On October 26, 2017, the French Autorité des Marchés Financiers (“AMF”) launched a consultation on Initial Coin Offerings (“ICOs”) and the potential regulation of such offerings (the “Consultation”). The Consultation was opened as of October 26, 2017 until December 22, 2017. It is expected that responses to the Consultation will be published during the first quarter of 2018 and a final position will be issued thereafter.  In addition, the AMF advises all market participants contemplating an ICO offering to inform and liaise with the AMF with respect to the ICO project and white paper in advance of the launch.

In parallel with the launch of the ICO consultation, the AMF announced the launch of a new sandbox called UNICORN (for “Universal Node to ICO’s Research & Network”), which is a support and research program focusing on digital asset fundraising and, specifically, financing based on blockchain technology. The program aims to provide a framework allowing initiators to develop transactions while ensuring the protection of buyers and other market participants.  The AMF will meet with initiators (French or foreign entrepreneurs and their advisors) as well as academics and intends to publish an initial impact analysis of these new forms of financing by the end of 2018. Continue Reading The AMF Consults on Potential Legal Framework for ICOs and Launches Digital Asset Fundraising Sandbox

On February 6, 2018,  Chairman Clayton of the Securities and Exchange Commission (SEC) and Chairman Giancarlo of the Commodity Futures Trading Commission (CFTC) testified before the Senate Banking Committee (the Committee) on their agencies’ oversight role for virtual currencies.  Consistent with his prior statements, Clayton took a strong stance on SEC regulation of Initial Coin Offerings (ICOs).  But, when it came to cryptocurrencies themselves, he and Giancarlo struck a somewhat more circumspect tone.  In particular, despite acknowledging that their existing jurisdiction does not extend to spot transactions in cryptocurrencies, the Chairmen did not yet seek additional regulatory authority.

However, Chairman Clayton particularly expressed concerns about whether virtual currency exchanges provided adequate protections for investors and whether state regulation as payment services was sufficient.  While the Chairmen did not request new authority, it is clear that there would be support within the Committee for legislation in this area, and Clayton and Giancarlo committed to work with each other and other authorities (including bank regulators and law enforcement authorities) to develop an appropriate approach.  When the Chairmen of the SEC and CFTC express that they are “open” to exploring whether increased federal regulation is needed, there is a clear message. Continue Reading SEC and CFTC Testimony on Virtual Currencies: Is More Regulation on the Horizon?

Recent media reports, including in State-connected media, suggest that China is about to block access to all cryptocurrency trading platforms, including those operating overseas.  In September 2017, the People’s Bank of China (“PBOC”) and six other government agencies jointly issued guidance  immediately banning fundraising through offerings of tokens, such as initial coin offerings (“ICOs”), and requiring the closure of cryptocurrency exchanges in China by the end of September 2017.  Continue Reading Chinese Government Moves To Effectively Ban Cryptocurrency Trading

Part I: The Basics

Everyone is talking about “ICOs” or “initial coin offerings.”  Celebrities are tweeting about them.  You cannot open the Wall Street Journal or Financial Times on any given day without at least one story about ICOs.  Prominent CEOs of financial institutions have taken to the bully pulpit to fulminate about ICOs and cryptocurrencies, using words such as “bubble” and “fraud.”  Parallels are drawn to 17th century tulip mania.  And securities and financial regulators around the world are taking notice, with varying degrees of reactions.

But why have ICOs elicited such attention?   In this series of posts, our aim is to shed light on this innovative way of raising funds, the regulatory responses (thus far), the challenges to regulation in various jurisdictions, the factors motivating regulators and possible future actions by regulators. Continue Reading Around the World in ICOs: A series examining regulatory responses to ICOs