Mayer Brown
Digital Asssets Download

May 5, 2023


Digital Assets Download – Your Cure for “Zero Knowledge” of Digital Assets: In the digital assets world, we’ve become accustomed to taking lemons and making lemonade, and our latest Digital Assets Download features one such opportunity in the world of tax losses and crypto bankruptcies. In this edition we also talk about the Cowboy State’s latest digital assets law, the Stable Token Act, and how it could create the first government-issued stablecoin in the United States. Plus, don’t miss two reports from Europe, including insights on MiCA, the landmark digital assets law, and key takeaways from NFT.NYC. Finally, as foreshadowed above, be sure read our “Lingo” for this week and find out why zero-knowledge can actually be a good thing.

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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Perspectives and insights from Mayer Brown lawyers and other thought leaders that touch on digital assets, decentralized finance, cryptocurrencies and related fields.

Wyoming Adopts Stable Token Legislation and Lays the Foundation for a Government-Issued Stablecoin

Wyoming’s recently-enacted Stable Token Act is the latest step in the Cowboy State’s efforts to create a business and legal environment that is tailored to digital assets and blockchain businesses. The Act creates a path for Wyoming to create the United States’ first government-issued stablecoin, which would be fully backed by reserves of US dollars. However, the law is short on specifics, and the committee created by the Act to develop the Wyoming stablecoin will have a list of open issues and challenges to overcome before the first token issuance. In this Legal Alert, we give a TL;DR version of the Act and the what it could mean for stablecoins in the United States.

Silver Linings Playbook: Celsius Bankruptcy Ruling Provides Cryptocurrency Tax Planning Opportunities

In January 2023, a New York Bankruptcy Court decided that depositors in the Celsius “Earn” program were unsecured creditors and no longer had an ownership interest in the cryptocurrency deposited on the Celsius platform. This decision will make it significantly harder for depositors to gain a recovery in the bankruptcy. The decision, however, provides a tax loss harvesting opportunity for these depositors and others who find themselves similarly situated on other platforms. Mark Leeds and Kyoolee Park, tax lawyers in Mayer Brown’s New York Office, explore the tax considerations applicable to this decision in this Legal Update.

European Parliament Endorses EU Markets in Crypto Assets Regulation

On 20 April 2023, the European Parliament endorsed the European Union’s landmark Markets in Crypto Assets (MiCA) Regulation—the world’s first comprehensive crypto law—and the Transfer of Funds Regulation (TFR), which requires service providers to trace transfers of crypto-assets in a bid to halt money laundering. The laws will now have to be formally endorsed by the Council, before publication in the EU Official Journal. They will enter into force 20 days later.

For details on MiCA, see our alert.

Germany Paves the Way for Electronic Shares on Blockchain

Germany is often considered one of the most crypto-friendly countries in Europe. The government has now proposed the "Future Financing Act" that will, among other things, pave the way for electronic shares on blockchain. Back in 2021, Germany passed the Electronic Securities Act, which cleared the way for the issuance of securities on blockchain and introduced licensing requirements for crypto custodians, among other things. Recently, German industrial giant Siemens made use of that law to issue a €60 million security using the Polygon blockchain. The laws enabling the issuance of crypto securities and shares implement some of the main points of the German Government's blockchain strategy, which was introduced in 2019.

Overheard at NFT.NYC – Five Key Takeaways

Across 6,000 attendees and 1,300 speakers at NFT.NYC2023 in April, there were numerous perspectives and predictions. In this article, we highlight five major themes we took away from the event for those who missed it.




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

“Blockchain and Digital Assets—What Are They and Why They Might be Relevant to You” at the Equipment Leasing and Finance Association (ELFA) Legal Forum

On Monday, May 8, Mayer Brown partners Barbara Goodstein and Joe Castelluccio will speak at the Equipment Leasing and Finance Association (ELFA) Legal Forum at the Marriott Sanibel Harbour Resort & Spa in Fort Myers, Florida. Their panel, “Blockchain and Digital Assets—What Are They and Why They Might Be Relevant to You,” will provide some high-level background—with pictures!—on blockchain technology and how it works. They will also discuss some reasons why equipment leasing and finance practitioners may be interested in this technology and its possible uses. For more information, please visit the forum website.

US House of Representatives - “The Future of Digital Assets: Measuring the Regulatory Gaps in the Digital Asset Markets”

The Joint Financial Services-Agriculture Subcommittee of the US House of Representatives will hold a hearing on the future of digital assets regulation on Wednesday, May 10, 2023, at 9:30 a.m.

Tokenization and Blockchain at Republic Capital Group’s Annual Wealth Management Summit at the Fordham Gabelli School of Business

On May 5, Mayer Brown partner Joe Castelluccio discusses tokenization and blockchain on a panel focused on “Need-to-Know Developments” in wealth management law.



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.

Zero-Knowledge Proof

A zero-knowledge proof is a cryptographic technique that allows the sharing of cryptographically encrypted information while keeping the underlying data private, including personally identifiable information that may be part of the data.

Blockchains are generally designed to be transparent, with each node able to see and download all data stored on the ledger. Zero-knowledge proofs allow the use of private datasets in applications (such as smart contracts) without revealing the underlying data. As a result, zero-knowledge proofs are generally considered to offer greater privacy in blockchain transactions.

In general, in a zero-knowledge proof, one party (the prover) can prove to another party (the verifier) the truth of a statement without sharing the statement’s contents or revealing how the prover discovered the truth. The proof works by having the verifier ask the prover to perform a series of actions that can only be performed accurately if the prover knows the underlying information.

A few applications where zero-knowledge proofs can be used include money transfers and identity authentication.


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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