United States

US Federal and State legislators propose exempting certain digital tokens from securities laws

On January 4, 2019, two Colorado senators introduced the “Colorado Digital Token Act,” a bill seeking to exempt digital tokens and cryptocurrencies from certain Colorado state securities laws. In filing the Colorado Digital Token Act, the senators proposed that digital tokens with a “primarily consumptive purpose” that are not marketed to be used for “speculative … Continue Reading

Personal jurisdiction in the age of blockchain

By Kathleen Scott (US) on January 10, 2019 Posted in Fintech, General, United States

As commercial activity increasingly intertwines with applications of blockchain technology with participants around the world, courts have had to grapple with the personal jurisdiction implications of such arrangements. Will participants in these blockchain applications based outside the United States find themselves subject to U.S. jurisdiction when disputes arise, based on how they have conducted their … Continue Reading

Transition period under New York cybersecurity regulation ends March 1, 2019

By Susan Ross (US), Kathleen Scott (US) and *Tristan Coughlin (US) on January 7, 2019 Posted in Banking, Enforcement, Fintech, Regulation and compliance, United States

The two-year transitional period under the New York State Department of Financial Services (“DFS”) Cybersecurity Regulation, 23 NYCRR 500 (the “Regulation”), will expire on March 1, 2019, with the final remaining requirement becoming effective. Entities covered by the Regulation that utilize third party service providers, which include not only banks and insurers, but also other … Continue Reading

Impact of partial US government shutdown on federal financial regulatory agencies

By Lillian A. Cardona (US) on January 5, 2019 Posted in Banking, Brokers and Intermediaries, Commodities & Derivatives, Energy, General, Regulation and compliance, Securities, United States

As a result of the United States Congress not adopting an appropriations bill or a continuing resolution to fund specific government departments, agencies or functions, certain federal agencies are currently subject to a partial government shutdown. Below is an overview of how the partial federal government shutdown is affecting financial or other major regulatory agencies: … Continue Reading

Federal Reserve Board proposes risk-based prudential standards

By Kathleen Scott (US) on December 19, 2018 Posted in Banking, Dodd-Frank, General, Regulation and compliance, United States

On November 29, 2018, the Federal Reserve Board published for public comment a Notice of Proposed Rulemaking that would reorganize the current prudential standards regulatory framework for US banking organizations deemed to be of systemic risk into four separate categories to reflect their risk profiles.… Continue Reading

New bipartisan bills aim to regulate and promote blockchain and cryptocurrencies

By Kathleen Scott (US) on December 19, 2018 Posted in Fintech, Regulation and compliance, United States

Legislation has been introduced in the US House of Representatives directed at regulating virtual currency. In a post from the Norton Rose Fulbright Project Finance blog available, Deanne Barrow analyzes the bills. Readers interested in learning more about cryptocurrency can sign up for updates on our FinTech law and regulation page.… Continue Reading

CFTC seeks public comment on crypto-asset mechanics and markets

By Lillian A. Cardona (US) on December 17, 2018 Posted in Commodities & Derivatives, Fintech, General, Regulation and compliance, United States

The Commodity Futures Trading Commission (“CFTC”) published a Request for input on December 17, 2018, seeking public comment and feedback on a set of twenty-five (25) questions to better inform the CFTC’s understanding of the technology, mechanics, and markets for virtual currencies beyond Bitcoin. … Continue Reading

Banking agencies and FinCEN encourage innovative efforts by banks to combat money laundering and terrorist financing

By Kathleen Scott (US) on December 14, 2018 Posted in Banking, Enforcement, Fintech, General, Money laundering, Regulation and compliance, United States

On December 3, 2018, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Office of the Comptroller of the Currency, and the Financial Crimes Enforcement Network (“FinCEN”), (collectively, the “Agencies”) issued a joint statement (“Joint Statement”) urging banks to consider, evaluate and potentially implement … Continue Reading

US economic sanctions also affect non-US companies

By Stephen McNabb (US), Paul Sumilas (US), Kim Caine (US) and Kathleen Scott (US) on December 10, 2018 Posted in Enforcement, General, Regulation and compliance, United States

Over the last few months, US economic sanctions have taken the front pages as the Trump Administration has reinstated certain sanctions aimed at Iran following the United States withdrawal from the Joint Comprehensive Plan of Action (“JCPOA”). While the so-called “snapback” reinstated sanctions provisions increase the risk for non-US companies, recent enforcement actions against non-US … Continue Reading

US Federal Banking Agencies issue Community Bank Leverage Ratio proposal

By Mike Keeley (US), Justin Long (US), Kathleen Scott (US) and Richard Potomac (US) on November 29, 2018 Posted in Banking, Capital adequacy, General, Regulation and compliance, United States

On November 21, 2018, the Office of the Comptroller of the Currency (the “OCC”), the Board of Governors of the Federal Reserve System (the “Board”), and the Federal Deposit Insurance Corporation (the “FDIC”) (collectively, the “Federal Banking Agencies” or the “Agencies”) jointly issued a notice of proposed rulemaking (the “NPR” or the “Proposal”) that would … Continue Reading

SEC issues statement on digital asset securities issuance, investment and trading

By Andrew Lom (US) and Rachael Browndorf (US) on November 21, 2018 Posted in Enforcement, Fintech, General, Regulation and compliance, Securities, United States

On November 16, 2018, the Securities and Exchange Commission (“SEC”) issued a statement on the application of federal securities laws to the issuance and trading of, and investment in, digital asset securities. While the statement encourages technological innovations that benefit investors and capital markets, it emphasizes that market participants must still adhere to federal securities … Continue Reading

CFTC adopts $8 billion threshold for swap dealer de minimis exception

By Lillian A. Cardona (US) on November 20, 2018 Posted in Commodities & Derivatives, General, Regulation and compliance, United States

On November 13, 2018, the CFTC published its Final Rule (Final Rule) setting its de minimis exception threshold to swap dealer registration and regulation requirements at an aggregate gross notional amount (“AGNA”) threshold of $8 billion in swap dealing activity. Under the de minimis exception as originally adopted, a person would not be deemed … Continue Reading

SEC announces first enforcement action against EtherDelta for operating an unregistered exchange for ERC20 digital tokens

By Kevin Harnisch (US), Andrew Lom (US), Rachael Browndorf (US), Christopher Cash (US) and Lillian A. Cardona (US) on November 19, 2018 Posted in Enforcement, Fintech, General, Regulation and compliance, United States

On November 8, 2018, the Securities and Exchange Commission (“SEC”) announced that it settled charges against Zachary Coburn, founder of EtherDelta, a digital token trading platform, for operating an unregistered national securities exchange. This is the SEC’s first enforcement action based on findings that a digital token trading platform operated as an unregistered national securities … Continue Reading

Iranian sanctions re-imposed and in full effect

By Kathleen Scott (US) on November 14, 2018 Posted in Banking, Enforcement, General, Money laundering, Regulation and compliance, United States

As of November 5, 2018, all of the US sanctions that were lifted or waived in connection with the Joint Comprehensive Plan of Action (JCPOA), the 2016 nuclear deal among the United States and its allies and Iran, have been re-imposed and are in full effect. As a result, non-US companies can be subject to … Continue Reading

What auditors need to know about the blockchain

By Kathleen Scott (US) on November 14, 2018 Posted in Fintech, General, United States

Yet another U.S. regulator has weighed in on the use of the blockchain. The Public Company Accounting Oversight Board (PCAOB) is a nonprofit corporation established by the U.S. Congress to oversee the audits of public companies in order to protect investors and the public interest by promoting informative, accurate and independent audit reports. The PCAOB … Continue Reading

Alibaba successful in temporarily shutting down third party using its name to sell “AlibabaCoin”

By Susan Ross (US) and Kathleen Scott (US) on November 6, 2018 Posted in Fintech, General, United States

On October 22, 2018, a U.S. federal trial court in Manhattan granted web services conglomerate Alibaba Group Holding Limited’s request for a preliminary injunction against several defendants that were offering cryptocurrency for sale, under the name “AlibabaCoin.” (Alibaba Group Holding Ltd. v. Alibabacoin Foundation, No. 18-CV-2897 (JPO) (S.D.N.Y. Oct. 22, 2018) Although neither Alibaba nor … Continue Reading

Conference of State Bank Supervisors files Federal lawsuit to stop OCC fintech charter

By Kathleen Scott (US) and Richard Potomac (US) on October 29, 2018 Posted in Banking, Fintech, General, Regulation and compliance, United States

On October 25, 2018, the Conference of State Bank Supervisors (“CSBS”) filed a lawsuit in the U.S. District Court for the District of Columbia against the Office of the Comptroller of the Currency (“OCC”) seeking to stop the OCC from issuing any special-purpose national bank charters to financial technology companies that do not receive deposits … Continue Reading

The last SIFI falls

By Kathleen Scott (US) on October 22, 2018 Posted in Dodd-Frank, General, Regulation and compliance, United States

On October 17, 2018, the U.S. Treasury Department announced that the Financial Stability Oversight Council (FSOC) had lifted its designation of Prudential Financial Inc. as a systemically important financial institution (SIFI). The decision was unanimous, with Securities and Exchange Commission (SEC) Commissioner Elad Roisman voting on delegated authority due to the recusal of SEC Chair … Continue Reading

CFTC Commissioner Brian Quintenz warns smart contract code developers may be held liable for violations of CFTC regulations

By Andrew Lom (US), Lillian A. Cardona (US) and Rachael Browndorf (US) on October 19, 2018 Posted in Commodities & Derivatives, Enforcement, Fintech, General, Regulation and compliance, United States

On October 16, 2018, Commissioner Brian Quintenz of the Commodity Futures Trading Commission (“CFTC”) shared his views on smart contract regulation by the CFTC. In his speech at the 38th Annual GITEX Technology Week Conference, in discussing a hypothetical where code in a smart contract was specifically designed to enable a type of activity regulated … Continue Reading

Can cryptocurrency be used to post bail?

By Kathleen Scott (US) on October 19, 2018 Posted in Fintech, General, United States

An interesting issue arose recently when a defendant was arrested on federal charges of stealing $342,000 worth of digital assets, and tried to post bond using cryptocurrency. Sue Ross has written a post for our Brand Protection Blog that includes a discussion of the case and whether the FBI permitted the defendant to post bail … Continue Reading

CFTC announces proposed rule to streamline certain regulations for commodity pool operators and commodity trading advisors

By Andrew Lom (US), Joseph Williams (US) and Lillian A. Cardona (US) on October 11, 2018 Posted in United States

On October 9, 2018, the Commodity Futures Trading Commission (“CFTC”) proposed changes to the registration and compliance obligations for commodity pool operators (“CPOs”) and commodity trading advisors (“CTAs”) consistent with relief currently provided by various staff letters and advisories. Comments are due sixty (60) days after the proposed rule is published in the Federal Register. … Continue Reading

Regulators bring enforcement actions against 1pool Ltd.

By Andrew Lom (US) and Rachael Browndorf (US) on October 8, 2018 Posted in Commodities & Derivatives, Enforcement, Fintech, General, Regulation and compliance, Securities, United States

On September 27, 2018, both the Securities and Exchange Commission (“SEC”) and the Commodity Futures Trading Commission (“CFTC”) filed charges against Marshall Islands-based firm 1pool Ltd. (“1pool”) and its Austria-based CEO and owner, Patrick Brunner, for (i) failing to register as a security-based swaps dealer with the SEC, (ii) failing to register as a futures … Continue Reading

CFTC Chair hails the accomplishments of the past year’s enforcement program

By Joseph Williams (US), Anna Biegelsen (US) and Lillian A. Cardona (US) on October 4, 2018 Posted in Commodities & Derivatives, Enforcement, General, Regulation and compliance, United States

On October 2, 2018, Commodity Futures Trading Commission (“CFTC”) Chairman J. Christopher Giancarlo spoke before the Economic Club of Minnesota, giving a detailed overview of the CFTC’s enforcement program for fiscal year 2017 (Oct. 2017 – Sept. 2018), entitling his remarks “Regulatory Enforcement & Healthy Markets: Perfect Together!” The CFTC’s enforcement program filed 83 actions … Continue Reading

CFTC’s Giancarlo’s Cross-Border White Paper 2.0 signals upcoming rule proposals to replace cross-border guidance

By Joseph Williams (US), Anna Biegelsen (US) and Lillian A. Cardona (US) on October 1, 2018 Posted in Commodities & Derivatives, Dodd-Frank, Enforcement, General, Regulation and compliance, United States

On October 1, 2018, the Commodity Futures Trading Commission’s (“CFTC”) Chairman, J. Christopher Giancarlo released a White Paper entitled, “Cross-Border Swaps Regulation Version 2.0: A Risk-Based Approach with Deference to Comparable Non-U.S. Regulation” (“Cross-Border White Paper 2.0”). Chairman Giancarlo intends to direct the CFTC staff to put forth new rule proposals, which if adopted, would … Continue Reading