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.
