Evolving Regulatory Landscape for Cryptocurrency: Lessons From Recent Enforcement Actions

SEC, CFTC, FinCEN and IRS Current Positions on Cryptocurrencies

Note: CPE credit is not offered on this program

Recording of a 90-minute premium CLE webinar with Q&A


Conducted on Wednesday, April 24, 2019

Recorded event now available

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Program Materials

This CLE webinar will provide an up-to-date look at the current regulatory landscape for cryptocurrency issuers, investors and traders. The panel will discuss recent enforcement actions by the SEC, the CFTC, the IRS and FinCEN, and what the measures mean for companies engaged in blockchain ventures supported by cryptocurrency, as well as the trade operating platforms.

Description

Public and investor interest in blockchain technology and digital, or cryptocurrency, has been at a fever pitch over the past couple of years. Products and applications are rapidly evolving, but investing in these currencies involves significant risk. Counsel advising issuers and investors must understand the current regulatory and enforcement landscape relating to cryptocurrency.

Throughout 2018, the SEC and the CFTC made public announcements and filed actions relating to several token sales and market participants that the agencies allege violated federal securities laws. The SEC's view is that investors in most initial coin offerings (ICOs) are purchasing digital tokens as an investment (regardless of whether they might now or sometime later have some utility of their own), making them securities subject to registration requirements and the full panoply of other securities laws. The CFTC has stated that cryptocurrencies are commodities, giving it authority to bring actions for fraud and manipulation.

The Treasury Department's Financial Crimes Enforcement Network (FinCEN) has released guidance addressing "convertible" virtual currency. As most tokens are designed to be traded on liquid markets and have an equivalent value in traditional currency, the government deems them subject to FinCEN jurisdiction. The IRS has confirmed that cryptocurrencies are property and subject to tax on gains from the sale of cryptocurrency and salaries received in cryptocurrency. FINRA, the Federal Trade Commission, and a host of states have also carved out roles in the patchwork of current crypto regulation.

Listen as our panel examines the regulatory framework which now exists for blockchain and cryptocurrency. The panel will discuss recent enforcement actions brought by the SEC, the CFTC, FinCEN and the IRS against various issuers, investors and traders in the industry, and the lessons learned.

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Outline

  1. Distributed ledgers, the blockchain and digital currency
  2. SEC: Registration requirements and beyond; actions and remedies for noncompliance
  3. CFTC: Cryptocurrency as a commodity; actions for fraud and manipulation
  4. FinCEN: "Convertible" virtual currency; money laundering and other actions
  5. IRS: Obligation to report capital gains and other income; recent actions

Benefits

The panel will review these and other key issues:

  • Why does the SEC view most digital tokens as securities and what are registration requirements?
  • When is cryptocurrency viewed as a commodity and what are the ramifications for traders?
  • What makes a token a convertible currency and what kinds of FinCEN enforcement actions have resulted?
  • Why might reporting transactions to the IRS be particularly problematic in the blockchain environment?

Faculty

Hanson, Matthew
Matthew B. Hanson

Atty
King & Spalding

Mr. Hanson represents companies and individuals in government investigations by the Securities and Exchange Commission,...  |  Read More

Michael, Brian
Brian R. Michael

Partner
King & Spalding

Mr. Michael, a trial lawyer and former federal prosecutor, represents companies, officers, directors, and executives in...  |  Read More

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