[cryptolaw_takeaway]Crypto lending platforms have faced significant regulatory enforcement, with the SEC, state regulators, and bankruptcy courts all finding yield-bearing crypto accounts constitute securities. The collapses of Celsius, Voyager, BlockFi, and Genesis demonstrate the risks of unregistered lending products. Platforms offering yield on crypto deposits should carefully evaluate securities law compliance.[/cryptolaw_takeaway] The Securities Law Analysis Crypto…
[cryptolaw_takeaway]Cryptocurrency custody requirements vary based on the entity type and regulatory framework. Investment advisers must use qualified custodians for client assets, while exchanges face custody standards under state and federal money transmission rules. Institutional adoption increasingly depends on robust custody solutions that satisfy regulatory requirements while maintaining security.[/cryptolaw_takeaway] Investment Adviser Custody Requirements Investment advisers registered…
[cryptolaw_takeaway]Token classification as a security or non-security depends on economic substance, not labels. The SEC has emphasized that calling a token a utility token does not exempt it from securities laws if it functions as an investment contract. Key factors include functional utility at launch, marketing emphasis, development team involvement, and secondary market expectations.[/cryptolaw_takeaway] Why…
[cryptolaw_takeaway]Cryptocurrency exchanges face overlapping federal and state regulatory requirements spanning anti-money laundering, securities, commodities, and consumer protection laws. Building a robust compliance program requires dedicated resources, experienced personnel, and ongoing adaptation to evolving regulatory expectations.[/cryptolaw_takeaway] Multi-Layered Regulatory Framework Operating a cryptocurrency exchange in the United States requires navigating multiple regulatory regimes simultaneously: FinCEN: Registration as…
[cryptolaw_takeaway]Smart contracts raise novel questions about legal enforceability, with courts increasingly recognizing their validity while grappling with interpretation challenges. Legal enforceability depends on whether traditional contract elements are satisfied—offer, acceptance, consideration, and intent—regardless of the automated execution mechanism. When disputes arise, courts must determine how to interpret code-based agreements.[/cryptolaw_takeaway] Legal Recognition of Smart Contracts Smart…
[cryptolaw_takeaway]Stablecoins face increasing regulatory scrutiny as policymakers seek to address systemic risks, consumer protection concerns, and monetary policy implications. Multiple legislative proposals would establish federal oversight frameworks, while existing regulators have brought enforcement actions under current law. Reserve transparency and redemption rights remain central regulatory concerns.[/cryptolaw_takeaway] The Regulatory Landscape Stablecoins currently operate in a regulatory…
[cryptolaw_takeaway]NFTs raise complex legal questions spanning intellectual property, securities law, and consumer protection. While purchasing an NFT provides token ownership, it typically does not transfer copyright or other IP rights to underlying content. Fractional NFTs and NFTs with revenue-sharing features may constitute securities requiring registration.[/cryptolaw_takeaway] Understanding NFT Ownership Non-fungible tokens represent unique digital assets recorded…
[cryptolaw_takeaway]DeFi protocols face potential regulation under securities, commodities, and money transmission frameworks. The degree of actual decentralization significantly affects regulatory exposure. Recent enforcement actions against Uniswap, dYdX, and others demonstrate that regulators are actively scrutinizing the DeFi space despite claims of decentralization.[/cryptolaw_takeaway] The Decentralization Spectrum Regulators do not accept decentralization claims at face value. Instead,…
[cryptolaw_takeaway]DAOs face fundamental legal questions about entity status, member liability, and regulatory compliance. Without proper legal structure, DAOs may be treated as general partnerships exposing members to unlimited liability. Wyoming, Tennessee, and other states have enacted DAO-specific legislation, while traditional entity structures like LLCs remain options for projects requiring legal personality.[/cryptolaw_takeaway] The Legal Recognition Problem…
[cryptolaw_takeaway]Cryptocurrency businesses operating in the United States typically need money transmitter licenses in each state where they serve customers. This creates a complex compliance burden, with 49 states plus DC and territories each imposing distinct requirements. The New York BitLicense remains the most demanding, while some states offer crypto-specific frameworks or exemptions.[/cryptolaw_takeaway] Federal vs. State…
[cryptolaw_takeaway]The IRS treats cryptocurrency as property, meaning every sale, trade, or purchase triggers a taxable event. New broker reporting rules under the Infrastructure Investment and Jobs Act require exchanges to issue 1099 forms starting in 2026. Maintaining detailed transaction records is essential for accurate reporting and audit defense.[/cryptolaw_takeaway] How the IRS Classifies Cryptocurrency Since IRS…
[cryptolaw_takeaway]Cryptocurrency businesses that exchange, administer, or transmit virtual currency qualify as Money Services Businesses under FinCEN regulations. This classification triggers Bank Secrecy Act compliance obligations including registration, AML program implementation, suspicious activity reporting, and extensive recordkeeping. Civil penalties can reach millions of dollars, and criminal prosecution remains possible for willful violations.[/cryptolaw_takeaway] Money Services Business Classification…
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