This is a reminder that May 11, 2018 is the deadline for implementing new Financial Crimes Enforcement Network (FinCEN) requirements under the Bank Secrecy Act. The requirements apply to a wide swathe of financial institutions, including securities broker-dealers, banks, mutual funds, and futures commission merchants and introducing brokers in commodities. These enhancements to anti-money laundering programs (AML) are often referred to as “Customer Due Diligence” (CDD) requirements.
While the SEC's Division of Corporate Finance has begun to explore ways to distinguish between utility tokens and securities, Arizona and Wyoming have already proposed legislation designed to provide a more definitive framework to ICO regulation. The proposed legislation illustrates the trade-off that regulators are faced with: fostering the growth of the ICO market by providing clear-cut rules or ensuring investor protection by adopting a policy-driven approach that suffers from line-drawing problems.
On March 6, 2018, in a decision on the CFTC’s motion for a preliminary injunction and the pro se defendant’s motion to dismiss, United States District Court Judge Jack Weinstein in the Eastern District of New York ruled that virtual currencies are “commodities” as that term is used in the Commodity Exchange Act and CFTC Regulations. Moreover, the court confirmed that a provision added to the CEA by the Dodd Frank Act, and regulations promulgated thereafter, provide the CFTC with jurisdiction over fraudulent transactions in the cash market for virtual currency even if the activity does not involve a futures or swap trade.
In what promises to be the start of a significant legal fight over the government’s ability to regulate initial coin offerings, or ICOs, under the federal securities laws, a Brooklyn man has moved to dismiss criminal securities fraud charges, arguing that digital coins are not “securities” within the meaning of the securities laws.
Joseph Facciponti, a former prosecutor at the U.S. Attorney’s Office for the Southern District of New York with in-house experience in the financial sector, has joined the firm of Murphy & McGonigle as a shareholder in its New York office.
Speaker, Polycon2018 conference in Nassau, Bahamas