The Federal Reserve Board (“FRB”) has approved final guidelines (“Final Guidelines”) for Federal Reserve Banks (“Reserve Banks”) to use in evaluating requests for master accounts and access to Reserve Bank financial services (“Fed Accounts and Services”).[1]  The Final Guidelines reflect the comments to and development of two prior proposed guidelines: (i) the initial proposed guidelines, issued on May 11, 2021;…

On June 7, 2022, Wyoming Senator Cynthia Lummis and New York Senator Kirsten Gillibrand introduced the Lummis-Gillibrand Responsible Financial Innovation Act, the first comprehensive bill introduced to govern digital assets (see our post summarizing the key provisions in the bill here). In the Debevoise Fintech Blog’s first official webcast, our banking and fintech experts, Alison Hashmall and Gary Murphy, discuss…

On July 21, 2022, the Department of Justice (“DOJ”) and the Securities Exchange Commission (“SEC” or the “Commission”) announced parallel actions against a former Coinbase product manager, his brother, and his friend for orchestrating a year-long insider trading scheme.[1]  According to the agencies’ respective charging documents, Defendant Ishan Wahi used inside information gleaned from his employment at Coinbase to tip…

In light of recent volatility in crypto markets and news of several crypto entities filing for bankruptcy,[1] market participants are increasingly scrutinizing the credit of crypto intermediaries and considering whether there will be an influx of additional filings.  In thinking through credit risk, one critical preliminary set of questions that market participants should ask is which bankruptcy regime is likely…

Originally Published: July 13, 2022 Updated: July 14, 2022 One of the key unresolved questions surrounding crypto-custodian bankruptcy proceedings under the U.S. Bankruptcy Code is whether or not digital assets that are held by a crypto exchange on behalf of platform users could be viewed as the exchange’s corporate assets in the proceeding, which in turn could be used to satisfy…

Introduction On June 7, U.S. Senators Kirsten Gillibrand (D-NY) and Cynthia Lummis (R-WY) (together, the “Senators”) introduced the Responsible Financial Innovation Act, a bipartisan bill that seeks to create a comprehensive regulatory framework for digital assets.  The Senators have stated that the purpose of the proposed legislation is to balance innovation with customer protection. Coverage of the bill has been…

On June 1, the United States Attorney for the Southern District of New York (“SDNY”) and the New York Field Office of the Federal Bureau of Investigation (“FBI”) unsealed an indictment charging Nathaniel Chastain, a products manager at OpenSea,[1] with one count of wire fraud and one count of money laundering for his alleged insider trading of Non-Fungible Tokens (“NFTs”).[2]…

Recent turmoil in the cryptocurrency market has brought issues related to crypto-asset custody to the forefront of the crypto currency discourse;[1] in an enormous $1 trillion crypto-asset crash between approximately May 6, 2022 and May 16, 2022, some coins lost up to 99% of their original value.[2]  Many crypto-asset investors are now wondering how their assets may be treated if…

Concerns over the environmental impact of proof-of-work mining have recently led to increased focus by legislative bodies in Europe and the United States.  The use of proof-of-work consensus mechanisms, by which “miners” solve complex cryptographic puzzles in order to validate transactions and mine new blockchain tokens, is central to the operation of certain blockchain networks such as Bitcoin.  However, the…

The cryptocurrency industry last week experienced a turbulence long predicted by industry observers.  The third largest stablecoin, TerraUSD (“UST”), lost its one-to-one peg to the U.S. dollar about 10 days ago, trading well below 10 cents per UST by 11:00 AM EST on May 16.  The sister token (“Luna”)—meant to stabilize UST—lost all of its value as well and fell…