This is our eighth monthly bulletin for 2022, aiming to help companies identify important and significant legal developments governing the use and acceptance of blockchain technology, smart contracts and digital assets.
While the use cases for blockchain technology are vast, this bulletin will be primarily on the use of blockchain and or smart contracts in the financial services sector. With respect to digital assets, we have organized our approach to this topic by discussing it in terms of traditional asset type or function (although the types and functions may overlap), that is, digital assets as:
In addition to reporting on the law and regulation governing blockchain, smart contracts and digital assets, this bulletin will discuss the legal developments supporting the infrastructure and ecosystems that enable the use and acceptance of these new technologies.
How the Digital Commodities Consumer Protection Act of 2022 would broaden the CFTC’s authority to regulate cryptocurrencies and other digital assets
By: Deanna Reitman , Margo H.K. Tank , Jeffrey Bourdon and Braden Penhoet
The total market capitalization of the global cryptocurrency market returned to the $1.1 trillion level, despite a bleak performance in June. It’s estimated that one in five Americans have used or traded digital assets. Given the value of this market and the volume of American participation, legislators continue to introduce bills aimed at regulating cryptocurrency markets. Two such bills introduced in this session are the Responsible Financial Innovation Act (RFIA - see our article immediately below) and the Digital Commodities Consumer Protection Act of 2022 (DCCPA), both of which seek to expand the powers of the Commodity Futures Trading Commission (CFTC) under the Commodities Exchange Act (the Act) to address digitization of commodities. Read more .
How the Responsible Financial Innovation Act proposes to regulate cryptocurrencies and other digital assets – commodities perspective
By Deanna R. Reitman , Jeffrey Bourdon and Margo H. K. Tank
Institutional clients are estimated to have traded $1.14 trillion worth of cryptocurrencies on Coinbase in 2021. Analysts warn the industry is so large that macroeconomic consequences may occur if these assets are mismanaged. Still, regulating cryptocurrency has been largely piecemeal. Now, the Responsible Financial Innovation Act (RFIA), recently introduced by Senators Kirsten Gillibrand (D-NY) and Cynthia Lummis (R-WY), aims to change this by, as stated in the Senators’ joint press release, “integrat[ing] digital assets into existing law and to harness[ing] the efficiency and transparency of this asset class while addressing risk.” Read more .
The SEC has begun imposing automatic penalties for failure to comply with a consent order – the case of Bloom Protocol LLC
The SEC has continued to bring a steady stream of crypto asset enforcement actions. On August 9, the agency announced a settled proceeding against Bloom Protocol LLC arising from what the SEC found was an unregistered initial coin offering (ICO) which raised nearly $40 million between mid-November 2017 and early January 2018. However, Bloom Protocol is unique in that the consent order entered in the case imposes penalties on Bloom if it fails to meet its obligations - including registration. Read more.
NFT projects reconsider their licensing strategies
Non-fungible token (NFT) projects are reconsidering their licensing strategies as they develop their business models. A number of major NFT projects, such as Nouns, Goblin Town, Cryptoadz and MFERS, have adopted as their initial approach Creative Commons Zero - no rights reserved (CC0). CC0 is the declaration of abandonment of copyright developed by Creative Commons. Other NFT projects are opting instead for a commercial license. Read more.
DLA Piper attorneys will be presenting at the following events:
Cryptocurrency and Digital Asset Regulation , published by the American Bar Association and co-edited by Deborah Meshulam and Michael Fluhr, includes chapters by Meshulam and Fluhr and by Margo H.K. Tank and Andrew Grant.
DeFi participants should prepare to confront the unknown as bankruptcies loom
Money laundering in trading works of art – US Treasury report addresses NFT marketplaces
Is blockchain the key to a more ESG-compliant supply chain?
Crypto Savvy – Bringing a Token to Life , featuring HashKey Group , which discusses TOKO and its tech. The podcast is now available on Spotify , Apple and Google Podcasts . Feel free to check out more on LinkedIn .
Understanding the Bitcoin Phenomenon - Insights from a Crypto Native , featuring Dan Held, Director of Growth Marketing at the cryptocurrency exchange Kraken.
Michael Fluhr is featured on “Hsu Untied” podcast .
Learn more about our Blockchain and Digital Assets practice by contacting any of our editors:
The editors send their thanks and appreciation to Marc Aronson and Raymond Janicko for their contributions to this and prior issues.
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