Matthew Comstock of the firm’s FinTech & Blockchain Practice authored an article regarding Securities and Exchange Commission jurisdiction over crypto assets in the Expert Analysis section of Law360 (8/26/21). In the article, Mr. Comstock analyzes the SEC’s stance on cryptocurrency and provides expert insight as to why the SEC believes it is uniquely qualified to protect the investing public.

Elizabeth Lan Davis, Murphy & McGonigle’s Chair, will be speaking at the {DeFi}ntech Retreat 2021 in Malibu, California on September 8. Ms. Davis will be joining a panel to discuss regulation in the fintech and blockchain spaces, alongside state government regulators and blockchain professionals. To see more blockchain events, please go to our Events section.

Lawmakers in the U.S. House of Representatives have re-introduced the Token Taxonomy Act, again seeking to clarify the legal and regulatory framework around digital assets and cryptocurrencies, as well as a separate bill to establish a digital asset working group.

Produced by the Attorney General’s Cyber-Digital Task Force, the Framework is divided into three parts with a conclusion. It provides an overview of threats and enforcement challenges associated with the increasing use of cryptocurrency; enumerates the criminal and civil statutes and regulatory framework used to investigate and regulate illegal crypto-related activities; and outlines ongoing challenges for businesses involved with cryptocurrency, and future strategies for investigating and prosecuting crypto involved crimes.

The author examines the decisions in SEC v. Telegram and how they may impact digital token issuers’ use of the Simple Agreement for Future Tokens model for distributing tokens.

The Southern District of New York has issued two main rulings in SEC v. Telegram—that the offer and sale of Telegram’s cryptocurrency (Grams) involved a "scheme" to distribute securities subject to 1933 Act registration requirements, and that the Court’s preliminary injunction regarding sales or resales of Grams applies to both U.S. and non-U.S. purchasers. Murphy & McGonigle’s Larry Bergmann examines both rulings and weighs the impact they might have on future issuances of digital tokens. Among other things, Bergmann believes that the decisions will make it more difficult for digital token issuers to argue that securities sold to raise capital can be transformed at a later date into "utility" digital assets that are not securities. He also raises the question of whether improvements can be made to an operational cryptocurrency platform to enhance the value of that platform’s tokens.

To read the entire article, click here.

The agency is seeking public comment on two proposals that will promote the responsible and efficient diversification of cryptocurrencies traded on New York licensed exchanges.

The staff of the Division of Corporation Finance issued the second no-action letter permitting an unregistered token offering and sale for use on a functional platform.