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What Does the BTC ETP Approval Mean for the SEC’s Regulatory Approach to Crypto? Five Observations on the Immediate, Near Term, and Post-2024 Impact
On January 10, 2024, the Securities and Exchange Commission (“SEC” or the “Commission”) approved the listing and trading of eleven spot bitcoin exchange traded products (“ETPs”). [1] The Commission declared effective the registration statements for ten of the ETPs on the same date. This long-awaited approval stands in contrast to the SEC’s sixteen prior denials…
Proposed Rule Subjects Digital Payments to CFPB Oversight
On November 7, 2023, the Consumer Financial Protection Bureau (CFPB) announced a notice of proposed rulemaking (NPRM) that would establish CFPB supervisory authority over certain nonbank companies “participating in a market for ‘general-use digital consumer payment applications.'”
Overview
The CFPB seeks to subject nonbank companies that provide digital payment wallets and applications to the CFPB’s…
The UK’s Regulatory Roadmap for Stablecoins: A Closer Look
On October 30, 2023, HM Treasury released a policy update announcing its intention to bring forward secondary legislation to introduce regulatory measures for specific cryptoassets known as stablecoins by early 2024. The policy update outlines the proposed framework for regulating the issuance, custody, and utilization of fiat-backed stablecoins by amending existing financial services legislation. In…
UK Government Extends Financial Promotions Regime to Cryptoassets
On October 8, 2023, highly anticipated regulatory changes came into effect bringing qualifying cryptoassets within the scope of the UK’s existing financial promotions regime and the remit of the Financial Conduct Authority (“FCA”). The regulatory changes effectively ban unauthorized firms globally from marketing qualifying cryptoassets to UK consumers, which are now deemed as “controlled investments.” …
FinCEN Proposed Rule Targets Digital Asset Mixers
On October 19, 2023, the U.S. Department of the Treasury’s (“Treasury”) Financial Crimes Enforcement Network (FinCEN) announced a Notice of Proposed Rulemaking (NPRM) that would implement new recordkeeping and reporting requirements on domestic financial institutions and domestic financial agencies, related to transactions that they know, suspect, or have reason to suspect involve convertible virtual currency…
UK Financial Regulator FCA Introduces the Travel Rule for UK Cryptoasset Businesses
On September 1, 2023, the Financial Conduct Authority (“FCA”) set out its expectations for cryptoasset businesses in the UK’s compliance with the “Travel Rule”, introduced by The Money Laundering and Terrorist Financing (Amendment) (No. 2) Regulations 2022 (the “Amended MLRs”). The Travel Rule requires cryptoasset businesses to gather, authenticate, and share information concerning cryptoasset transfers. …
Critical Tornado Cash Developments Have Significant Implications for DeFi AML and Sanctions Compliance
After months of anticipation, a federal judge has finally ruled in the closely watched case of Joseph Van Loon, et al. v. Department of Treasury, et al. This important case addressed challenges to the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) decision to impose sanctions on Tornado Cash as a Specially…
IRS Takes a Stand on Rewards From Staking Activities
By John Cobb & Shree Sharma
Cash method taxpayers that stake cryptocurrency native to a proof-of-stake blockchain and receive additional units of cryptocurrency as rewards when validation occurs must include the fair market value of the rewards in income in the year in which the taxpayer gains dominion and control of the rewards, according to the IRS. Revenue Ruling 2023-14 (the…
What Can UK Crypto Regulators Learn from the Passing of the EU’s MiCA Bill?
Earlier this year, the European Union (EU) voted in favour of the Markets in Crypto-Assets (“MiCA”) bill, which aims to regulate the crypto industry within the EU. The bill is seen as a major step towards establishing a comprehensive regulatory framework for cryptocurrencies and other digital assets in the EU that will undoubtedly make…