FinTech & Blockchain

  • Advising a client on matters relating to digital currency-denominated securities trading.
  • Advising a client on the use of distributed ledger (blockchain) technology in the trading, clearance, and settlement of security-based swaps.
  • Advising a client on retail client disclosures for crypto-related investments.
  • Advising a client on the regulatory aspects of an Initial Coin Offering.
  • Representing a director in an SEC investigation of an Initial Coin Offering.
  • Representing a cryptocurrency fund under scrutiny from the SEC.
  • Providing regulatory and compliance counsel to a tech start-up that is disrupting the private capital formation marketplace.
  • Advising a client on the regulatory scrutiny of SAFTs.

Looking Forward

All signs point towards a breakout year in 2021 for blockchain technology, cryptocurrency adoption, and increased issuance and trading of digital securities. Bucking the COVID-19 worldwide recession, Bitcoin went on a tear in the second half of 2020 and was poised to break its all-time high in November. Other major indicators of market adoption of blockchain and crypto in 2020 include:

  • Congress introduced more crypto-focused legislation
  • Continued development and maturation of cryptocurrency market structure, including use of cryptocurrency prime brokers, particularly in the institutional space
  • Increased infrastructure to issue and trade digital securities
  • The OCC announced national banks can provide custody for customers’ cryptocurrencies
  • DeFi, in which cryptocurrencies are leveraged in blockchain-based financial products, continues to expand

With crypto prices soaring, we expect more capital raising in blockchain-based companies using digital securities. Companies will want to raise capital in registered and exempt securities offerings as the negative consequences of the 2017 ICO craze have been realized. The SEC notched two big wins this year in heavily litigated and closely watched cases: federal courts ruled that the coin offerings run by elegram and Kik were governed by the securities laws. It is unclear how the change in administration may impact the SEC’s approach to regulating cryptocurrency.

2021 is likely to see new use cases for blockchain as capital pours into the industry. Beyond blockchain, artificial intelligence will continue to transform investment advisory services by automating the process and driving down fees. Machine learning is disrupting automated trading and pushing the boundaries of high-frequency trading algorithms.