2023 – FinTech and Blockchain Law Watch

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

Dec 29 2023

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.

California is Seeking Industry Input on New Crypto Rules

Nov 21 2023

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.

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

Nov 20 2023

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.

Singapore to Share Cryptocurrency Tax Information With Other Countries

Nov 14 2023

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.

CFPB Wants to Oversee Large Nonbank Digital Payment Providers

Nov 08 2023

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.”

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

Oct 26 2023

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.

NY AG Sues Gemini, Genesis, and DCG for Fraud

Oct 20 2023

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.

Australia: Licensing Comes to the Crypto Industry

Oct 17 2023

By Daniel Knight and Kithmin Ranamukhaarachchi

Yesterday the Australian Federal Government released its proposal paper on regulating the crypto industry (Paper). The government proposes to regulate exchanges, custodians and other digital asset service providers within the scope the Australian Financial Services (AFS) licensing regime.

CFTC Files Complaint Against Voyager’s Former CEO Stephen Ehrlich Alleging Fraud and Registration Failures

Oct 16 2023

By Cliff Histed, Cheryl Isaac, Eden Rohrer, and Josh Durham

On 12 October, the Commodity Futures Trading Commission (CFTC) filed a complaint against Stephen Ehrlich, the former CEO of the now-defunct cryptocurrency platform, Voyager Digital (Voyager), in the US District Court for the Southern District of New York. In its 55-page complaint, the CFTC asserts both fraud and registration failures by Ehrlich in connection with the Voyager platform and Voyager’s operation of an unregistered commodity pool.

Hong Kong Monetary Authority Unveils Fintech Promotion Roadmap

Sep 27 2023

By Jay Lee and Beatrice Wun

In a transformative step for the financial technology (fintech) industry, the Hong Kong Monetary Authority (HKMA) recently announced a new Fintech Promotion Roadmap (Roadmap), which outlines its key initiatives to be taken over the next 12 months to expedite the growth of the Fintech ecosystem and give stronger impetus to fintech adoption in the Hong Kong financial services sector.

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