With the flurry of subpoenas and investigations into companies in the blockchain space that has erupted in the first eight months of this year, 2018 is on track to be "the year of the crypto investigation."

Murphy & McGonigle’s leading FinTech & Blockchain Practice is pleased to publish the second edition of “Who’s On the Block,” a roundup of blockchain conferences, trends and upcoming events.

Murphy & McGonigle lawyers will be attending and speaking at Blockchain conferences around the country and internationally in the coming weeks. Who’s On the Block features a summary of the conferences, trends, thought leadership and sponsorships in which our leading FinTech & Blockchain Practice is involved.

Whether digital assets are securities under Federal securities law or something other than a security, and therefore outside those provisions, is a pressing question.  On June 14, 2018, William Hinman, the Director of the Division of Corporation Finance at the Securities and Exchange Commission, provided valuable insights about current staff thinking and offered future guidance for market participants.  However, parsing the analysis in respect of a particular digital asset remains a daunting task.

This article addresses the problem of how to separate capital-raising securities from utility tokens.  The proposed solution is to use the basic SAFT model, but add a mechanism that extinguishes the capital-raising securities and results in the distribution only of utility tokens.

On September 27, 2018, the Commodity Futures Trading Commission sued 1Pool Ltd. and Patrick Brunner for offering illegal leveraged, off-exchange commodity transactions to retail customers in the United States. 

On September 21, 2018, Congressman Tom Emmer (R-MN), co-chair of the Congressional Blockchain Caucus, announced his plans to introduce three pieces of legislation designed to support the use and development of blockchain technology in the United States. 

In case the intrepid and hardy souls bravely blazing entrepreneurial paths in the New World of virtual currencies do not have enough regulatory hazards to navigate, one few seem to have considered to date is the possible application of the Model State Commodity Code (“Model Code”). Depending on how its thirty-three year old provisions are interpreted, the Model Code’s prohibition on the sale of commodities for speculative or investments may possibly be applied to some virtual currency businesses.

If 2017 was the year of the ICO, then 2018 may become the year of the cryptocurrency investigation

Concerned that virtual currencies and related products “may be attracting customers that do not fully understand their nature, the substantial risk of loss that could arise from trading them and the limitations of NFA’s oversight role,” the National Futures Association (“NFA”) is implementing new disclosure requirements for NFA Members engaging in virtual currency activities with customers.