USA Law and Practice Contributed by: Margo H. K. Tank, Michael Fluhr, Deborah Meshulam, Kristin Boggiano, David Stier, Liz S. M. Caires, Adam Dubin, Emily Honsa Hicks, Meghan Carey, Kathleen Birrane and Eric Hall, DLA Piper LLP
10.4 Regulation of “Issuers” of Blockchain Assets
ing registration for the offer and sale of securities related to staking activities, and registration is also required as a broker. This approach may
In the US, the sale or distribution of cryptocur - rency is a regulated activity and is generally considered money transmission, requiring reg - istration with federal and state regulators where required – generally where there are sales to US persons or persons located in the US, even if the seller or distributor is located abroad. To the extent that the assets constitute secu - rities, initial sellers or distributors must either register the sale with the SEC or conduct the sale pursuant to an exemption to the registration requirement. 10.5 Regulation of Blockchain Asset Trading Platforms The SEC had sued several major cryptocur - rency trading platforms for securities law viola - tions arising from alleged failure to register as exchanges, brokers, and clearing agencies. The SEC has now dismissed, or is seeking to dis - miss, these cases. Some cryptocurrency trading platforms have registered as alternative trading systems (ATS) under US securities laws. An ATS must comply with complex SEC regulations and register as a broker-dealer. Thus far, the activity of these ATSs appears limited in scope and size, and the vast majority of crypto-asset trading occurs on centralised and decentralised trading platforms not registered with the SEC. See 6. Marketplaces, Exchanges and Trading Platforms and 12.11 Virtual Currencies . 10.6 Staking In several enforcement actions, the SEC asserted that staking-as-a-service constitutes a securities offering subject to federal securities laws, requir -
change with the new administration. 10.7 Crypto-Related Lending
The SEC brought several enforcement cases asserting that crypto lending products are secu - rities. The agency has not, however, issued spe - cific rules addressing crypto lending products. In early 2023, several agencies issued a Joint Statement on Crypto-Asset Risks to Banking Organizations and a Joint Statement on Liquid- ity Risks to Banking Organizations Resulting from Crypto-Asset Market Vulnerabilities . In the Statement, regulators instructed supervised financial institutions to provide prior notice and demonstrate appropriate risk management before engaging in cryptocurrency activities. The agencies also cautioned banks about the risk in accepting deposits from certain crypto- asset-related entities. Since issuing the State - ment, regulators have been slow to approve or respond. Consequentially, supervised financial institu - tions de-risked, or otherwise limited exposure to, cryptocurrency-related companies. The new crypto-friendly Trump Administration may shift this approach. See 1.1 Evolution of the Fintech Market . 10.8 Cryptocurrency Derivatives The CFTC regulates activities such as sales, trading, and advice in markets for derivatives. No CFTC registration is required for over-the- counter derivative products, provided the parties are eligible contract participants. Retail investors trading in crypto derivative prod - ucts may use retail derivatives exchanges reg -
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