By: Daniel Knight and Kithmin Ranamukhaarachchi
The Australian Attorney-General’s Department (Department) has released five consultation papers outlining proposals for extensive reforms to Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) regime.
Read MoreBy: 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.
Read MoreBy: 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.
Read MoreBy: Jennifer Klass and Wiley Cole
On 16 October 2023, the Division of Examinations (the Division) of the US Securities and Exchange Commission (SEC) released its examination priorities for the 2024 fiscal year. In an interesting twist, the SEC released the examination priorities early, changing the timing to correspond to the beginning of its new fiscal year.
Read MoreBy 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.
Read MoreBy: 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).
Read MoreBy: 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.
Read MoreBy: Clifford C. Histed, Cheryl L. Isaac, and Christine Mikhael
On 2 June 2022, the Commodity Futures Trading Commission (CFTC) filed a complaint against crypto exchange Gemini Trust Company, LLC (Gemini) in the U.S. District Court for the Southern District of New York for allegedly making false or misleading statements of material facts to the CFTC related to the bitcoin futures contract that Gemini launched on its exchange in 2017. If successful in this litigation, the CFTC would impose a derivatives trading and registration ban on Gemini and its employees, in addition to civil monetary penalties and profit disgorgement.
According to the CFTC’s complaint, Gemini intended to self-certify its bitcoin futures contract, and it engaged with CFTC staff between July and December 2017 in connection with the self-certification. The bitcoin futures contract was to be cash-settled by reference to the underlying bitcoin price, determined by the daily bitcoin auction that took place on the Gemini Exchange. In its complaint, the CFTC alleges that the Gemini bitcoin futures contract and related spot auction were readily susceptible to manipulation.
Specifically, the CFTC alleges that:
The CFTC emphasized in its complaint that the bitcoin futures contract was particularly significant because it was to be among the first digital asset futures contracts listed on a U.S. derivatives exchange. This action makes clear regulators’ intense focus of crypto assets, and the stakes are high: If the CFTC is successful, Gemini and its employees and agents would effectively be banned from U.S. derivatives markets, in addition to being subject to civil monetary penalties and profit disgorgement. CFTC Chairman Rostin Behnam has previously warned that the agency’s recent crypto-related enforcement actions were just the “tip of the iceberg,” and the Gemini lawsuit is evidence that there are more enforcement actions to come.
By: Rob Weiss
Fund sponsors continue to search for ways to get their investors exposure to cryptocurrencies.
For sponsors able to offer registered fund products, exchange-traded products (ETPs) are attractive: available to retail investors, highly liquid, and without a fixed term, ETPs check several boxes for sponsors and investors alike. However, while the SEC has authorized listing of ETPs that trade in bitcoin futures regulated by the CFTC, the SEC has not authorized listing of ETPs that trade directly in spot cryptocurrency. We recently wrote an article on this point, which can be accessed here.
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