FinTech and Blockchain Law Watch

At the Crossroads of Law, Innovation and Commerce

1
SFC Circular on SFC-Authorized Funds with Exposure to Virtual Assets–Part 1
2
The Aloha State Finally Welcomes Crypto
3
SFC Circular on Intermediaries Engaging in Tokenized Securities Activities (Part 2)
4
SFC Circular on Intermediaries Engaging in Tokenized Securities Activities (Part 1)
5
California is Seeking Industry Input on New Crypto Rules
6
Tokenized Products of SFC-Authorized Investment Products Can Be Offered to Retail Customers in Hong Kong
7
Singapore to Share Cryptocurrency Tax Information With Other Countries
8
CFPB Wants to Oversee Large Nonbank Digital Payment Providers
9
Hong Kong Stock Exchange Launches a New Blockchain-Based, Real-Time Settlement Platform
10
NY AG Sues Gemini, Genesis, and DCG for Fraud

SFC Circular on SFC-Authorized Funds with Exposure to Virtual Assets–Part 1

By: Jay Lee and Anson Chan

Earlier this year, the US Securities and Exchange Commission approved 11 spot Bitcoin ETFs. In Hong Kong, in view of rapid developments of virtual asset (VA) products and growing investment products offering exposure to VAs, the Securities and Futures Commission (SFC) issued a circular, on 22 December 2023, detailing requirements for investment funds with exposure of more than 10% of net asset value (NAV) to VA seeking authorization for public offerings in Hong Kong (Circular).

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The Aloha State Finally Welcomes Crypto

By: Jeremy McLaughlin and Joshua Durham

Hawaii has long been a thorn in the side of crypto companies. That thorn has finally been removed: on 25 January 2024, the Hawaii Department of Commerce and Consumer Affairs issued a press release summarizing its findings on the proper regulatory framework for cryptocurrency—its conclusion is that it will not apply the state’s money transmitter law to cryptocurrency activities. Hawaii initially worked with cryptocurrency companies to create an alternative licensing framework, but was ultimately unable to conceive of an adequate digital asset license.

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SFC Circular on Intermediaries Engaging in Tokenized Securities Activities (Part 2)

By: Jay Lee and Beatrice Wun

In our previous blog, we discussed the Hong Kong Securities and Futures Commission (SFC)’s position on the taxonomy of tokenized securities and digital securities, and whether tokenized securities will be regarded as “complex products”. In this blog, we explore the guidance set forth in the SFC’s circular on intermediaries engaging in tokenized securities-related activities (the Circular).

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SFC Circular on Intermediaries Engaging in Tokenized Securities Activities (Part 1)

By: Jay Lee and Beatrice Wun

On 2 November 2023, Hong Kong’s Securities and Futures Commission (SFC) issued a circular addressing the participation of intermediaries in tokenized securities-related activities (the Circular). The move was timely, as we are seeing a growing interest among financial institutions in tokenizing traditional financial instruments in global financial markets.

The Circular supersedes the SFC’s 2019 Statement on Security Token Offerings (2019 Statement) and clarifies the meaning of tokenized and digital securities.

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California is Seeking Industry Input on New Crypto Rules

By: Jeremy McLaughlin and Josh Durham

The California Department of Financial Protection and Innovation (DFPI) is requesting comments on potential rules it will promulgate to implement the state’s recently-enacted Digital Financial Assets Law (DFAL), which establishes a formal licensing regime for digital asset service providers. Please review our client alert for a detailed analysis of the new law, which takes effect 1 July 2025.

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Tokenized Products of SFC-Authorized Investment Products Can Be Offered to Retail Customers in Hong Kong

By: Jay Lee and Natalie Chow

The Securities and Futures Commission of Hong Kong (SFC) will now allow tokenized authorized investment products to be offered to retail investors. Recognizing the growing interest in the tokenization of investment products in Hong Kong, on 2 November 2023, the SFC issued a circular outlining the public offering scheme and requirements of tokenized authorized investment products under the Securities and Futures Ordinance for primary dealings. However, secondary trading of such tokenized investment products is not allowed yet.

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Singapore to Share Cryptocurrency Tax Information With Other Countries

By: Nicolet-Serra and Josh Durham

Singapore has just become the 48th nation (joining the US) to begin implementing the international Crypto-Asset Reporting Framework (CARF), which is intended to standardize the automatic exchange of personal financial information between countries and to reduce tax evasion by those engaging in cryptocurrency transactions.

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CFPB Wants to Oversee Large Nonbank Digital Payment Providers

By Jeremy McLaughlin, Andrew Hinkes, and Josh Durham

Yesterday the Consumer Financial Protection Bureau (CFPB) issued a Notice of Proposed Rulemaking (NPRM) that, according to the agency, aims to “crack down on [fintech] regulatory arbitrage by ensuring large technology firms and other nonbank payment providers are subjected to appropriate oversight.”

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Hong Kong Stock Exchange Launches a New Blockchain-Based, Real-Time Settlement Platform

By Jay Lee and Beatrice Wun

Hong Kong Stock Exchange (HKEx) recently launched “HKEx Synapse” (Synapse), a new blockchain-based settlement platform to complement the existing post-trade infrastructure for Northbound Stock Connect. “Stock Connect” in Hong Kong refers to a market access program through which investors in Mainland China and Hong Kong can trade and settle shares listed on the other market via exchanges and clearing houses in the home market. “Northbound Stock Connect” refers to the market access program where investors in Hong Kong can have access to shares in Mainland China.

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NY AG Sues Gemini, Genesis, and DCG for Fraud

By Eden Rohrer, Aiden O’Leary, and Josh Durham

On 19 October 2023, New York Attorney General Letitia James filed a lawsuit against cryptocurrency companies Gemini Trust Company, LLC (Gemini), Genesis Global Capital, LLC (Genesis), Digital Currency Group, Inc. (DCG), and several of their affiliates and controlling persons, in relation to Gemini’s digital asset investment program called Gemini Earn (Earn). In addition to claims that Earn constituted the offering of an unregistered security, which we have seen recently in other SEC and state regulator enforcement actions, the lawsuit also claims that the defendants allegedly defrauded investors by concealing the program’s risks and misleading investors about the financial stability of Genesis.

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