investors and users of the potential risks involved with virtual currencies.
Continue Reading CFTC Issues Primer on Virtual Currency, Virtual Tokens and ICOs