We previously reported on the pre-emptive lawsuit that Consensys Software Inc., a software developer whose business centers on the Ethereum blockchain network, brought against the United States Securities and Exchange Commission in April 2024 in federal court in Texas. The Complaint may be found here. Three of the four counts in the Complaint relate to Consensys’s ETH transactions (ETH is the native token for the Ethereum blockchain). The fourth count relates to Consensys’s two MetaMask software products:…
We recently reported about the pre-emptive lawsuit that Consensys Software Inc., brought against the United States Securities and Exchange Commission over the regulation of Ethereum. We also previously reported on the SEC’s first NFT enforcement action, against Impact Theory, LLC, a media and entertainment company. The SEC’s second NFT enforcement action, against Stoner Cats, was brought a few weeks later, in September 2023. These two actions by the SEC were a big part of the impetus behind…
In a post two months ago, we discussed how the United States Securities and Exchange Commission surprised the crypto community on May 23, 2024 when it effectively set the stage for the sale of spot Ethereum Exchange-Traded Funds (ETFs) to begin in the not-too-distant future. That day has now arrived. On May 23, 2024, the SEC approved the 19b-4 form for a number of ETH ETF applications (form 19b-4 is a form that is used to inform…
We previously reported about action by the U.S. House of Representatives concerning U.S. Security and Exchange Commission (“SEC”) Staff Accounting Bulletin No. 121 (“SAB 121”), which was issued on March 31, 2022. It requires reporting entities which perform custodial duties in relation to crypto assets to hold those assets on their balance sheet. Doing so means these entities would also be required to take on significant capital, liquidity, and other costs under the existing prudential regulatory…
In two earlier posts, we reported about Consensys filing a pre-emptive lawsuit against the United States Securities and Exchange Commission seeking, among other things, a declaration that (i) Ether is not a security and that, accordingly, the SEC’s investigation into Ether and Ethereum and any resulting enforcement actions exceed its regulatory authority; (ii) any enforcement action against Consensys premised on Ether being a security or Ether transactions being securities transactions would violate due process and…
The United States Securities and Exchange Commission surprised the crypto community on May 23, 2024 when it effectively approved the sale of spot Ether Exchange-Traded Funds (ETFs). First, some historical context. In 2013, Gemini founders Tyler and Cameron Winklevoss first sought to launch a Bitcoin ETF. The SEC rejected that application and, for about 10 years, rejected all other applications to list spot Bitcoin ETPs (an Exchange Traded Fund is the most common type of…
U.S. Security and Exchange Commission (“SEC”) Staff Accounting Bulletin No. 121 (“SAB 121”) was issued on March 31, 2022. It requires reporting entities which perform custodial duties in relation to crypto assets to hold those assets on their balance sheet. Doing so means these entities would also be required to take on significant capital, liquidity, and other costs under the existing prudential regulatory framework. SAB 121 thus represented a significant departure from decades of generally accepted…
Last week, we reported that two crypto industry groups sued the United States Securities and Exchange Commission seeking to strike down revisions to the dealer rule. On April 26, 2024, Consensys Software Inc., a software developer whose business centers on the Ethereum blockchain network, brought a much more significant case when it sued the SEC in federal court in Texas over the regulation of Ethereum. The Complaint may be found here. In a June 2018…
The tension between the crypto industry and the United States Securities and Exchange Commission over the issue of which tokens qualify as securities has been well documented. SEC Chair Gary Gensler is on record as saying almost all crypto products are securities. On April 23, 2024, two crypto industry groups, the Blockchain Association and the Crypto Freedom Alliance of Texas sued the SEC in federal court in Texas, challenging the SEC’s rule expanding the definition…
On February 29, 2024, the U.S. House of Representatives Financial Services Committee passed a resolution (H.J. Res. 109) which, if enacted, would undo the recent US Security and Exchange Commission (“SEC”) Staff Accounting Bulletin No. 121 (“SAB 121”). It acted under the Congressional Review Act (“CRA”), which allows Congress to use their oversight authority to overturn rules issued by federal agencies. SAB 121 requires reporting entities which perform custodial duties in relation to crypto assets…