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…