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Cryptocurrency

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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…

On 27 July 2020, the Joint Money Laundering Steering Group (JMLSG), which comprises UK financial services industry trade bodies, published new sectoral guidance for cryptoasset exchange providers and custodian wallet providers regarding compliance with money laundering obligations. The Guidance provides an outline of the money laundering risks posed by cryptoassets and how cryptoasset firms can mitigate such risks. Money-Laundering Risks of Cryptoassets A 2020 study by the UK’s National Crime Agency reported that UK based…

On July 20, 2020, the UK’s HM Treasury (HMT) published a consultation paper proposing to bring the promotion of certain types of cryptoasset within the scope of the UK’s financial promotions restriction. We’ve summarised key considerations below; for further reading, our Financial Institutions Hub post takes a deeper look at the consultation. Proposed Changes The financial promotions restriction, set out in section 21 of the Financial Services and Markets Act 2000, provides that a person must not,…

On July 22, 2020, the Office of the Comptroller of the Currency (“OCC”) issued an interpretive letter confirming that national banks and savings associations may provide cryptocurrency custody and related services. National banks have long provided safekeeping and custody services for a wide variety of customer assets, including both physical objects and electronic assets, and the extension of these services to cryptocurrency is a modern form of these traditional activities. In the letter, the OCC…

On 30 June 2020, the Financial Conduct Authority (the “FCA”) published a research report into the market size, consumer profile and attitude towards cryptoassets. This research shows that an estimated 2.6 million UK consumers have purchased cryptoassets at some point; a 1.1 million increase over 2019’s figure. The Research Since 2018, the FCA has worked with the Bank of England and the UK Government as part of a Domestic Taskforce on Cryptoassets. In its joint…

The U.S. Securities and Exchange Commission announced on June 19, 2020 that it had filed an emergency action and obtained a temporary restraining order and asset freeze against two Pennsylvania-based brothers and three entities they control to stop an offering fraud and the misappropriation of investor proceeds. According to the SEC’s complaint, from at least July 2019 through May 2020, brothers Sean Hvizdzak and Shane Hvizdzak offered securities in a private fund that purported to invest in…

France has regulated Initial Coin Offerings (ICOs) and intermediaries providing crypto-asset services by virtue of its PACTE law n° 2019-486 of 22 May 2019. Its aim was twofold: France wanted to attract meritorious projects to its territory while also bringing this ecosystem within the ambit of regulation. Thus, while France transposed the EU Fifth Anti-Money Laundering-Directive (AML-Directive), it went a step further by imposing additional regulatory duties on intermediaries. In this respect, it has provided…

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…

Ukraine is actively promoting a friendly regulatory environment for blockchain/cryptocurrency projects, in both the public and private sectors. On May 18, 2020, the Ministry of Digital Transformation (MDT) launched a public consultation in relation to the draft law on the virtual assets (available here in Ukrainian). Among other things, it sets out (i) the legal status of the virtual assets; (ii) their issuance rules; (iii) the relevant regulator and scope of its powers; and (iv) the…