Women, that’s who. Why? Because women “get it,” according to the media. Over the past year, there have been a plethora of articles encouraging women to invest in virtual currencies, and, according to the Wall Street Journal, this effort is beginning to yield results.

The WSJ quotes Christine Brown, COO of Robinhood Crypto, as stating that one in four (25%) customers who traded crypto in 2021 was a woman. This is up substantially from the 10%-15% estimate provided by Real Simple in an article earlier this year. (A recent CoinDesk article puts the UK percentage of women investors in crypto at over 40%.)


Continue Reading Who Is Investing in Cryptocurrencies?

As tax season heads into full swing, cryptocurrency traders may be in for a surprise when they sit down to complete their 2020 taxes. This year, for the first time, the Internal Revenue Service (IRS) is including a question about cryptocurrency transactions on the first page of Individual Income Tax Returns, Form 1040.

The question asks taxpayers if at any time during 2020 they received, sold, sent, exchanged, or otherwise acquired any financial interest in any virtual currency (the IRS’s term for digital, convertible currency, such as Bitcoin, Dogecoin, and the like.)


Continue Reading Purchased Bitcoin in 2020? IRS Might (or Might Not) Require Reporting on Your Tax Return

Mastercard has announced that it will begin supporting select cryptocurrencies directly on its payment network this year. Mastercard made the announcement in February, touting that the change would create “more possibilities for shoppers and merchants,” enabling them to move digital value – traditional or crypto – in a new form of payment.

Unlike Mastercard’s previous endeavors in the blockchain space, such as its partnerships with Wirex and BitPay to offer cryptocurrency debit cards, this change would support digital assets on Mastercard’s network directly. In previous projects, cryptocurrencies did not move through the Mastercard network. Instead, Mastercard’s cryptocurrency partners would convert the digital assets on their end to traditional currencies, then transmit them through the Mastercard network.


Continue Reading Mastercard to Directly Support Cryptocurrencies on Its Payment Network – But Not Bitcoin

On March 11, 2021, a piece of digital art sold for $69,000,000.00 (yes, sixty-nine million United States dollars) at Christie’s Auction House (online, of course). That happened roughly five months after its original sale, meaning that the piece created by the artist known as Beeple sold for over 100,000% of its original price ($66,666.66), pushing Beeple to become one of “the top three most valuable living artists” according to Christie’s. Other than the price, what makes the Beeple sale noteworthy is the fact that the work was in the form of an NFT.

What Is an NFT?

NFT stands for “non-fungible token,” or a bit of digital code written onto a blockchain (also called distributed ledger technology). Through an NFT, a digital asset like a piece of art, a video clip, or the very first Tweet can be permanently registered on a blockchain forever. Ownership and provenance can be verified instantly. For the first time, digital scarcity can be achieved for digital items and, with it, the promise of higher prices for digital assets, outside of cryptocurrencies like Bitcoin. You might pay a small fortune for an authentic Ted Williams rookie year baseball card, but not for a reproduction made today that is physically identical in every respect. The same idea is fueling a boom in NFTs sold by artists, athletes, and others, because the digital item is registered and its quantity limited. As a result, the owner has “the one” (or one of 100 limited edition items, for example) and can prove it. In this context, ”digital” may now mean scarce, and therefore valuable.


Continue Reading NFTs Promise Digital Scarcity Through the Blockchain for Artists, Athletes, and Celebrities – and an Abundance of New Legal Issues

On March 15, 2021, Ed Wilson was quoted in PYMNTS on the creation of sovereign digital currencies. According to the article, U.S. Treasury Secretary Janet Yellen said last month that central banks should explore creating and issuing sovereign digital currencies. The hypothesis is that such currencies—digital dollars among them—could create “faster, safer and cheaper payments,” she said at a virtual conference. Yellen noted that among the many things to consider is how regulators would “manage money laundering and illicit finance issues.”

Wilson said the rise of cryptocurrencies demands advanced technologies to close the gap with financial criminals. The opportunity to have money on an undisputable and never-forgotten ledger would increase transparency and fairness. With ethical companies and cutting-edge technology, crypto could be the way to a new world order in anti-money laundering (AML), characterized by fairness, efficiency, and accountability.


Continue Reading PYMNTS Quotes Ed Wilson on the Creation—and Risks—of Sovereign Digital Currencies

Technology facilitates legal and illicit transactions alike. Advances in payments technologies and cryptocurrencies such as Bitcoin, Monero, and Zcash allow criminal enterprises to dissect, route, and reaggregate small transactions to evade detection by regulatory and enforcement agencies. This is particularly true with international transactions where, for example, the exchange from cryptocurrency to fiat currency takes place outside U.S. financial supervision.

To address these challenges, the Federal Reserve Board and the Financial Crimes Enforcement Network (FinCEN and together, Agencies) issued a joint notice of proposed rulemaking (Proposed Rule) on October 23, 2020, to amend the Recordkeeping Rule and Travel Rule under the Bank Secrecy Act (BSA) and to define “money” as it applies to both rules. Specifically, the Proposed Rule:

  1. Lowers the threshold for collecting, retaining, and transmitting information on international funds transfers and transmittals of funds from $3,000 to $250. The threshold for domestic transactions would remain unchanged at $3,000; and
  2. Defines money to extend the Recordkeeping Rule and Travel Rule to digital assets used for legal tender and convertible virtual currency (CVC).

Written comments on this proposed rule are due November 27, 2020.


Continue Reading BSA Alchemy: While Lowering the Recordkeeping and Travel Threshold, FinCEN and the Fed Turn Virtual Currency into Real Money

On July 23, 2020, the Office of the Comptroller of the Currency (OCC) released Interpretive Letter #1170 (Letter) confirming that safekeeping and custody of cryptocurrency and crypto-assets (collectively, cryptocurrency) are traditional banking services and, therefore, are permissible activities for national banks and federal savings associations. The Letter also provides the usual admonition that banks may provide permissible services as long as they manage the risks and comply with applicable law, which, for cryptocurrency-related services, involves additional technological and practical challenges.

Banks have long provided safekeeping and custody services for their customers, and, over time, these services evolved along with the business of banking to now include safekeeping and custody of various physical and electronic assets. There is a well-established body of laws, regulations, and guidance supporting banks acting in both fiduciary and nonfiduciary capacities when performing such safekeeping and custody activities. The Letter recognizes this evolution, and states that safekeeping and custody of cryptocurrency is a logical outgrowth of national banks’ existing authority.

Key Takeaways

Custody services for cryptocurrency generally involve holding the unique cryptographic keys used to access units of cryptocurrency in “hot” or “cold” wallets and providing related services, including facilitating the customer’s cryptocurrency and fiat currency exchange transactions, transaction settlement, trade execution, record keeping, valuation, tax services, and reporting. While there is a well-developed body of law for custody services, the OCC found that the uniqueness of cryptocurrency-related services requires banks to pay particular attention to certain practices.


Continue Reading Crypto Custody: OCC Confirms That National Banks Can Provide Custody Services for Cryptocurrency

Introduction

Are digital tokens issued by blockchain companies securities under U.S. law? Much of the industry, including several prominent law firms, has taken the position that they are not. The Securities and Exchange Commission (SEC) has consistently stated that many or even most are securities. It recently issued a “Framework” that laid out a host of criteria that will guide the agency’s analysis. With the framework and its first blockchain no-action letter, the SEC has now articulated three scenarios where a digital token may not be a security: 1) if the token is merely a store of value like Bitcoin; 2) pursuant to its no action letter, if the token exists in essentially a closed system designed for consumptive use only and has a fixed value pegged to the dollar; or 3) where the “efforts of others” prong from the Howey test is not met. The framework focuses mostly on the third case.

We will review the framework, and suggest a way to strengthen the SEC’s standard to clarify how a digital token could transition to a non-security even if initially issued as a security. We believe that if a clear and workable regime is not adopted soon, the U.S. risks being left behind in the race to unlock blockchain’s transformative potential.


Continue Reading Improving upon the SEC’s Blockchain “Framework”: Toward a Reasonable Regulation of Digital Tokens

Last week the SEC offered its clearest guidance yet on when blockchain tokens and other digital assets would be classified as “securities” under U.S. securities law and subject to SEC regulation.

Specifically, the SEC’s Strategic Hub for Innovation and Financial Technology (FinHub) issued its first-ever “Framework for ‘Investment Contract’ Analysis of Digital Assets.


Continue Reading SEC Clarifies Application of Securities Regulation to Blockchain Tokens, ICOs

As they say, everything’s bigger in Texas, including initial coin offerings. A Texas federal court recently unsealed a complaint filed by the Securities and Exchange Commission (SEC) against a Texas-based company (the “Company”) that presents itself as the “world’s first decentralized bank” and claims to have provided “the largest ICO to date.”1 Among other things, the Company is accused of engaging in the offering of securities without properly registering with the SEC and defrauding investors in the process.

Continue Reading Texas-Sized Initial Coin Offering Faces Multiple Allegations in SEC Lawsuit