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
Steptoe Blockchain Blog
by Steptoe International, Coy Garrison, Alan Cohn, Evan Abrams and Sophia Breggia
4M ago
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 of similarly situated spot bitcoin ETP applications between 2018 and 2023.  In this post, we highlight five observations on the immediate, near term, and post-2024 impact this decision will have on the SEC’s regulatory ..read more
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The UK’s Regulatory Roadmap for Stablecoins: A Closer Look
Steptoe Blockchain Blog
by Steptoe International, Alexandra Melia and Elliot Letts
4M ago
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 order to assess the UK’s regulatory roadmap for stablecoins, it is imperative to understand the key aspects of this regulatory proposal and explore its implications and the potential i ..read more
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UK Government Extends Financial Promotions Regime to Cryptoassets
Steptoe Blockchain Blog
by Steptoe International, Alexandra Melia and Elliot Letts
4M ago
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.”  A final warning letter to firms marketing cryptoassets to UK consumers on the new regime issued by the FCA on September 21, 2023 indicated the FCA’s expectation of full compliance fro ..read more
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Proposed Rule Subjects Digital Payments to CFPB Oversight
Steptoe Blockchain Blog
by Steptoe International, Alan Cohn, Coy Garrison, Evan Abrams and Sophia Breggia
5M ago
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 supervisory authority under the Consumer Financial Protection Act (CFPA), similar to the supervisory authority it currently exercises over banks, credit unions, and other tradit ..read more
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FinCEN Proposed Rule Targets Digital Asset Mixers
Steptoe Blockchain Blog
by Evan Abrams, Sophia Breggia and Dave Stetson
7M ago
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 (CVC) mixing within or involving a non-U.S. jurisdiction.  FinCEN issued the NPRM pursuant to Section 311 of the USA PATRIOT Act, which provides the Secretary of the Treasury (the “S ..read more
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UK Financial Regulator FCA Introduces the Travel Rule for UK Cryptoasset Businesses
Steptoe Blockchain Blog
by Alexandra Melia and Elliot Letts
9M ago
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.  Ultimately, the Travel Rule seeks to raise the level of transparency associated with cryptoasset transfers, bringing them into line with practices common in other areas of financia ..read more
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IRS Takes a Stand on Rewards From Staking Activities
Steptoe Blockchain Blog
by John Cobb and Shree Sharma
10M ago
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 “Ruling”), issued on July 31, explains the IRS’s position that those cryptocurrency rewards over which the taxpayer has dominion and control are income for purposes of Section 61[1] and the regulations thereunder.  The fair market valu ..read more
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What Can UK Crypto Regulators Learn from the Passing of the EU’s MiCA Bill?
Steptoe Blockchain Blog
by Alexandra Melia and Elliot Letts
10M ago
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 the EU an attractive destination for crypto firms. As the United Kingdom (UK) continues to navigate its post-Brexit regulatory landscape, the passing of the MiCA bill notably puts renewed and “significant jurisdictional pressure” on the UK to pass its own framew ..read more
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Risk Assessment Offers Treasury’s Most Extensive Comments to Date on DeFi Regulation
Steptoe Blockchain Blog
by Evan Abrams
1y ago
The Department of the Treasury’s recently issued Illicit Finance Risk Assessment of Decentralized Finance is principally intended to provide insight on how illicit actors are abusing decentralized finance (DeFi) services, as well as anti-money laundering (AML) and countering the financing of terrorism (CFT) vulnerabilities unique to DeFi.  However, the report also contains critical insight on how Treasury, and, presumably, the Financial Crimes Enforcement Network (FinCEN) within Treasury, view the applicability of existing US AML/CFT regulations, issued pursuant to the Bank Secrecy Act (B ..read more
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The Storm Is Here
Steptoe Blockchain Blog
by Jason Weinstein and Alan Cohn
1y ago
With the collapse of FTX and Alameda so close on the heels of Celsius, one thing is clear – the regulatory and enforcement storm so many anticipated coming to crypto is now here.  Unfortunately, regardless of what the facts surrounding FTX and Alameda ultimately turn out to be, incidents like this serve to reinforce the biases of enforcement agencies against all crypto companies, regardless of their construction, design, operation, or leadership. For some prosecutors and investigators, this incident will be seen as validation of the view that everything and everyone in the crypto spa ..read more
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