AI-related cryptocurrencies, including notable names such as Fetch.ai ($FET) and SingularityNET ($AGIX), have seen a significant upswing this week, with increases of 35% and 30% respectively within just 24 hours. This surge comes in anticipation of the global AI Nvidia conference set for March 18, which has garnered the attention of developers and engineers worldwide.
Hong Kong Monetary Authority Issues Guidance for Banks on Crypto Custody and Sale of Tokenised Products
Regulator sets out its expectations for banks looking to provide digital asset custody services, and sell and distribute tokenised products.
By Simon Hawkins and Adrian Fong
On 20 February 2024, the Hong Kong Monetary Authority (HKMA) published two circulars prescribing additional guidance to banks interested in carrying on certain digital asset services:
The SEC’s Definition of a “Dealer” — End of the Road for DeFi, or Just Another Bump?
The SEC’s ambiguous rule could have a chilling effect both on decentralized finance and on the provision of liquidity to centralized crypto exchanges.
By Jenny Cieplak, Marlon Q. Paz, Stephen P. Wink, and Naim Culhaci
The Securities and Exchange Commission (SEC) adopted a new rule on February 6, 2024, further defining the
Hong Kong Consults on Proposed Regulations to Prudential Treatment of Cryptoasset Exposures
Implementation of Basel Committee cryptoassets standard to provide additional clarity for banks looking to engage in cryptoassets business.
By Simon Hawkins and Adrian Fong
On 7 February 2024, the Hong Kong Monetary Authority (HKMA) released a consultation paper on its proposal for implementing new regulations on the prudential treatment of cryptoasset exposures (Consultation Paper).
The Consultation Paper comes shortly after the Financial Services and the Treasury Bureau and the HKMA issued a consultation paper in December 2023 outlining their legislative proposal for a regulatory regime governing stablecoin issuers in Hong Kong (see this Latham blog post). On 20 February 2024, the HKMA also published guidance on digital asset custody services and sale and distribution of tokenised products conducted by banks. Together, these papers offer guidance and greater certainty to banks interested in providing digital asset services (including digital asset issuance, custody, and dealing services).
This blog post summarises the proposed regulations set out in the Consultation Paper as well as next steps for banks, known in Hong Kong as authorised institutions (AI).
SEC Expands “Dealer” Definition
On February 6, 2024, by a 3-2 vote, the US Securities and Exchange Commission adopted new rules that expand the definition of “dealer” under the federal securities laws. Ostensibly adopted to provide the SEC with greater oversight over the market for Treasury bonds, the new rules are not limited to any particular asset class, and may impact the operations of firms that regularly trade in cryptocurrencies or other digital assets that are securities.
Hong Kong Proposes Regulation of Over-the-Counter Crypto Trading
The requirements in the proposed framework are more extensive in scope and reach than what many virtual asset industry stakeholders anticipated.
By Simon Hawkins and Adrian Fong
On 8 February 2024, the Financial Services and the Treasury Bureau (FSTB) released a consultation paper on its legislative proposal to introduce a regulatory regime governing over-the-counter (OTC)
Foreign Extortion Prevention Act Criminalizes Bribery Demands by Foreign Officials
On December 22, 2023, President Biden signed the Foreign Extortion Prevention Act (FEPA) into law as part of the fiscal year 2024 National Defense Authorization Act. Although bribery always requires a giver and a receiver, US anti-corruption efforts have traditionally focused almost exclusively on those who pay bribes because of the way the Foreign Corrupt Practices Act (FCPA) is written. The FCPA criminalizes the act of giving bribes to foreign government officials, but until now, the US has not had a statute that criminalized the receipt of bribes by foreign government officials. The FEPA will now complement the FCPA by criminalizing demand-side bribery by foreign officials.
AI and Emerging Technologies Year in Review
2023 was a year filled with remarkable AI-related legal developments in legislation, litigation, and regulation. Recent headlines indicate that 2024 will be noteworthy as well. In our AI and Emerging Technologies Year in Review, we take a look at what happened over the past year and predict how key AI issues and trends in the law will continue to progress.
Corporate Transparency Act: FinCEN Updates FAQs on Beneficial Ownership Information
On January 12, 2024, FinCEN updated its Beneficial Ownership Information Frequently Asked Questions (“FAQs”) to include new information and clarifications about reporting companies, beneficial owners, company applicants, and other reporting requirements. We discuss these developments in our post.
FINRA Continues Focus on Crypto Asset Securities
FINRA, the self-regulatory organization overseeing the US broker-dealer industry, recently announced two items of interest for broker-dealers offering crypto asset securities. On January 9, 2024, FINRA published its 2024 Annual Regulatory Oversight Report, which includes a detailed section for broker-dealers conducting a crypto asset business. Then, on January 23, 2024, FINRA published a report detailing the results of a targeted sweep examination on customer communications involving crypto assets, finding potential substantive violations of FINRA Rule 2210 in approximately 70 percent of surveyed communications.