Digital Asset Companies Announce New Partnerships, Acquisitions, Products
By Robert A. Musiala Jr.
A recent press release announced that Ripple, a U.S. fintech and digital asset infrastructure provider, has agreed to acquire Hidden Road, a prime brokerage, clearing and financing platform, for $1.25 billion. According to the press release, “With the acquisition, Ripple becomes the first crypto company to own and operate a global, multi-asset prime broker.” The press release further noted that the acquisition “reinforces Ripple USD’s (RLUSD) position as an enterprise-grade USD-backed stablecoin with real utility as Hidden Road leverages it as collateral across its prime brokerage products.”
In another recent development, according to recent reports, a major U.S. payment card issuer has partnered with a major U.S. cryptocurrency exchange to allow U.K. and EU users of the exchange to spend digital assets using a physical crypto debit card. The crypto debit card will reportedly be available for use at over 150 million merchants worldwide.
According to a recent press release, a major nonfungible token (NFT) marketplace recently acquired an “onchain trading app” that will enhance the NFT marketplace’s crypto trading offerings. The acquisition will reportedly allow the NFT marketplace to offer easier fiat onramps, AI-assisted token discovery and easier token trading.
And in a final notable item, Web3 security platform Immunefi recently announced the launch of Immunefi Audits, a new Web3 audit solution “that matches protocols with the most elite auditors in Web3.” According to a press release, “Immunefi Audits is powered by the most elite blockchain hackers and auditors in the world, pairing each project’s codebase with auditors that have already found and disclosed real funds-at-risk vulnerabilities onchain, which is the highest possible achievement for demonstrating security expertise and integrity in Web3.”
For more information, please refer to the following links:
U.S. Financial Services Firms Launch Digital Asset Products
By Robert A. Musiala Jr.
The operator of a major global derivatives and securities exchange network recently announced plans to launch a new Bitcoin Index futures product, XBTF. According to a press release, “XBTF futures are cash-settled contracts and settle in the afternoon (P.M[.]) on the last business day of each month.” The press release further noted that the XBTF products are based on “the XBTF Index,” which is developed by a third-party financial services firm.
In another recent press release, the operator of “the premier post-trade market infrastructure for the global financial services industry” announced the launch of a new “digital collateral management platform.” According to the press release, the new platform aims to use “tokenized collateral management” to increase the mobility and velocity of collateral movement, increase capital efficiencies and liquidity, facilitate the convergence of traditional and digital assets, and enable an “open digital liquidity ecosystem.”
In a final development, according to reports, a major U.S. financial services firm recently launched retirement plans that will provide investors with exposure to BTC, ETH and LTC. The plans reportedly include a Roth IRA, traditional IRA and rollover IRA.
For more information, please refer to the following links:
SEC Division of Corporation Finance Publishes Digital Asset Statements
By Robert A. Musiala Jr.
The U.S. Securities and Exchange Commission (SEC) Division of Corporation Finance recently published two statements addressing the digital assets industry. The first statement, “Statement on Stablecoins,” was published on April 4 and notes that it is the division’s view that the offer and sale of certain “Covered Stablecoins” do not involve the offer and sale of securities. The statement defines “Covered Stablecoins” as stablecoins that “are designed to maintain a stable value relative to [USD] on a one-for-one basis, can be redeemed for USD on a one-for-one basis (i.e., one stablecoin to one USD), and are backed by assets held in a reserve that are considered low-risk and readily liquid with a USD-value that meets or exceeds the redemption value of the stablecoins in circulation.” The statement goes on to further define and address the characteristics, marketing and reserves of Covered Stablecoins and provides a legal analysis of Covered Stablecoins under the tests set forth in Reves v. Ernst & Young and SEC v. W.J. Howey Co.
SEC Commissioner Caroline Crenshaw published a separate statement criticizing the “Statement on Stablecoins.” According to Crenshaw, “The statement’s legal and factual errors paint a distorted picture of the USD-stablecoin market that drastically understates its risks.”
The second SEC statement, “Offerings and Registrations of Securities in the Crypto Asset Markets,” was published on April 10 and addresses the division of Corporation Finance’s “views about the application of certain disclosure requirements under the federal securities laws to offerings and registrations of securities in the crypto asset markets.” The statement generally addresses certain disclosure requirements set forth in Regulation S-K as they apply to Securities Act registration forms (such as Form S-1) and Exchange Act registration forms (such as Form 10), certain disclosure requirements of Form 20-F when used by foreign private issuers to register classes of securities under the Exchange Act, and disclosures in Form 1-A for offerings exempt from registration under Regulation A.
For more information, please refer to the following links:
New York Department of Financial Services Announces Consent Order for Digital Asset AML Violations
By Robert A. Musiala Jr.
The State of New York Department of Financial Services recently published a press release announcing a $40 million settlement with a major U.S. fintech and digital assets company “for significant failures in its Bank Secrecy Act/Anti-Money Laundering compliance program, which violated the Department’s money transmitter and virtual currency regulations.” In addition to the $40 million penalty, the company “is required to retain an independent monitor to perform a comprehensive evaluation of its compliance with the Department’s regulations and its remediation efforts.”
According to a press release, “The Department’s investigation revealed critical gaps in [the company’s] Bank Secrecy Act/Anti-Money Laundering (BSA/AML) program, including inadequate customer due diligence, failure to implement sufficient risk-based controls designed to prevent money laundering and illicit activity, and failure to effectively and timely monitor transactions.” The press release further noted that the company’s “lax treatment of high-risk Bitcoin transactions allowed largely anonymous transactions to proceed without proper scrutiny.” Additionally, according to the press release, the company’s rapid growth between 2019 and 2020 contributed to a severe transaction alert backlog that the company “left unaddressed for a significant period of time.”
For more information, please refer to the following links:
Hong Kong SFC Publishes Guidance on Digital Asset Staking Services
By Robert A. Musiala Jr.
The Hong Kong Securities and Futures Commission (SFC) recently published guidance addressing the provision of staking services by licensed virtual asset trading platforms (VATPs). According to a press release, the new guidance allows VATPs to expand product and service offerings and “recognises the potential benefits of staking in enhancing the security of blockchain networks and allowing investors to earn yields on virtual assets within a regulated market environment.” Among other things, the guidance requires VATPs that provide staking services to maintain measures to effectively prevent errors associated with the services, safeguard staked client virtual assets and ensure proper disclosure of staking risks.
For more information, please refer to the following link:
Crypto Hackers Target Python Package Index, Report Addresses AI-Crypto Crime
By Robert A. Musiala Jr.
Recent reports provide details on a sophisticated software supply chain attack targeting developers of crypto-related applications. The attack reportedly involves the creation of malicious Python packages that were uploaded to the Python Package Index. The malicious packages are reportedly designed to compromise crypto wallet security by exploiting a popular open-source library for managing cryptocurrency wallets.
In other news, Elliptic, a blockchain analytics company, recently published a report titled “Best practices to prevent AI-enabled crime in the cryptoasset ecosystem.” The report provides key findings on AI-enabled crypto crimes based on consultations with 40 participants from a range of industries, including law enforcement, virtual asset services, regulators, tech startups and academia. Among its many findings, the report notes that “AI-enabled crime trends, including deepfake scams and AI-enabled illicit goods and services, are projected to become more mainstream in the next three years, with notable impact.”
For more information, please refer to the following links:
