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.

Arbitration in the cryptocurrency world promises to be very different from traditional “securities” arbitrations against broker-dealers. The latter are conducted pursuant to the strict rules and procedures of the Financial Industry Regulatory Authority. In contrast, the parties likely to be involved in cryptocurrency disputes have far greater freedom in determining which disputes are arbitrable, the particular arbitration forum and venue for resolving the disputes, and the applicable procedures and remedies. The article attached, which appeared in Law360 on May 30, examines the predispute arbitration clauses that certain major digital asset exchanges require customers to agree to as a condition of opening an account, and considers how arbitrations in the cryptocurrency world will differ from traditional securities arbitration and the ramifications for industry participants.

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.

The CFTC's Division of Market Oversight and Division of Clearing and Risk recently issued an advisory providing guidance to exchanges and clearinghouses regarding virtual currency derivatives to be listed or cleared.  Entities already listing or clearing virtual currency derivatives, as well as those considering doing so, should be aware of the compliance and enforcement implications stemming from the advisory.

A new law might provide blockchain companies a new way to raise funds. On May 22, 2018, the U.S. House of Representatives passed S. 2155, the “Economic Growth, Regulatory Relief, and Consumer Protection Act.”  The Senate had passed the bill previously.  The bill now goes to President Trump, who is expected to sign it into law.

A cryptocurrency sweep announced by NASAA comes on the heels of an in-depth report from the Wall Street Journal on red flags in the ICO market.