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…
The trend of established banks partnering with technology companies to offer digital asset-related services continues in Switzerland. Around the end of February 2019, Julius Baer, one of Switzerland’s largest and oldest banks, announced plans to offer access to digital assets through a partnership with SEBA Crypto, a Swiss-based start-up. This development follows similar arrangements between technology companies and other established banks such as Falcon Private Bank, Vontobel, and Gazprombank. This trend underscores Switzerland’s reputation as…
Crypto Fund AG, a subsidiary of Swiss-based Crypto Finance AG, received authorization from the Swiss Financial Markets Supervisory Authority (FINMA) to act as an Asset Manager defined under the Swiss Collective Investment Schemes Act (CISA). The Press Release from Crypto Finance AG states that Crypto Fund AG, now being an authorized Asset Manager, is permitted to “manage and distribute domestic and foreign investment funds to qualified investors and provide investment advice for institution clients.” This…
During 2017, the issue that probably got the most attention for companies raising capital through initial coin offerings (ICOs) was whether tokens constitute securities. However, governmental agencies and regulators, particularly the Swiss Financial Market Supervisory Authority (“FINMA”), focused on other legal issues as well. It was reiterated that companies issuing cryptocurrencies or tokens have to consider not only securities registration but also anti-money laundering and licensing compliance. It has also become clear that blockchain-related businesses…