According to a recent Bloomberg Law article [subscription required], in the past year there has been a sharp decline in active civil suits against cryptocurrency exchanges, digital wallet, mobile phone providers and others involving claims related to crypto hacking incidents or cybertheft, due, in part, to increased security protocols and concerted electronic contracting legal strategies
Blockchain and the Law
Latest from Blockchain and the Law
SEC Approves Exchange Listing Applications for Spot Bitcoin ETPs
On January 10, 2024, the Securities and Exchange Commission (“SEC”) issued an order approving the applications of 11 different spot Bitcoin exchange‑traded products (the “Approved ETPs”) to each list and trade their shares on a national securities exchange. As a result, each Approved ETP is expected to commence trading on either the NYSE Arca, Inc.,…
Don’t Get Caught Up in the Mix: OFAC Sanctions Another Crypto Mixer for Potential Violations of Sanctions Regulations and FinCEN Proposes New Rule
U.S. government agencies continue to take action against cryptocurrency mixing services that enable cybercriminals to obfuscate the trail of stolen proceeds on public blockchains stemming from illicit cyber activity. On November 29, 2023, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) sanctioned another virtual currency mixing service, Sinbad.io, for “serving as…
The Investment Association Publishes a “Blueprint” for Fund Tokenisation in the UK
On 24 November 2023, the Investment Association published a report on behalf of the wider Technology Working Group to the UK Government’s Asset Management Taskforce (the “Working Group”) on a “Blueprint” for the implementation of a fund tokenisation regime in the UK (the “Tokenisation Report”).
The Financial Conduct Authority (“FCA”) which, along with HM Treasury…
Part II: NFT Lending — Legal Issues Involving Secured Transactions under the UCC, Pre- and Post-Article 9 and 12 Amendments
As discussed in Part I of this series, NFT-based lending is pioneering a new avenue of investment and activity on the blockchain that will enable new and innovative use cases. In this Part II, we will discuss the implications for Lenders.
I. Issues for Lenders:
These on-chain loans secured by digital assets present a…
Part I: NFT Lending — Legal Issues Involving Secured Transactions under the UCC, Pre- and Post-Article 9 and 12 Amendments
Despite the protracted crypto bear market, innovators in non-fungible tokens (“NFTs”) are hard at work. Gone are the days when NFTs were merely profile pictures (“PFPs”) displayed on a pseudonymous social media account or shown for their prestige online or in real life to confused friends and colleagues. As discussed in our two-part series explaining…
CFTC Wades into DeFi Enforcement Again
Last month, the Commodity Futures Trading Commission (CFTC) announced settled charges against three decentralized finance (DeFi) protocols for various registration and related violations under the Commodity Exchange Act (CEA) during the relevant period of investigation. As a result, each entity paid a civil monetary penalty and agreed to cease violations of the CEA. According to…
Ownership Claims over Auction of “The First NFT” Previously Dismissed by a New York Court Now on Appeal
Way back (if we’re counting tech years) in 2014, artist Kevin McCoy (“McCoy”) created a digital record of his pulsating, octagon-shaped digital artwork Quantum on the Namecoin blockchain on May 2, 2014, thereby minting “the first NFT.” A lot has happened in the digital asset and NFT space since that day. Who could imagine that…
UK Financial Promotion Rules for Cryptoassets: Longer Implementation Period for Certain Requirements
On 7 September 2023, the United Kingdom’s Financial Conduct Authority (“FCA”) set expectations ahead of its new financial promotion rules for cryptoassets (which we wrote about here).
From 8 October 2023, new rules for the marketing of cryptoassets come into force. The new requirements include the need for marketing materials to be “clear, fair…
Tokenised Funds – Key UK Regulatory Considerations
In its February 2023 discussion paper (DP23/2) relating to the UK regulatory regime for asset management, the UK’s Financial Conduct Authority (“FCA”) briefly touched on fund tokenisation as an area of technological drive and change in the fund management industry. Please refer here to our update on that discussion paper.
The FCA made clear that…
U.S. Senate and House of Representatives Introduce Competing Crypto Regulation Bills
On July 12, 2023, U.S. Senators Cynthia Lummis (R-WY) and Kirsten Gillibrand (D-N.Y.) proposed a revised version of their previously introduced crypto regulation bill to create better safeguards for the crypto industry generally while adding new, stronger consumer protection provisions and AML provisions. The Lummis-Gillibrand bill, also known as the Responsible Financial Innovation Act (“RFIA”),…
Cryptocurrency Companies: Enforceable Terms of Use Matter
It is not unusual for users of a platform or of software to challenge the enforceability of a company’s terms of use if they take issue with the company’s product or service and decide to bring suit. As most terms of use contain an arbitration clause (or mandated dispute resolution process) and disclaimers of liability,…
From Code to Consequence: CFTC Obtains Default Judgment Against Ooki DAO for Commodity Exchange Act Violations
Unlike traditional corporate entities with a typical hierarchical structure, a decentralized autonomous organization (“DAO”) – a management structure that uses blockchain technology – functions as a leaderless entity. Without a formal corporate structure, DAOs instead operate by distributing governance rights among persons who hold a specific governance token. Consequently, federal and state courts have been…
The Ripple Effect: Implications of the SEC’s Partial Loss in SEC v. Ripple Labs Inc.
The SEC suffered a significant loss last week in its ongoing legal battle with Ripple over the XRP digital token. While the District Court held that Ripple’s initial sales of XRP to institutional investors constituted the sale of unregistered securities, it was a Pyrrhic victory as the court held that all other ways in which…
CFTC Acts to Ensure Covered Entities Are Considering Evolving Risks from Digital Assets and Other Technologies
In a post-FTX environment, several financial regulators are taking action to emphasize a policy of sound custody and disclosure practices and to better understand certain risks to protect customers in the event of an insolvency or similar proceeding. For example, back in January 2023, the New York Department of Financial Services announced that it had…
The Crypto Wars Escalate
The gloves are off. The SEC’s recent enforcement actions against leading crypto exchanges suggest that the SEC has decided that time’s up for the crypto industry as it currently exists in the United States.
After spending years urging industry participants to come in and register, the SEC has made clear, by going after some of the…