FINRA’s Findings: Member Firms Get Failing Grade in Crypto Communications

Jan 25 2024

By: Richard Kerr, Eden Rohrer, and Aiden O’Leary

On 23 January 2024, the Financial Industry Regulatory Authority (FINRA) published its findings from a 2022 targeted exam sweep, which may serve as a warning to broker-dealers offering crypto asset products. FINRA conducted a sweep reviewing communications made between 1 July 2022 and 30 September 2022 by member firms in connection with crypto assets and crypto-related products and services, focusing on compliance with FINRA Rule 2210 (Communications with the Public). The exam focused not only on written material, but also on communications made via websites, podcasts, advertisements, social media, and other public channels.

2024: The Year of the Spot Bitcoin ETP

Jan 11 2024

By: Peter J. Shea, Richard F. Kerr, Keri E. Riemer, and Aiden D. O’Leary

The US Securities and Exchange Commission (SEC) is making 2024 a significant year for exchange-traded products (ETPs) by declaring effective the registration statements of ten Bitcoin ETPs, and approving their listing on one of the major stock exchanges. This is a monumental step to bringing access to Bitcoin to a broader retail market in the US For over a decade, the staff of the SEC (Staff) had denied or otherwise blocked applications to list spot Bitcoin ETPs, claiming, in part, that there were insufficient protections against market manipulation in the underlying Bitcoin market. The approvals issued this week unlock – although do not widely open – a previously dead bolted door to registered products offering direct exposure to Bitcoin, providing an opportunity for retail investors to have easier access to exposure to Bitcoin in a regulated product.

Tokenisation of SFC-authorised Investment Products: What You Need to Know

Nov 13 2023

By: Carolyn Sng and Tan Choo Lye

The Securities and Futures Commission of Hong Kong (SFC) has on 2 November 2023 issued guidance for the tokenisation of investment products authorised by it for offer to the public in Hong Kong, such as mutual funds, unit trusts and other collective investment schemes. The SFC is adopting a see-through approach, permitting tokenisation of authorised investment products if the underlying product satisfies all applicable authorisation requirements and additional safeguards are in place to address the new risks associated with tokenisation arrangements.

Europe: Gains From Crypto Trading Are Taxable, German Court Decides

Mar 06 2023

By Hilger von Livonius

In a recent decision of 14 February 2023, the Federal Fiscal Court (Bundesfinanzhof, BFH), the highest German tax court, has ruled that privately held cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH) and Monero (XMR) are – notwithstanding the fact that there are no physical goods in which a traditional form of legal ownership can be established – taxable assets for German income tax purposes. As a consequence, any gains from their acquisition (against fiat currency or otherwise) and sale (or exchange) within a one-year period will be taxable (at the owner’s personal tax rate); if, however, the relevant cryptocurrency has been held for more than one year, any gains will be tax exempt. For these purposes, the holder of the “private key” will be considered as legal owner of the cryptocurrency. The tax treatment of a realization of an increase in value of cryptocurrencies is therefore, in Germany, substantially the same as for fiat currency.

Australia: Treasury Releases Token Mapping Consultation Paper

Feb 16 2023

By Daniel Knight and Oliver Herrmann

New licensing requirements for crypto service providers are coming, following a series of consultations launched last week by Treasurer, Jim Chalmers. The Government approach focuses on strengthening enforcement, bolstering consumer protection and ultimately establishing a new licensing framework.

United States: A Record Year: SEC FY 2022 Enforcement Actions Bring Big Penalties

Nov 16 2022

By: Keri E. Riemer, Michael W. McGrath, Neil T. Smith, Hayley Trahan-Liptak, and Christopher F. Warner

On 15 November 2022, the U.S. Securities and Exchange Commission (SEC) announced its enforcement statistics for its 2022 fiscal year (FY 2022), noting that it filed 760 total enforcement actions — a 9% increase over fiscal year 2021. This total was comprised of 462 new actions, 169 “follow-on” actions, and 129 actions for delinquent filings. Money obtained in SEC actions, comprising civil penalties, disgorgement, and pre-judgment interest, totaled a record-breaking $6.439 billion (compared to $3.852 billion in fiscal year 2021). Civil penalties, totaling $4.194 billion, were also the highest on record.

Australian Regulatory Update – 7 November 2022

Nov 07 2022

By Jim Bulling and Anabelle Weinberg

1. ASIC Annual Forum

The ASIC Annual Forum was held on 3 – 4 November 2022 with a number of significant announcements being made.

Firstly, ASIC has for the first time announced their enforcement priorities for 2023. ASIC now intends to do this on an annual basis.

United States: SEC vs. Wahi: An Insider Trading Action with Surprising Impacts on the Investment Management Industry

Aug 02 2022

By: Richard F. Kerr and Keri E. Riemer

The SEC has made a new crypto move – and its impact is broad.

As described in our FinTech Law Watch blog published on 29 July 2022, the SEC recently declared that 9 crypto assets were “securities” in a complaint relating to insider trading violations (Wahi Complaint).

AUSTRALIA: CRYPTO DOWNTURN AND ITS REGULATION

Jul 11 2022

By Daniel Knight and Kithmin Ranamukhaarachchi

In the wake of the drawn out cryptocurrency market downturn, increased regulation of the sector seems inevitable. With nearly one million Australians transacting in cryptocurrencies last year, there have been widespread calls to enact additional protections for retail investors.

United States: Grayscale Appeals to DC Circuit on SEC Denial of Bitcoin ETP

Jul 05 2022

By: Stacy L. Fuller, Clifford C. Histed, Cheryl L. Isaac, Richard F. Kerr, Keri E. Riemer, and Peter J. Shea

On Thursday, Grayscale Investments, LLC (Grayscale) filed suit against the Securities Exchange Commission (SEC) in the D.C. Circuit asking the court to reconsider the agency’s rejection of listing a spot Bitcoin ETP on the New York Stock Exchange (NYSE). In its appeal, Grayscale argued that the SEC’s ruling regarding its spot Bitcoin ETP was “arbitrary and capricious,” because it disregarded facts about the ETP and erroneously determined that listing the ETP would be in contravention of NYSE’s duties under the Securities Exchange Act of 1934.

Tag:crypto

1. ASIC Annual Forum