- Expect continuing focus on government enforcement and regulatory action – Enhanced focus on companies involved in the digital assets space will continue as we see increasingly more high-profile actions from the Department of Justice (DOJ), Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC), and state Attorneys General.
- Key industries sectors will move toward greater adoption of blockchain technology and digitized assets – The COVID-19 pandemic has accelerated the movement by certain industries, such as the financial industry and the hospitality sector, into digitizing certain of their products and assets on blockchain platforms.
- Investor acceptance of digital assets will increase - Virtual currencies and digital securities will continue to gain traction as a portfolio-balancing tool.
- The SEC will more aggressively police Initial Coin Offerings (ICO) – The recent trend will heighten throughout 2021 with the new administration setting the tone for new SEC leadership.
- The CFTC will continue its fraud enforcement in the cryptocurrency space – Expect to see even more focus on digital assets fraud over the coming year.
- FinCEN will increase its focus on digital assets that are convertible to cash - The passage of the Anti-Money Laundering Act of 2020, plus a new FinCEN rulemaking proceeding, make clear that regulation of convertible digital assets remains a FinCEN priority. Convertible digital assets hosted in private wallets will be subject to reporting and recordkeeping requirements. And FinCEN will have a statutory mandate to regulate “value that substitutes for currency.”
- Stablecoins and digital fiat currencies will be pursued more vigorously – Countries will increase their investigation and development of digital representations of fiat currency, following from the work by the G20 FSB Consultation Paper and regional initiatives.
- The DOJ will continue to police the cryptocurrency space – As discussed in the DOJ’s October 2020 Cryptocurrency Enforcement Framework, the DOJ is focused on criminal offenses using cryptocurrency to effectuate, or as the object of, a perpetrator’s scheme, and pledges vigilance in its enforcement activity.
- Cryptocurrency exchanges need to be hypervigilant in operating in ways that could be construed as fraudulent and subjecting them to U.S. jurisdiction – To avoid government action, cryptocurrency exchanges must take seriously their legal obligations to protect users, safeguard customer information, protect evidence, and recognize when they are subject to U.S. jurisdiction.
- Office of the Comptroller of the Currency (OCC) broadens national bank and federal savings association authority in the blockchain and digital asset space - After taking a number of actions in 2020 in the blockchain and digital asset space, the OCC got off to a fast start in 2021, concluding that certain payment-related activities that involve the use of new technologies, including the use of shared, independent node verification networks that are digital ledgers (INVNs) and stablecoins, to engage in and facilitate payment activities, are permissible activities for national banks and federal savings associations. We expect the OCC to continue in 2021 with more pronouncements to facilitate national banks’ and federal savings associations’ use of blockchain and digital asset technologies.
About the Authors:
Greenberg Traurig, LLP's global Blockchain & Digital Assets Group comprises more than 80 attorneys across multiple legal disciplines in key financial hubs around the world, providing a centralized approach to blockchain and digital asset matters. We leverage our diverse experience to advise clients on matters ranging from token structuring, fund formation, investment strategies, financial regulation and registration, international tax planning and structuring, stable coins and asset-backed digital assets, tokenized property interests, infrastructure applications, technology licensing and development, securities compliance, cryptocurrency exchanges and trading, and blockchain-as-a-service.