The week’s developments in the crypto currencies world including crypto assets are to be treated as property

Crypto assets are to be treated as property

The LawTech Delivery Panel (“LTDP”), an industry-led and, government-backed initiative, has published a document which looks at the legal status of crypto assets and smart contracts.

The LTDP has concluded that crypto assets have the necessary legal characteristics which allow them to be treated as property. The body goes one to say that some types of security can be issued over crypto assets.

Further, when considering smart contracts, the LTDP has stated a smart contract is capable of satisfying the basic requirements of an English law contract.

This recognition of crypto as an asset class and smart contracts as having a validity as a true contract under English law will have substantial ramifications in the acceptance of certain crypto assets as more than a store of value.

Singapore: Crypto Derivatives Set to Come Under Regulatory Oversight

Singapore’s central bank and financial regulator, the Monetary Authority of Singapore (MAS), has proposed bringing crypto derivatives trading under its purview.

According to a BNN Bloomberg report on Nov. 20, the MAS’ proposal would make the trading of derivatives based on underlying assets like Bitcoin (BTC) and Ether (ETH) subject to the city-state’s Securities and Futures Act. According to the MAS, plans to extend its remit to crypto derivatives have been spurred by interest from hedge funds and asset managers engaged in the sector. MAS has said its proposal will “allow approved exchanges in Singapore to meet the need of investors to manage their exposure to payment tokens while bringing the activity under regulatory oversight.”

Source: “Singapore: Crypto Derivatives Set to Come Under Regulatory Oversight”, available at https://cointelegraph.com/news/singapore-crypto-derivatives-set-to-come-under-regulatory-oversight

Fidelity Digital Asset Services Now Authorized to Operate Crypto Custody Platform

Fidelity Digital Asset Services, LLC (FDAS) has procured a charter from the New York State Department of Financial Services (NYDFS) to operate a virtual currency custody and execution platform.

Per a Nov. 19 press release, the NYDFS authorized FDAS to operate as a limited liability trust company and run a cryptocurrency custody and execution platform where both institutional investors and individuals can store, buy, sell and transfer Bitcoin (BTC).

Superintendent of Financial Services Linda A. Lacewell noted that “this approval is further evidence that innovation and consumer protection can coexist in New York’s evolving and expanding financial services industry.”

Source: “Fidelity Digital Asset Services Now Authorized to Operate Crypto Custody Platform”, available at https://cointelegraph.com/news/fidelity-digital-asset-services-now-authorized-to-operate-crypto-custody-platform

Grayscale Files Form to Become First Bitcoin Fund to Report to SEC

Publicly traded Bitcoin (BTC) fund Grayscale Bitcoin Trust (GBTC) filed Form 10 with the United States Securities and Exchange Commission (SEC) to become the first crypto fund to report to regulator.

Grayscale announced in a blog post published on Nov. 19 that, if the filing will be deemed effective by the SEC, several aspects of the fund’s operations could change.

The firm notes that, if the regulator deems the filing effective, the structure of the trust will remain the same and it will not be added to a national securities exchange. However, there will be some changes to Grayscale’s scope and operations.

Should the SEC accept Grayscale’s filing, it would designate the fund as an SEC reporting company and obligate it to register its shares under the Exchange Act. Furthermore, as many institutions block investors from considering trusts based on SEC-approval, Grayscale’s eligible investor audience could widen. The SEC’s auditing standards would also be applied to Grayscale.

Source: “Grayscale Files Form to Become First Bitcoin Fund to Report to SEC”, available at https://cointelegraph.com/news/grayscale-files-form-to-become-first-bitcoin-fund-to-report-to-sec)

China’s crypto boom is expected to be less ‘fragmented’ as government backs blockchain efforts

Industry experts are expecting a much less fragmented cryptocurrency boom in China, compared to other parts of the world, with President Xi Jinping’s government recently backing digital currency initiatives. “I hope that we will have an enlightened infrastructure here,” said Paul Brody, EY global blockchain leader, at CNBC’s East Tech West conference in the Nansha district of Guangzhou, China. “And I hope that we will avoid some of the mistakes that happened in the rest of the world.”

With Xi’s backing, China is developing a Digital Currency Electronic Payment, or DCEP, to be issued by the People’s Bank of China. The national currency may be launched within months. China’s policy shift may look from the outside like an abrupt move to capitalize on a trend, but it fits squarely in Xi’s long-term plan for “industrialization of the digital economy,” added Rae Deng, partner at DU Capital, who was on the same panel discussion at the East Tech West conference.

Source: “China’s crypto boom is expected to be less ‘fragmented’ as government backs blockchain efforts”, available at https://www.cnbc.com/2019/11/19/chinese-crypto-boom-expected-to-be-less-fragmented.html

Claire Cummings

Claire practises financial services law with a focus on regulatory issues, cryptocurrencies and tokens, trading and brokerage documentation and advising both existing and start-up funds and fund managers.

If you would like to discuss any of the points we raise, please contact me or one of our other lawyers.

Phone: 0207 585 1406
Email: claire.cummings@cummingsfisher.com

Previous

Next