In Short
The Situation: Non-fungible tokens are an
emerging digital asset class that present a unique set of
commercial, regulatory, and other legal considerations.
The Result: The current U.S. regulatory and
legal framework is slowly catching up to the developing technology.
Key legal issues include how NFTs can be categorized, intellectual
property rights, anti-money laundering and sanctions implications,
cybersecurity concerns and state laws governing virtual
currencies.
Looking Ahead: As the asset class matures, U.S.
regulations and laws are catching up to the developments and
increased interest in the technology with other applicable
global regulatory regimes already in place. Investors, financial
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On April 1, 2021, the Financial Crimes Enforcement Network (FinCEN) issued an Advance Notice of Proposed Rulemaking (the Notice ) seeking public comment on a myriad of issues related to the implementation of a beneficial ownership information reporting system under the Corporate Transparency Act (the Act ).
As discussed in our previous article, The Corporate Transparency Act: Initial Observations and Considerations for Domestic and International Private Clients, the Act requires “reporting companies” to provide certain information on each of their “beneficial owners” and applicants to FinCEN. For each such individual, a reporting company must generally provide a full legal name, date of birth, current residential or business address, and a unique identifying number from a non-expired passport, personal information card, or driver’s license, or one issued by FinCen (the FinCEN identifier ).
Thursday, April 29, 2021
As covered in our earlier advisory, AML Enforcement Continues to Trend in 2021, the recently passed National Defense Authorization Act for fiscal year 2021 included the Anti-Money Laundering Act of 2020 (AML Act), which expanded the reach of AML regulations and the tools available to law enforcement to investigate and penalize violators. Of particular interest for private businesses, however, is the fact that the AML Act also provides federal regulators, law enforcement, and financial institutions with greater transparency into their business structures and financial dealings.
It is important to note, the AML Act requires corporations, limited liability companies and “similar entities” to report beneficial ownership information. The AML Act does not define “similar entities,” but the Financial Crimes Enforcement Network (FinCEN) has suggested that this term could apply to a variety of business structures such as state-chartered trust com
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On April 14, 2021, the U.S. Senate confirmed Gary Gensler as the new Chair of the U.S. Securities and Exchange Commission. Over the last few years the SEC has taken an assertive position in considering many digital assets to be securities and has been conservative in approving offerings of digital assets, leaving the industry in a continued state of uncertainty. On the other hand, the SEC made strides to embrace innovation as exemplified by their establishing FinHub and maintaining an open door policy to practitioners in this space.
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With Bitcoin’s latest bull run resulting in its price surge by almost 6x over the last year, taking hundreds of other digital currencies along for the ride, it is becoming increasingly clear that crypto-related merger activity is poised to skyrocket in 2021. According to a PwC report on the crypto M&A fundraising landscape, the global deal value associated with the crypto industry was $597 million in just the first half of 2020, surpassing a total of $491 million for the entire year in 2019. The recent IPO of Coinbase, the largest U.S. based cryptocurrency exchange, represents yet another milestone for the exploding sector, marking the intersection of cryptocurrency and traditional finance. As more companies integrate cryptocurrency into their business models to favorable results and new crypto-based platforms emerge, many private equity sponsors are beginning to explore it as a viable means of increasing the value of th