Seward & Kissel’s Blockchain and Cryptocurrency Group is an inter-disciplinary group that was formed to advise clients on issues arising from investments in assets based on blockchain or Distributed Ledger Technology (DLT), including cryptocurrencies and other cryptoassets such as utility coins and tokens. The group includes experts in securities laws, capital markets, private and public funds, investment advisers, broker dealers, intellectual property and technology, tax, commodities, and Fintech laws and regulations. The group draws on the Firm’s long history and deep understanding of financial services to assist clients with solving legal issues that arise from utilizing blockchain and distributed ledger technology to disrupt existing, less efficient processes and technology.
Seward & Kissel is an active member of the Wall Street Blockchain Alliance and the Digital Chamber of Commerce.
Corporate Financings and Offerings (ICOs)
The group has advised clients on a range of activities involving ICOs, from assisting issuers with conducting both public and private ICOs as well as investors seeking to invest in ICOs or earlier seed rounds. S&K has advised issuers in areas as diverse as financial services, real estate and cryptomining.
Funds and Investment Advisers
S&K advises funds and investment advisers on issues from cryptoasset fund formation to regulatory issues faced by advisers, including custody, valuation, disclosure, transfer agent and registrar issues.
The CFTC has been one of the U.S. regulators most active in the cryptocurrency space since it announced its position that all “virtual currencies” are commodities. In addition, CBOE and CME are now trading bitcoin futures. We advise clients on issues relating to holding and trading cryptoassets, from licensing to regulatory compliance..
Our broker-dealer team includes nationally recognized thought leaders who understand the regulatory and competitive landscape that drives innovation. Our team represents clients on the full range of blockchain and DLT-related issues across the brokerage industry, including: formation of broker-dealers to transact or custody assets based on DLT or blockchain technology; net capital and customer protection issues; sales practices; anti-money laundering, sanctions and Bank Secrecy Act; privacy; and E-discovery and recordkeeping. Seward & Kissel regularly represents clients in the development of proposed legislation and regulations, or the clarification of existing rules and regulations, before a range of federal and state regulators – particularly the SEC.
State Licensing Requirements
S&K advises clients on state law compliance and license requirements in connection with the issuance, transfer and possession of cryptoassets, money transmitter licenses and other state licensing issues. One of our clients was the first entity admitted to Arizona’s fintech sandbox.
Anti-Money Laundering/Terrorist Financing
Our team advises clients on developing and implementing enterprise controls related to compliance with AML laws and OFAC monitoring and sanctions. We expect regulators to increasingly scrutinize blockchain and crypto platforms for issues related to AML and OFAC compliance.
Intellectual Property and Technology
Our team counsels our clients with respect to the intellectual property and technology aspects of blockchain platforms including the licensing of technology necessary to develop and protect blockchain platforms, the user agreements for the platforms, and the selection and protection of trademarks for the platforms. With our extensive experience advising both startup and established financial services companies in connection with their intellectual property, we are uniquely positioned to advise clients in the cryptocurrency space.
Collateral and Insolvency Issues
Assets based on blockchain and DLT raise challenging issues related to using such assets as collateral, particularly with respect to control, perfection and attachment of liens. We are helping clients understand issues relating to the use of cryptocurrencies and cryptoassets in security arrangements, as well as their treatment in in-court insolvency proceedings.
Our team advises clients on tax issues relating to investing in and transferring cryptocurrencies and cryptocurrency-related products such as futures and options, including tax reporting requirements in connection with such activities. We also provide advice to clients regarding the tax consequences of raising capital through ICOs, regarding the formation of cryptocurrency hedge funds, and regarding tax efficient structuring of blockchain companies.
Below is a list of blockchain-related projects on which S&K’s Blockchain and Cryptocurrency Group has worked. Work on these projects has included securities law analysis (analysis of whether a token is a security, whether broker-dealer or alternative trading system (ATS) registration is required, investment company analysis, and the like), state money transmitter registration – as money services business (MSB), FinCen registration, privacy laws, protection of intellectual property, tax structuring and disclosure, analysis of real estate assets and related issues, creation of security interests under the UCC, NY Bitlicense requirements, labor issues, and litigation.
- Money services business (MSB) and money transmitter licensing
- Payment processing system utilizing blockchain
- Development of trust token
- Assisting cryptocurrency miner with token offering
- Tokenization of real-estate rights
- Social networking site based on blockchain
- Tokenized security exchange project
- Real estate marketplace using token and smart contracts
- Alternate Trading System (ATS) and crowdfunding platform for tokenized offerings
- Cryptocurrency smart order routing
- Offering of token backed by real estate assets
- Development of crypto index
- Offering of token paying dividends based on industrial hemp growing and processing
- Represented client in first U.S. registered trading system that trades crypto securities
- Cryptocurrency private funds
- Cryptocurrency ETF
- Cryptocurrency custody, including registration of BD to serve as qualified custodian for crypto assets
- Gold-backed blockchain warehouse receipt
- Representation of blockchain clients in connection with SEC and DOJ investigations
- Assist client with registration for Arizona blockchain “sandbox”
Seward & Kissel is an active member of the Wall Street Blockchain Alliance. The Firm is also a member of the Chamber of Digital Commerce, whose mission is to promote the acceptance and use of digital assets and blockchain-based technologies.