Mayer Brown

February 10, 2023


Digital Assets Download – Global Edition: The latest edition of the Digital Assets Download covers developments on three continents, plus tax (which can sometimes be a world of its own!). In this issue, the global Mayer Brown team covers policy statements from several US regulators, licensing requirements in Hong Kong and the crypto token legal regime in Dubai—all without any jet lag!

For the Uninitiated: Digital Assets Download is a curated mix of insights and headlines that provide a Layer 3 Legal Perspective™ on the digital assets multiverse—created by Mayer Brown’s global Digital Assets, Blockchain & Cryptocurrency group. (Check out all of our previous editions of the Digital Assets Download.)

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Original Mayer Brown content, perspectives and insights from across our global platform that touch on digital assets, decentralized finance, cryptocurrencies and related fields.


HKMA to Roll Out New Licensing Requirements and Regulations on Stablecoins in 2023/2024

On January 31, 2023, the Hong Kong Monetary Authority (HKMA) confirmed its plan to regulate certain activities relating to stablecoins. This follows the HKMA’s discussion paper on crypto-assets and stablecoins published in January 2022 and responses from 58 industry participants that were mostly supportive of a “risk-based and agile” regulatory framework for stablecoins.

Crypto Custody Guidance Released by NYDFS Addresses Uncertainty in Insolvency Proceedings

The New York Department of Financial Services (“NYDFS”) recently released guidance on its expectations for custody and disclosure practices for virtual currency belonging to an institution’s customers. The guidance is intended to help institutions better protect customers in the event of an insolvency of a crypto-asset business. While the guidance applies only to virtual currency entities that are regulated by NYDFS, other institutions may find it instructive regarding steps they may take to protect customers. In this Legal Update, we provide background on the challenges posed in the custody of virtual currency and discuss the key points in the guidance.

US Federal Reserve Issues Policy Statement Further Restricting Crypto-Asset Activities and Addressing Uninsured State Member Banks

On January 27, 2023, the Board of Governors of the US Federal Reserve System (“Federal Reserve”) issued a policy statement regarding the permissible activities of state-chartered banks that are members of the Federal Reserve System (“Crypto Policy”). The Crypto Policy is the first formal interpretation of whether the Federal Reserve believes that crypto-asset activities are permissible for banking organizations. While the Crypto Policy applies to all state member banks, it is most relevant for uninsured state member banks, which have increased in visibility following Wyoming’s adoption of a special purpose depository institution charter option that does not require federal deposit insurance. In this Legal Update, we provide background on the federal regulation of bank involvement in crypto-assets and describe the Crypto Policy.

The January Effect: The US Internal Revenue Service Rules on Cryptocurrency Loss Harvesting

On January 11, 2023, the US Internal Revenue Service (“IRS”) released guidance on two strategies that taxpayers may have been contemplating for recognizing tax losses in cryptocurrency positions in 2022. The IRS set out a position that the two strategies—a worthlessness deduction and an abandonment loss—were both going to be challenged if pursued. Mark Leeds, of the New York office of Mayer Brown, analyzes the new IRS guidance in this Legal Update.

Hitting a Moving Target: US Federal Banking Regulators’ Latest Commentary on Crypto-Asset Risks

On January 3, 2023, the US federal banking regulators released a statement highlighting key risks for banking organizations associated with crypto-assets and the crypto-asset sector and describing their approaches to supervision in this area. While the statement is consistent with the concerned tone of earlier guidance, it provides more detail regarding supervision of these activities. In this Legal Update, we provide background on the federal banking regulators’ approach to supervising crypto-asset activities and discuss their most recent statement.

New Crypto Token Regime by the DFSA

As part of our ongoing series on key legal developments of the financial services sector in the United Arab Emirates, this summary presents an overview on the current Crypto Token regime of the Dubai Financial Services Authority (“DFSA”). Mayer Brown's Middle East practice is closely monitoring important developments of the financial services sector in the region.



Selected events for deeper dives into different parts of the digital assets and DeFi world.

Crypto Crash: Why Financial System Safeguards Are Needed for Digital Assets

The full committee of the US Senate Committee on Banking, Housing, and Urban Affairs will convene for a hybrid hearing on February 14, 2023, at 10:00 am ET.



For those new to the digital assets and DeFi world, each edition of the Digital Assets Download will highlight a different term to help you be a part of the conversation.

A stablecoin is a digitally native medium of exchange that seeks to maintain a stable relative value. A type of cryptocurrency, a stablecoin is designed to achieve price stability through linking its market value to a reference asset, most often the US dollar. By linking or “pegging” to this more stable reference asset, the stablecoin can then be used in scenarios where price stability is the primary objective, such as for peer-to-peer or cross-border payments, in the on-chain trading of other digital assets, and in collateralized lending and other DeFi services.

However, while all stablecoins offer the promise of stability in price, not all are able to achieve this outcome.

Stablecoins generally fall into two broad categories: custodial and non-custodial (or “decentralized”). Each broad category can also have sub-categories. For more on stablecoins, check out our piece on the collapse of TerraUSD and the road ahead for stablecoins.


Writings on the Wall, Translating ‘Crypto’ Terms with Mayer Brown

From Airdrop to Wrapped Token, our illustrated glossary, “Writings on the Wall, Translating Securities with Mayer Brown,” has been updated with additional digital assets and cryptocurrency terms. Check out our “featured” list for the crypto terms and the full list of terms.



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