News & Analysis as of September 13, 2024

Virtual Currency › Financial Transactions

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Virtual Currency (aka Digital Currency or Digital Money) is a type of currency or medium of exchange that is not issued by any government nor guaranteed by a government currency. Despite lacking legal tender status, Virtual Currency is still traded and exchanged in some environments, typically online environments or communities. Bitcoin is the most well-known form of Virtual Currency. less -

CFPB Levels Up: Consumer Risks in Gaming Draws Regulatory Scrutiny

Husch Blackwell LLP on 4/18/2024

If you thought virtual reality was free from real-world regulations, think again. On April 4, 2024, the CFPB released an Issue Spotlight that dives deeply into a realm the agency had not previously traversed—video games and...more

Treasury Cries “Uncle” to Crypto Industry: Crypto Reporting Delayed

Cadwalader, Wickersham & Taft LLP on 1/24/2024

On January 16th, the IRS published Announcement 2024-4 (the “Announcement”), postponing certain reporting requirements for large crypto transactions which were set to go into effect for the 2024 tax year. Persons engaged in...more

Playing the Waiting Game on Crypto Tax Reporting

Cadwalader, Wickersham & Taft LLP on 6/28/2023

As previously discussed here, the IRS published guidance in December 2022 effectively postponing the January 1, 2023 effective date for certain digital asset broker reporting rules until final regulations are promulgated. To...more

IRS Says Crypto Protocol Changes Are Not Taxable

Cadwalader, Wickersham & Taft LLP on 5/25/2023

On April 21, 2023, the IRS released Chief Counsel Advice Memorandum 202316008 (the “CCA”), which provides that cryptocurrency protocol changes are not treated as realization events and do not give rise to gross income for...more

IRS Gets Serious About Digital Asset Reporting by Individuals

Cadwalader, Wickersham & Taft LLP on 4/27/2023

Since 2019, Form 1040 has included a general question regarding the taxpayer’s cryptocurrency activity. Over the years, the IRS has modified the scope of its cryptocurrency inquiry. On the 2021 Form 1040, this question read:...more

NYDFS gives custodial guidance on crypto insolvency

Orrick, Herrington & Sutcliffe LLP on 1/26/2023

On January 23, NYDFS reiterated expectations for sound custody and disclosure practices for entities that are licensed or chartered to custody or temporarily hold, store, or maintain virtual currency assets on behalf of...more

Bank Regulators Issue Joint Statement on Crypto-Asset Risks

Cadwalader, Wickersham & Taft LLP on 1/5/2023

On the first business day of the year, January 3, 2023, the Board of Governors of the Federal Reserve System (“the Fed”), the Federal Deposit Insurance Corporation (“FDIC”) and the Office of the Comptroller of the Currency...more

Virtual Currency Activity Prior Approval Requirement Established by NYDFS

Mayer Brown Free Writings + Perspectives on 12/20/2022

On December 15, 2022, the New York Department of Financial Services (“NYDFS”) issued guidance clarifying that all New York banking organizations are required to obtain prior agency approval for virtual currency-related...more

Kraken Coughs Up $362,158 to OFAC to Settle Iran Sanctions Violations

The Volkov Law Group on 12/9/2022

Cryptocurrency companies are in trouble. Regulators are bearing down on crypto companies with the Eye of Sauron – pulling the crypto companies into their jurisdiction, prosecuting fraud cases, and aggressively prosecuting...more

Treasury Plans Significant Actions to Curb Illicit Digital Asset Financing

BakerHostetler on 10/17/2022

As part of a coordinated effort with the U.S. Secretary of State, Attorney General, Secretary of Commerce, Secretary of Homeland Security, Director of the Office of Management and Budget, Director of National Intelligence,...more

OFAC Sanctions Virtual Currency Mixer Tornado Cash

Dechert LLP on 9/16/2022

The U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) on August 8, 2022, imposed sanctions against the popular decentralized virtual currency mixer Tornado Cash alleging that it has been used to launder...more

Mini-Me Crypto Tax Legislation

Cadwalader, Wickersham & Taft LLP on 8/19/2022

Bipartisan crypto legislation was introduced by Senators Pat Toomey (R-PA) and Kyrsten Sinema (D-AZ) on July 26, 2022. If enacted, the Virtual Currency Tax Fairness Act would exclude from gross income gain on certain de...more

OFAC's Crackdown on Tornado Cash Protocol Raises Specter of Future Liability Concerns

Husch Blackwell LLP on 8/19/2022

The Office of Foreign Assets Control (OFAC) recently made the unprecedented move of sanctioning a smart contract — a decentralized digital currency mixer called “Tornado Cash” — along with certain cryptocurrency addresses...more

The Cullen Commission Explores the Issue of Money Laundering Through Virtual Assets

Bennett Jones LLP on 8/18/2022

In June 2022, the Final Report of the Commission of Inquiry into Money Laundering in British Columbia was published. As previously reported by us in The Cullen Commission Releases Its Final Report on Money Laundering in...more

Crypto Litigation Claims, Defenses Industry Should Watch

Bilzin Sumberg on 8/12/2022

Cryptocurrency companies face a steadily growing number of lawsuits, adding to a list of recent headaches for their industry. That list includes steep recent declines in investment value and a high probability of new...more

New York State Department of Financial Services Issues Guidance Addressing USD-Backed Stablecoins; Proposed Responsible Financial...

Dechert LLP on 7/12/2022

DFS Guidance - The New York State Department of Financial Services (DFS) Superintendent Adrienne A. Harris issued new DFS Regulatory Guidance (Guidance) on June 8, 2022, setting foundational criteria for USD-backed...more