Since the ICO boom in 2017, governments around the world began settling on different approaches to regulating the crypto industry. Many legislatures and regulators proactively drafted new laws, regulations, guidance and frameworks for the crypto industry. Others used investigatory authorities and enforcement actions to regulate the industry. We expect that governments around the world will remain active for the foreseeable future as cryptoassets become more mainstream. Baker McKenzie’s new guide, Crypto around the World, presents…
The U.S. Office of the Comptroller of the Currency (OCC) published a letter on January 4, 2021 (January 2021 Letter) clarifying the authority of national banks and thrift institutions (collectively, Banks) to participate in independent node verification networks (INVN) and use stablecoins to conduct payment activities and other bank-permissible functions. The January 2021 Letter follows a September 21, 2020 letter from the OCC (see our post here) which concludes that Banks may hold “reserves” on…
The U.S. Financial Crimes Enforcement Network (“FinCEN”) released a notice on December 31, 2020 (the “December 31 Notice”) stating that it will propose amendments to regulations of the Bank Secrecy Act (“BSA”) bearing on non-U.S. account holdings of virtual currency. FinCEN is a bureau of the U.S. Department of Treasury that, among other things, collects and analyzes information about financial transactions in order to combat domestic and international money laundering, terrorist financing, and other financial…
An indictment unsealed on December 9, 2020 shows that cryptocurrency founder, Amir Bruno Elmaani (aka “Bruno Block”) has been charged with two counts of U.S. federal tax evasion. Elmaani is alleged to have made millions of dollars in income from the sale and exchange of cryptocurrencies but attempted to obscure his ownership of that income through various schemes and evaded reporting that income to the U.S. IRS. In September and October 2017, Elmaani, using his…
Introduction On October 8, 2020, the U.S. Department of Justice (“DOJ”) released a Cryptocurrency Enforcement Framework (the “Framework”) authored by the Attorney General’s Cyber Digital Task Force. The Framework is the second detailed report authored by the Cyber-Digital Task Force addressing cryptocurrencies. The Framework provides a self-described comprehensive overview of what the DOJ considers to be emerging threats and enforcement challenges associated with cryptocurrencies. The Framework also details the collaboration that the Department of Justice…
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…