The decision, which addresses a broad range of market activity by Coinbase relating to 13 third-party tokens, could have significant implications for market participants. By Latham & Watkins’ Litigation & Trial Practice On March 27, 2024, Judge Katherine Failla of the US District Court for the Southern District of New York (SDNY) ruled[i] (the Ruling) in favor of the Securities and Exchange Commission (SEC) on all but one argument raised in Coinbase’s motion for judgment on the pleadings, finding that the Commission adequately alleged the tokens at issue and Coinbase’s staking service ..read more

Updated on April 17, 2024 The decision, which addresses a broad range of market activity by Coinbase relating to 13 third-party tokens, could have significant implications for market participants. By Latham & Watkins’ Litigation & Trial Practice On March 27, 2024, Judge Katherine Failla of the US District Court for the Southern District of New York (SDNY) ruled[i] (the Ruling) in favor of the Securities and Exchange Commission (SEC) on all but one argument raised in Coinbase’s motion for judgment on the pleadings, finding that the Commission adequately alleged the tokens at issue and ..read more

As federal regulation remains patchy, firms may want to consider a New York state charter as a potential avenue to expand digital asset offerings in a compliant manner. By Arthur S. Long, Barrie VanBrackle, Stephen P. Wink, and Deric Behar On March 22, 2024, WisdomTree, Inc., a global asset management firm, announced that the New York Department of Financial Services (NYDFS) granted a New York limited purpose trust company charter to its subsidiary WisdomTree Digital Trust Company, LLC.  WisdomTree stated that the new trust company would engage in fiduciary custody activities for di ..read more

The legislation allows decentralized autonomous organizations to gain legal entity status and operate within the bounds of applicable law. By Jenny Cieplak, Stephen P. Wink, Daphne Lambadariou, and Deric Behar On March 7, 2024, Wyoming Governor Mark Gordon signed into law a new legal framework for decentralized autonomous organizations (DAOs), allowing them to be recognized as “decentralized unincorporated nonprofit associations” (DUNAs). The Wyoming Decentralized Unincorporated Nonprofit Association Act (the Act) was adopted with bipartisan support, reflecting Wyoming’s progressive stan ..read more

The rule targets a statutory loophole that the CFPB asserts large credit card issuers exploited to exact excessive late fees from consumers. By Barrie VanBrackle and Deric Behar On March 5, 2024, the Consumer Financial Protection Bureau (CFPB) finalized a rule (the Rule) to amend Regulation Z, which implements the Truth in Lending Act (TILA) to limit credit card late fees. The Rule was initially proposed in February 2023 and was intended to go into effect in October 2023 (for more information on the proposal, see this Latham blog post). The Rule aims to ensure that credit card late fees ..read more

Regulator sets out its expectations for banks looking to provide digital asset custody services, and sell and distribute tokenised products. By Simon Hawkins and Adrian Fong On 20 February 2024, the Hong Kong Monetary Authority (HKMA) published two circulars prescribing additional guidance to banks interested in carrying on certain digital asset services: Provision of Custodial Services for Digital Assets (Custody Circular) provides guidance for banks who are interested in holding digital assets for clients. Sale and Distribution of Tokenised Products (Tokenised Products Circular) provides s ..read more

The SEC’s ambiguous rule could have a chilling effect both on decentralized finance and on the provision of liquidity to centralized crypto exchanges. By Jenny Cieplak, Marlon Q. Paz, Stephen P. Wink, and Naim Culhaci The Securities and Exchange Commission (SEC) adopted a new rule on February 6, 2024, further defining the phrase “as part of a regular business” — which is an integral part of what it means to be a “dealer” under securities laws. The Securities Exchange Act of 1934 (Exchange Act) defines a dealer as “any person engaged in the business of buying and selling securities … for such ..read more

Implementation of Basel Committee cryptoassets standard to provide additional clarity for banks looking to engage in cryptoassets business. By Simon Hawkins and Adrian Fong On 7 February 2024, the Hong Kong Monetary Authority (HKMA) released a consultation paper on its proposal for implementing new regulations on the prudential treatment of cryptoasset exposures (Consultation Paper). The Consultation Paper comes shortly after the Financial Services and the Treasury Bureau and the HKMA issued a consultation paper in December 2023 outlining their legislative proposal for a regulatory regime gov ..read more

The requirements in the proposed framework are more extensive in scope and reach than what many virtual asset industry stakeholders anticipated. By Simon Hawkins and Adrian Fong On 8 February 2024, the Financial Services and the Treasury Bureau (FSTB) released a consultation paper on its legislative proposal to introduce a regulatory regime governing over-the-counter (OTC) trading of virtual assets (VA) in Hong Kong (Consultation Paper). This blog post summarises the proposed regulatory framework set out in the Consultation Paper. Background A number of VA exchange platforms allegedly engag ..read more

Understanding NFTs as commodities calls for a more nuanced analysis than what their “non-fungible” label might suggest at first glance. By Yvette D. Valdez The appropriate regulatory characterization of cryptocurrencies and digital assets for US legal purposes has spawned many pages of analysis and occupied many hours of industry, law firm, and regulatory consideration. Significant amounts of commentary, and later government and judicial attention, have been devoted to determining whether fungible cryptocurrencies and digital assets constitute securities for purposes of US federal securities ..read more