On January 2, 2019, the Texas Department of Banking issued revised guidance on the application of the Texas Money Services Act to virtual currency transactions.  Updating the Department’s 2014 guidance, the revised guidance offers new perspectives on the application of Texas law and regulations to certain stablecoins and Bitcoin ATMs. 

A federal court sitting in New York and applying that state’s long-arm statute lacked personal jurisdiction over a U.S. company not based in New York.  Accordingly, the court dismissed a breach of contract lawsuit brought against the company by an overseas consultant retained to assist with the company’s initial coin offering.  See ICO Servs., Ltd. v. Coinme, Inc., No. 18-cv-4276, 2018 WL 6605854 (S.D.N.Y. Dec. 17, 2018) (Schofield, J.).  The court held that the one-shot consulting agreement was not the type of on-going relationship courts consider in evaluating personal jurisdiction; and the alleged existence of New York-based customers, investors, and business activity had no alleged connection to the underlying dispute.  Coinme illustrates – in the context of an ICO – contract-related activity that will and will not support personal jurisdiction in federal court.

A purchaser of tokens in an initial coin offering adequately alleged that the tokens are securities, a district court judge has held.  See Solis v. Latium Network, Inc., No. 18-10255 (SDW) (D.N.J. Dec. 10, 2018).  Accordingly, the court denied a motion to dismiss a putative class action alleging that a blockchain-based company and its co-founders violated Sections 12 and 15 of the Securities Act of 1933.  The decision breaks no new ground, but adds to a growing body of district court decisions rejecting, at the pleading stage, the argument that tokens are not “securities” subject to the federal securities laws.  The issue has not been addressed by a federal court of appeals or definitive guidance from U.S. regulators.