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). We have advised clients on projects involving cryptoassets, DeFi, and blockchain enterprise solutions. The Group includes experts in securities laws, capital markets, private and public funds, Fintech laws and regulations, sanctions and anti-money laundering laws, tax, commodities, investment advisers, broker-dealers, complex derivatives, and intellectual property and technology. The Group draws on the Firm’s long history and deep understanding of financial services and products 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, the Digital Chamber of Commerce, the Virtual Commodity Association (VCA), and the Blockchain and Cryptocurrency Group publishes its own blog, SKrypto @ https://skrypto.sewkis.com/blog.
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.
Fintech Laws and Regulations
Members of the Group combined can draw on decades of experience and have advised clients with respect to payment processing, privacy, custody, lending, collateralization, and banking-related activities in the cryptoasset and DeFi space.
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.
Capital Markets Access and Securities Law Analysis
The Group has advised clients on a range of activities involving offerings of security and utility tokens, assisting issuers with public and private offerings as well as investors seeking to invest in token offerings or seed rounds. S&K has advised issuers in areas as diverse as financial services, real estate, digital contracts, enterprise applications, and cryptomining.
Federal and State Licensing Requirements
S&K advises clients on federal and state law compliance and license requirements in connection with the issuance, transfer, and possession of cryptoassets, including money services business (MSB) registration, money transmitter licenses (MTL), and other state licensing issues. Notably, we have assisted multiple customers with NY BitLicense applications and one of our clients was the first entity admitted to Arizona’s fintech sandbox.
Sanctions and Anti-Money Laundering
Our team advises clients on U.S. economic sanctions and anti-money laundering laws, including the development and implementation of risk-based compliance programs. We expect regulators to increasingly scrutinize blockchain and crypto platforms for issues related to sanctions and AML compliance.
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, the formation of cryptocurrency hedge funds, and tax efficient structuring of blockchain companies.
We have represented clients in connection with SEC and DOJ enforcement actions, as well as private disputes and claims brought in class-action litigation.
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 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.
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), sanctions and AML analyses, 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.
S&K has performed work on the following projects:
- 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
- New York BitLicense Applications
- Transactions involving non-fungible tokens (NFTs)
- 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 public funds
- Cryptocurrency custody
- Gold-backed blockchain warehouse receipt
- Representation of blockchain clients in connection with SEC and DOJ investigations
- Representation of blockchain clients in private disputes and litigation
- Assist client with registration for Arizona blockchain “sandbox”
- Ransomware-related payments
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.