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News Roundup – The Latest in Crypto and Blockchain

Canadian Securities Administrators Provide Additional Guidance on Securities Law Implications for Offerings of Tokens

June 11, 2018: The Canadian Securities Administrators (“CSA”) published CSA Staff Notice 46-308 Securities Law Implications for Offerings of Tokens, which provides additional guidance on the applicability of securities laws to offerings of coins or tokens, including those that industry stakeholders commonly refer to as “utility tokens”. Staff Notice 46-308 “outlines specific situations that may have an implication on the presence of one or more of the elements of an investment contract in the context of an offering of coins or tokens.” In particular, Staff Notice 46-308 provides guidance on when an offering of tokens may or may not involve an offering of securities and offerings of tokens that are a structure in multiple steps.

Since the publication of CSA Staff Notice 46-307 Cryptocurrency Offerings in August 2017, the CSA has “engaged with numerous businesses wishing to complete offerings of tokens and have found that most of these offerings have involved securities.”

Andy Warhol Artwork to Be Auctioned for Cryptocurrency

June 7, 2018: Andy Warhol’s artwork “14 Small Electric Chairs” has been selected by Dadiani Syndicate for the world’s first cryptocurrency auction. Buyers will be able to purchase digital certificates representing fractional ownership in the painting. The final price will be determined by a smart contract run on Ethereum.

Canadian Securities Administrators Urge Caution When Investing with Crypto-Asset Trading Platforms

June 6, 2018: The CSA issued a press release urging Canadians to be cautious when considering buying crypto assets through trading platforms. The CSA is clear that “currently there are no crypto-asset trading platforms recognized as an exchange… or authorized to operate as a marketplace in Canada.”

Cryptocurrency Startup Circle Seeks Registration as a Federally Licensed Bank

June 6, 2018: Bloomberg reports that Circle Internet Financial Ltd., one of the world’s most valuable cryptocurrency platforms, aims to enter the “highly regulated realm of U.S. banks and brokerages.” The venture, partly backed by Goldman Sachs Group Inc. plans to seek both a federal banking license and registration as a brokerage to assist investors with buying and selling tokens deemed to be securities. Bloomberg reports that “Circle officials say they’ve had preliminary conversations with the Office of the Comptroller of the Currency to explore banking functions, as well as with staff at the SEC and officials from the Financial Industry Regulatory Authority, which oversees brokerages.”

International Central Bank Representatives Believe Cryptocurrencies are Not a Threat to Fiat

June 5, 2018: Representatives of central banks discussed whether cryptocurrencies spell the end of fiat money at the Money 20/20 Conference in Amsterdam. Representatives of the Banks of England, Canada, and Lithuania, among others, discussed the potential of cryptocurrencies to end fiat money. Martin Etheridge, Head of a Division at the Bank of England, stated he doesn’t “see much prospect of the current iteration of crypto assets in replacing fiat currencies” but that “who knows what the future will hold”.

CNN Reports that Russian Farmers Ditch Ruble in Favor of Cryptocurrency

June 4, 2018: A report by CNN states that Kolionovo, a small village outside of Moscow, has created a cryptocurrency, the “kolion”, to avoid steep banking interest rates. CNN reports that the village sees cryptocurrency as a manner of insulating themselves from Russia’s financial system and a manner of providing low-cost capital to fund local business.

SEC Creates New Position for Oversight of Emerging Digital Technologies and Innovations

June 4, 2018: The SEC announced it has appointed Valerie A. Szczepanik to a newly created advisory position that will coordinate efforts across all SEC Divisions and Offices regarding “the application of U.S. Securities laws to emerging digital asset technologies and innovations, including Initial Coin Offerings and cryptocurrencies.” Ms. Szczepanik is the Head of the SEC’s Distributed Ledger Technology Working Group, Co-Head of the SEC’s Dark Web Working Group and a member of its FinTech Working Group.

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