In-depth legal analysis of crypto issues
Regulation A+ offers a pathway to raise up to $75 million from non-accredited investors with SEC qualification. Understanding this framework helps token issuers reach broader investor bases. Reg A+ Structure Regulation A+ has two tiers: Tier 1 allows up to $20 million with state registration, while Tier 2 permits up to $75 million with federal…
Investment advisers holding crypto assets face specific custody rule requirements. Understanding these obligations is essential for advisers offering crypto investment services. Custody Rule Basics Rule 206(4)-2 under the Investment Advisers Act requires advisers with custody of client assets to maintain them with qualified custodians and undergo annual surprise examinations. Qualified Custodian Challenge Traditional qualified custodians…
The fair notice defense has emerged as a key argument in crypto enforcement cases, with defendants claiming the SEC failed to provide clear guidance before bringing charges. Understanding this defense helps evaluate litigation strategy. Constitutional Basis The fair notice defense derives from due process principles requiring that laws provide sufficient warning of prohibited conduct. Defendants…
Analyzing SEC enforcement patterns reveals priorities and risk areas for crypto companies. Understanding these trends helps compliance teams focus their resources effectively. Enforcement Volume SEC crypto enforcement actions have increased significantly since 2017, with peak activity following major market cycles. The Commission now has a dedicated Crypto Assets and Cyber Unit handling these cases. Common…
The SEC No-Action Letter process provides a pathway for crypto companies to obtain informal guidance before launching products. Understanding how to effectively request and interpret these letters can significantly reduce regulatory risk. What Is a No-Action Letter? A no-action letter is a written response from SEC staff stating they will not recommend enforcement action if…
Disputes in the crypto industry present unique challenges. From cross-border jurisdiction issues to smart contract failures, understanding available dispute resolution mechanisms helps parties protect their interests. Traditional Arbitration Arbitration offers advantages for crypto disputes: Neutral forum for international parties Confidentiality protections Arbitrator expertise selection Enforceability under New York Convention Specialized Crypto Arbitration Some arbitration institutions…
Layer 2 scaling solutions have become essential infrastructure for blockchain networks. Understanding the unique legal considerations for rollups, sidechains, and other L2 technologies helps developers and users navigate this complex landscape. What Are Layer 2 Solutions? Layer 2 technologies process transactions off the main blockchain while inheriting its security: Optimistic rollups – Assume validity with…
Regulatory sandboxes allow crypto companies to test innovative products under relaxed regulatory requirements. Understanding available sandbox programs can provide a pathway for novel offerings that might otherwise face regulatory barriers. What Is a Regulatory Sandbox? A regulatory sandbox is a controlled environment where companies can test products with real customers under modified regulatory requirements. Regulators…
Whether you are investing in a token, acquiring a crypto company, or partnering with a blockchain project, legal due diligence is essential. A comprehensive review identifies risks and informs deal structure. Corporate Structure Review Examine the organizational structure: Entity formation documents and jurisdiction Capitalization and ownership Foundation or DAO governance Intercompany agreements Officer and director…
Cryptocurrency enables instant cross-border payments, but regulatory compliance requires navigating multiple jurisdictions. Understanding international money transmission rules is essential for global crypto payment services. US Money Transmission Framework Cross-border crypto payments typically require: FinCEN MSB registration State money transmitter licenses (most states) AML/KYC compliance programs SAR and CTR reporting obligations International Licensing Major jurisdictions have…
As institutional investment in cryptocurrency grows, prime brokerage services have emerged to meet sophisticated investor needs. Understanding the regulatory framework for crypto prime brokerage helps providers and clients navigate this evolving landscape. Traditional Prime Brokerage Functions Crypto prime brokers offer services adapted from traditional finance: Custody – Secure storage of digital assets Execution – Access…
Whistleblower programs have become powerful enforcement tools in the crypto industry. Understanding how these programs work helps both potential whistleblowers and companies seeking to manage whistleblower risk. SEC Whistleblower Program The SEC pays 10-30% of sanctions over $1 million to whistleblowers who provide original information leading to successful enforcement. Recent crypto-related awards have exceeded $100…
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