Launching today: 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 and Cryptocurrency Group. Enjoy this edition of the Digital Assets Download below and find previous editions here.
The Lead Block
News Node
A curated selection of headlines and news from around this multiverse—including deals, developments and other disruptions in DeFi.
On June 7, US Senators Cynthia Lummis (R-WY) and Kirsten Gillibrand (D-NY) introduced the first major bipartisan digital assets legislation in the US Senate. The law would establish a US regulatory regime for digital assets and aims to provide legal and regulatory clarity in several areas, including the taxation of digital assets, legal constructs for DAOs and jurisdiction of financial regulatory agencies over cryptocurrencies and stablecoins. The full text of the legislation can be found here and a section-by-section overview published by Senators Lummis and Gillibrand can be found here.
Commissioners Hester Peirce (Securities and Exchange Commission) and Caroline Pham (Commodity Futures Trading Commission) make the case for a collaborative approach by US regulators on decentralized finance and crypto in this opinion piece.
In the wake of TerraUSD’s sharp decline, Japan has moved quickly to enact legislation regulating stablecoins.
According to the US Federal Trade Commission (FTC), reported crypto scam losses since 2021 exceed $1 billion. Read More >> Several outlets covering the FTC’s study spoke with Mayer Brown partner Christopher Leach.
A lawsuit has been filed against the US Labor Department in connection with its public warning about 401(k) providers allowing crypto investments.
The NY State Senate approved a bill that would enact a two-year moratorium on proof-of-work crypto mining. As of the date of this publication, NY Governor Kathy Hochul has yet to decide whether she will sign the bill into law or veto it. If the bill is signed into law, New York would become the first state in the US to curb the mining of proof-of-work digital assets.
In a speech on risk in crypto markets, US Federal Reserve Governor Christopher Waller focused on the impact of crypto losses on retail investors as a lens through which to view cryptocurrency regulation.
Wyoming-based crypto bank Custodia sued the US Federal Reserve for delaying a decision on the bank’s application for a Federal Reserve master account, a key access point in the US monetary system.
NY Department of Financial Services (DFS) released regulatory guidance on the issuance of US Dollar-backed Stablecoins. The guidance described foundational criteria for USD-backed stablecoins issued by DFS-regulated entities.
Britain makes crypto technology a priority for streamlining markets and will begin live testing of crypto blockchain technology for traditional market activities such as trading and settlement of stocks and bonds next year.
Select Events
Selected events for deeper dives into different parts of the digital assets and DeFi world.
US House Committee on Financial Services Virtual Hearing on Digital Assets and the Future of Finance: Examining the Benefits and Risks of a US Central Bank Digital Currency. May 26, 2022 (View Hearing Recording). The full committee held a hearing entitled “The Future of Money: Assessing the Benefits and Risks of a U.S. Central Bank Digital Currency”. The witness list includes the Honorable Lael Brainard, Vice Chair of the Board of Governors of the Federal Reserve System.
Learn the Lingo
Staking:
The purpose for the staking varies by protocol, but the most common form of staking is within the proof-of-stake consensus mechanism (an alternative to proof-of-work) used by certain blockchains to verify new blocks of data that are added to the network. In a proof-of-stake protocol, stakers perform the exercise of validating new blocks of transactions to be added to the network. The staked assets are at risk and will be lost if the staker processes fraudulent transactions; as a result, each validator’s stake acts as an incentive to ensure the security of the network. In exchange for the committed tokens, validators receive rewards denominated in the native cryptocurrency.
