FinTech & Blockchain

The rapid growth of technological innovation has expanded markets and created tremendous opportunities in the financial services industry. Financial institutions have increased their use of, and reliance on, technology to manage and understand their businesses, markets, trading activity, clients, and regulatory compliance. Blockchain technology is proving to be one of the most transformative new developments as it has led to the creation of cryptocurrencies, smart contracts, and myriad other applications. The ability of blockchain technology to track everything from the execution of financial transactions to the movement of goods and materials in a distributed, immutable ledger is transforming industries around the world, including financial services, insurance, health care, shipping, computing, and more.

The increasing use of FinTech, as well as the explosive growth of investment in cryptocurrencies and digital tokens, has spurred strong interest from industry regulators. Murphy & McGonigle has substantial experience in dealing with these regulators. The Murphy & McGonigle FinTech & Blockchain team advises broker-dealers, traders, exchanges, banks, private equity and venture investors, asset managers, private funds and other market participants on complex regulatory and legal matters related to the use of technology. We regularly work with a diverse range of companies and individuals that have a stake in legal and regulatory developments impacting blockchain technology.

For news, blogs, events, and other information on legal developments in the Blockchain space, visit our website www.blockchainlawcenter.com.

Looking Forward

Predictions of the demise of cryptocurrency were everywhere after the Bitcoin price crash and ensuing “Crypto Winter” in 2018. But 2019 saw yet another rebound in cryptocurrency prices, demonstrating resiliency of cryptocurrency as an asset class. The cryptocurrency markets also showed maturation over the past year with the continued development of a market structure in the institutional space. We expect this maturation to continue in 2020, particularly in the areas of market data and prime brokerage.

This past year also saw continued development in the digital securities markets, but the development was uneven, mostly because of continued regulatory uncertainty. The markets witnessed the first Regulation A+ digital securities offering qualified by the SEC in 20, as well as a pilot program to clear and settle digital securities on a blockchain. This coming year will likely see the continued expansion of capital raising using digital securities. The lack of SEC guidance on custody of digital securities, however, remains the primary impediment to greater issuance and trading of digital securities. Moreover, as government authorities continue to assert that crypto assets are, variously, securities, commodities, property, currency, or none of the above, the regulatory regime applicable to digital assets remains murky. Look for incremental steps towards regulatory clarity in 2020 as new crypto-focused legislation is considered at the state and federal level and as regulators respond to industry pressure for clear rules.

This past year also saw continued development in the digital securities markets, but the development was uneven, mostly because of continued regulatory uncertainty. The markets witnessed the first Regulation A+ digital securities offering qualified by the SEC in 20, as well as a pilot program to clear and settle digital securities on a blockchain. This coming year will likely see the continued expansion of capital raising using digital securities. The lack of SEC guidance on custody of digital securities, however, remains the primary impediment to greater issuance and trading of digital securities. Moreover, as government authorities continue to assert that crypto assets are, variously, securities, commodities, property, currency, or none of the above, the regulatory regime applicable to digital assets remains murky. Look for incremental steps towards regulatory clarity in 2020 as new crypto-focused legislation is considered at the state and federal level and as regulators respond to industry pressure for clear rules.