On August 20, 2020, three Swiss companies, 21 Analytics, Crypto Finance AG, and Mt. Pelerin, conducted a live demonstration of a Bitcoin transaction valued at US$23 million. The transaction between Crypto Finance and Mt. Pelerin was powered by 21 Analytics’ regtech, and ran over Swiss FATF travel rule system OpenVASP and the TRP, another institution-focused solution led by ING Bank. The transaction is reported to be the first cryptocurrency transaction in Switzerland that automated full…
INX Limited, a Gibraltar-based private company formed in 2017, announced on August 24 that the U.S. Securities and Exchange Commission (SEC) declared as effective INX Limited’s Form F-1 registration statement. A Form F-1 is the registration required for foreign companies seeking to issue securities under U.S. federal law. This approval marks the first instance in which the SEC has cleared a full registration statement for a public offering of crypto-tokens. The SEC has previously approved…
Bank Frick, a Liechtenstein-based private bank, began offering cryptocurrency investment services to its existing customers in the first quarter of 2018. Bank Frick continued to pursue and develop various aspects of its digital token service offerings. For example, it established a subsidiary, DLT Markets in February 2019, to provide institutional investors with an independent trading platform for the digital token asset class. As of May 26, 2020, Bank Frick began offering support for US Dollar…
On May 13, 2020, Kenneth A. Blanco, the Director of the U.S. Financial Crimes Enforcement Network (“FinCEN”) delivered a speech at the ConsenSys Blockchain Conference. As Mr. Blanco notes in his speech, FinCEN is the primary regulatory and administrator of the Bank Secrecy Act (“BSA”), which serves as the legal architecture for anti-money laundering and counter terrorism financing in the U.S. FinCEN collects and analyzes information about financial transactions in order to combat domestic and…
Hester Peirce, who is a Commissioner of the U.S. Securities and Exchange Commission (SEC) and affectionately referred to as Crypto Mom, formally proposed, during a speech on February 6, a safe harbor from certain U.S. securities laws aimed at cryptotoken network developers. The proposed safe harbor would provide network developers with a three-year exemption from certain aspects of U.S. securities laws with respect to token transactions so long as certain conditions are met. Ms. Peirce…
On October 9, 2019, the U.S. tax authority (the Internal Revenue Service or “IRS”) released Revenue Ruling 2019-24 providing guidance on the U.S. income tax treatment of hard forks and airdrops of cryptocurrency (see our prior post about this guidance). On December 20, 2019, eight members of the U.S. Congress sent a letter to the Commissioner of the IRS stating that they were “concerned that this recent guidance raises many new questions related to the…
Historically, U.S. tax law has allowed a taxpayer to exchange one investment property for another and defer the income tax consequences of that exchange so long as both the relinquished property and the acquired property are sufficiently similar—along with several other requirements. This type of tax-deferred exchange is referred to as a Like-Kind or Section 1031 Exchange. Without this Like-Kind Exchange treatment, a taxpayer would owe income tax on the increase in value of the…
The U.S. Internal Revenue Service (“IRS”) released Revenue Ruling 2019-24 on October 9, 2019 providing guidance on the U.S. income tax treatment of hard forks and airdrops of cryptocurrency. Revenue Rulings are an official interpretation of the U.S. tax laws by the IRS and intended to guide taxpayers in addressing their income reporting and tax obligations. This Revenue Ruling supplements the first and only cryptocurrency-related guidance issued by the IRS in 2014. The IRS described…
On August 20, 2019, the Swiss Banking Association (“SBA”) released guidelines for member banks (in German with Italian, French and English versions to follow) about opening company accounts for companies with a nexus to distributed ledger technology (“DLT”). These guidelines update the SBA’s guidelines from September 21, 2018. The guidelines outline what banks should require of DLT-nexus companies in the account opening process to address risk management related to issues such as anti-money laundering (“AML”).…
During a speech at Consenus 2019, Sigal Mandelker, the U.S. Treasury’s Under Secretary for Terrorism and Financial Intelligence, reiterated the projection that the Financial Action Task Force (“FATF”) will adopt international standards for cryptocurrency-based services in June 2019. FATF (also known by its French name, Groupe d’action financière) is an independent inter-governmental body that develops global standards for anti-money laundering and counter-terrorist financing. In 2014 and 2015 FATF began expressing concerns that the potential benefits…