On Monday, January 23, 2022, the New York Department of Financial Services (the “DFS”) released a letter (the “Guidance”) clarifying virtual currency custody and disclosure standards and practices that the DFS expects from entities that have received a “BitLicense” and New York limited purpose trust companies (the “VCE Custodians”).  The Guidance is final and effective immediately.  The Guidance complements existing…

On December 19, 2022, FTX Trading Ltd. issued a press release announcing a process for the voluntary return of avoidable pre-bankruptcy payments to “secure the prompt return of such funds to the FTX Estates for the benefit of customers and creditors.”[1]  Seeking to clawback or “avoid” pre-bankruptcy transfers is commonplace in bankruptcy.  Such transfers may include customer withdrawals, payments to…

In response to “significant volatility and exposure of vulnerabilities in the crypto-asset sector” throughout 2022, on January 3, 2023, the Federal Reserve Board (“FRB”), Federal Deposit Insurance Corporation (“FDIC”) and Office of the Comptroller of the Currency (“OCC”) (together the “Agencies”) released a joint statement (the “Statement”) highlighting risks to banking organizations related to crypto-assets and reiterating that banking organizations…

The recent wave of bankruptcies in the crypto industry, culminating in the collapses of Celsius, BlockFi, and FTX, has spurred financial regulators to adopt a more aggressive tone when discussing their enforcement priorities.[1]  For instance, when announcing charges against FTX Founder Sam Bankman-Fried (“SBF”) for allegedly orchestrating a scheme to defraud FTX’s equity investors,[2] Securities and Exchange Commission (“SEC”) Chair…

On Thursday, December 15, 2022, the New York Department of Financial Services (“DFS”) released a letter (the “Guidance”) outlining the pre-approval application and evaluation process for New York regulated banking organizations that seek to engage in new or significantly different virtual currency-related activities, including virtual currency business activity.  While conceptually similar to the approach federal banking regulators have taken in…

As we approach the end of the year, here are the Top 10 posts on the Debevoise Fintech Blog in 2022. If you are not already a Blog subscriber, click here to sign up. How Will Bankruptcy Courts Measure Customer Crypto Claims? October 10, 2022 In the wake of the industry’s significant bankruptcy filings, crypto watchers are focusing for the…

On December 14, 2022, Senators Elizabeth Warren (D-Mass.) and Roger Marshall (R-Kan.) introduced the Digital Asset Anti-Money Laundering Act of 2022 (the “Act”). According to the statement announcing the Act, the legislation is intended to mitigate the risks that digital assets pose to U.S. national security by bringing the digital asset ecosystem into greater compliance with the anti-money laundering and…

On December 8, 2022, the Securities and Exchange Commission’s (“SEC”) Division of Corporation Finance (the “Division”) released a sample comment letter (the “Letter”) regarding recent developments in crypto asset markets.  In its review of disclosure documents, the Division may issue a tailored form of the Letter to a public company or other entity with SEC filing obligations, asking it to…

On November 9, 2022, the New York Department of Financial Services (the “NYDFS”) announced the publication of the official proposed amendments to its 2017 Cybersecurity Regulation 23 NYCRR 500 (the “Proposed Amendments”). The 60-day public comment period to the Proposed Amendments ends on January 9, 2023. Debevoise’s Data Blog provided their initial thoughts on the Proposed Amendments in a blog post, and then held a webcast…

In a Bloomberg article originally published October 12, 2022, Courtney M. Dankworth, Jehan Patterson and Zila R. Acosta-Grimes caution financial technology companies that recent actions by the Consumer Financial Protection Bureau signal it intends to take an expansive view of its jurisdiction. They offer several steps fintechs can take to prepare for this extra scrutiny. The article, “Why Fintechs Should…