Steptoe Blockchain Blog, Steptoe – Johnson LLP
On March Nineteen, 2018, US Voorzitter Donald Trump issued Executive Order 13827 (the EO), which for the very first time targets US economic sanctions against a virtual currency – namely, a digital currency colloquially known spil the “petro” that has bot issued by the Government of Venezuela (GOV). Specifically, the EO prohibits “all transactions related to, provision of financing for, and other dealings te, by a United States person or within the United States, any digital currency, digital coin, or digital token, that wasgoed issued by, for, or on behalf of the [GOV] on or after January 9, 2018.”
Spil justification for thesis sanctions, the EO cited latest deeds undertaken by the Maduro staatsbestel to circumvent US sanctions by issuing a digital currency. This voorzichtig discusses the key aspects and potential implications of the fresh GOV Digital Currency sanctions.
Click here to read more.
After a year-long fight with the IRS on turning overheen customer gegevens, Coinbase both won and lost. It won te that the court significantly narrowed the type of information that it wasgoed ordered to turn overheen to the IRS. It lost te that it wasgoed still required to turn overheen gegevens on approximately 13,000 customers. For the 13,000 customers this means that the IRS may now be contacting you to let you know that you may owe extra tax. Proceed Reading
On March 1, Steptoe is hosting a workshop ter Fresh York on the tax consequences of investing te cryptocurrency, spil well spil common methods of tax structuring for individuals and entities using, trading, and investing ter cryptocurrency and tokens. The workshop will feature discussions on a range of topics from determining ondergrond, income, and capital gains to common on-shore and off-shore tax structuring mechanisms.
Te addition to hearing from Steptoe’s cryptocurrency tax specialists, you will hear from outside panelists, including:
- Brian Kelly, Founder and CEO, BKCM LLC
- James Morgan, General Counsel &, Chief Compliance Officer at Genesis Global Trading
- Houman B. Shadab, Professor of Law and Co-Director of the Center for Business and Financial Law, Fresh York Law Schoolgebouw
You can learn more and sign up for the workshop here.
The Federal Communications Commission (FCC or Commission) last week added itself to the list of regulators that have issued guidance or raised warnings about crytpocurrency when it sent a notification about interference with wireless broadband signals from a Bitcoin mining device.
The FCC is the independent agency that regulates communications te the United States, and it has responsibility for regulating spectrum and radio swings te the United States to ensure, among other things, that licensed users of spectrum do not suffer from interference. While seemingly a remote concern from Bitcoin, the mission of the FCC collided with a miner ter Fresh York City. Proceed Reading
Government regulators are increasingly focused on blockchain and cryptocurrency activity, a development that some, such spil IMF head Christine Lagarde have called unavoidable. Ter the US, the Financial Crimes Enforcement Network (FinCEN), the Commodity Futures Trading Commission (CFTC), and the Securities and Exchange Commission (SEC) have issued statements, enforcement deeds, and penalties involving blockchain and cryptocurrency activities, and they are not the only agencies monitoring thesis activities. Spil a result, it is significant for industry participants to be ready to react to potential regulatory inquiries.
This is why Steptoe has partnered with Thomson Reuters to publish a “one-stop” guide to the regulatory landscape and best practices for responding to blockchain and cryptocurrency-related investigations. Proceed Reading
You know that federal entities like the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), the Financial Crimes Enforcement Network (FinCEN), and the Internal Revenue Service (IRS) have all issued guidance concerning cryptocurrencies. But get ready to add a fresh agency to the list—the Department of Defense’s Defense Security Service (DSS).
Standard Form 86 (SF-86), “Questionnaire for National Security Positions,” is the lengthy form that anyone applying for a security clearance from the US government vereiste accomplish. Question 20A of the SF-86 asks whether the applicant or instantaneous family members have everzwijn “had any foreign financial interests (such spil stocks, property, investments, handelsbank accounts, ownership of corporate entities, corporate interests or businesses) ter which you or they have ongezouten control or onmiddellijk ownership? (Exclude financial interests te companies or diversified mutual funds that are publicly traded on a U.S. exchange.)”
Wij know that FinCEN considers cryptocurrency to be currency, the CFTC considers it a commodity, and the IRS considers it to be property, but is it also a “foreign financial interest” for the purposes of the SF-86? Proceed Reading
Today, Steptoe &, Johnson LLP’s Blockchain and Digital Currency practice applauded the Commodity Futures Trading Commission’s (CFTC) decision to propose, through the rulemaking process, an interpretation defining the term “actual delivery” te the setting of retail commodity transactions involving cryptocurrencies like Bitcoin.
“We are pleased that the commission has chosen to react to Steptoe’s petition for rulemaking, along with other requests for guidance, by proceeding ter this manner,” said Micah Green, chair of Steptoe’s Financial Services practice and co-head of Steptoe’s Government Affairs and Public Policy Group. “We look forward to reviewing the proposal and working together with the industry to find the right treatment for businesses that treat, trade, and exchange cryptocurrency.”
Te July of 2016, Steptoe filed its petition requesting that the CFTC proceed with a rulemaking on this subject rather than continued enforcement deeds, so that there would be visibility to the industry and an chance for the industry to comment and participate ter the process. Specifically, the petition called for a commission rulemaking to set forward the requirements for effectuating a transfer of ownership under the Commodity Exchange Act (CEA). Under the CEA, retail commodity transactions within the terms and intent of such provision are required to be traded on a commission-regulated exchange, unless the transaction falls within one of the stated exceptions, such spil a transaction that results te “actual delivery” of a commodity within 28 days. Accordingly, the petition also requested that a CFTC rulemaking outline the elements necessary to sate the requirements of “actual delivery” under the CEA spil applied to leveraged or financed retail cryptocurrency transactions.
“Cryptocurrency and crypto-assets represent a fresh asset class, and wij applaud the CFTC and other regulatory agencies who have chosen to evaluate their treatment to innovation and investor protection to make sure it fits with this fresh type of asset,” said Jason Weinstein, co-chair of Steptoe’s Blockchain and Digital Currency practice.
Steptoe is among the leaders ter the evolving legal and regulatory landscape surrounding blockchain technology and digital currency. The firm’s multidisciplinary, global practice features practice te a range of disciplines that will be impacted by blockchain technology ter the coming years – including corporate and fund formation, financial services, international regulation and compliance, trade, IP, government contracts, public policy, tax, cyber, and government investigations and enforcement. Steptoe helped create and serves spil counsel to the Blockchain Alliance and the Digital Assets Tax Policy Coalition. The rock hard also serves spil the legal services playmate of the Global Blockchain Business Council, and spil an advisor to industry-leading advocacy groups Coin Center and the Chamber of Digital Commerce. The firm’s Blockchain and Digital Currency practice has advised venture capital firms, financial institutions, established companies, startups, and governments on issues surrounding digital currencies and blockchain technology.
Alan Cohn wasgoed recently featured on the Future Tech Podcast. Te an vraaggesprek with Richard Jacobs, Editor of Crypto News Insider and Organizer &, Host of the Bitcoin, Ethereum, and Blockchain Super Conference 2018, Alan discusses the latest regulatory switches and guidance related to cryptocurrency such spil the latest Securities and Exchange Commission (SEC) Investigative Report on the Distributed Autonomous Organization and Investor Bulletins along with the need for clearer tax treatment of cryptocurrencies. Listen to the podcast here.
This summer, US and international regulators have brought enforcement deeds, issued guidance and explanatory documents, and sharpened previously-taken positions regarding regulation of cryptocurrency and crypto-tokens under the anti-money laundering, derivatives, securities, and tax laws. Thesis deeds provide a better sense of the way te which US regulators will treatment the blockchain and digital asset space going forward, but also leave many unanswered questions.
Thesis latest deeds indicate enhanced regulatory risk for certain types of activities. Companies that have made or are contemplating making initial coin offerings or cryptocurrency investments should assess thesis activities te light of thesis fresh regulatory pronouncements. But overall, this latest round of regulatory deeds may provide greater regulatory certainty and a better understanding of regulatory priorities, which ter turn can provide innovators and early adopters a clearer legal framework within which to operate.
Steptoe’s advisory covers four areas of latest regulation and guidance:
- Anti-Money Laundering
- Commodities and Derivatives Regulation
- Securities and Initial Coin Offerings
Read the total advisory here.
Before 2014, the treatment of virtual currency for tax purposes wasgoed somewhat of an open question. That is, would it be treated like a currency? Maybe a foreign currency? Or would it be treated like property? Or maybe a commodity or a derivative? The IRS took initial steps to answering that question ter Notice 2014-21, where the IRS asserted that virtual currency would be treated like property.
A lotsbestemming of practitioners thought that this wasgoed very likely the right reaction, spil did many significant investors, but for ordinary folks who have bot using bitcoin or other virtual currency to buy goods and services, it may have bot a bit surprising. Essentially, the IRS characterization means that if you go to Starbucks and use bitcoin to buy your coffee, while it may seem to you the same spil using dollars, for tax purposes, it’s more like using gold. And if your gold has appreciated te value since you acquired it, you may owe tax on the build up. Same thing with virtual currency. The problem arises because using virtual currencies to buy things seems much more like using metselspecie than like using gold, so many virtual currency users may not have even considered that there could be potential tax consequences. Proceed Reading