Blockchain & Cryptocurrency Regulation 2019

1 Blockchain & Cryptocurrency Regulation 2019 Contributing EditorJosias DeweyFirst EditionGLOBAL LEGAL INSIGHTS Blockchain & Cryptocurrency REGULATION2019, FIRST EDITIONE ditorJosias Dewey, Holland & Knight LLPP roduction EditorAndrew Schofi eldSenior EditorsSuzie LevyCaroline CollingwoodGroup Consulting EditorAlan FalachPublisherRory SmithWe are extremely grateful for all contributions to this edition. Special thanks are reserved for Josias Dewey for all his by Global Legal Group Tanner Street, London SE1 3PL, United KingdomTel: +44 207 367 0720 / URL: 2018 Global Legal Group Ltd. All rights reservedNo photocopyingISBN 978-1-912509-35-5 ISSN 2631-2999 This publication is for general information purposes only. It does not purport to provide comprehensive full legal or other advice. Global Legal Group Ltd.

2 And the contributors accept no responsibility for losses that may arise from reliance upon information contained in this publication. This publication is intended to give an indication of legal issues upon which you may need advice. Full legal advice should be taken from a qualifi ed professional when dealing with specifi c situations. The information contained herein is accurate as of the date of publication. Printed and bound by CPI Group (UK) Ltd, Croydon, CR0 4 YYAugust 2018 CONTENTS Preface Josias Dewey, Holland & Knight LLPF oreword Aaron Wright, Enterprise Ethereum Alliance Glossary The Editor shares key concepts and defi nitions of Blockchain Industry Promoting innovation through education: The Blockchain industry, law enforcement and regulators work towards a common goal Jason Weinstein, Alan Cohn & Chelsea Parker, The Blockchain Alliance 1 The loan market, Blockchain , and smart contracts.

3 The potential for transformative change Bridget Marsh, LSTA, & Josias Dewey, Holland & Knight LLP 5 An overview of the Wall Street Blockchain Alliance Ron Quaranta, Wall Street Blockchain Alliance 14 General chapters Blockchain and Intellectual Property: A case study Joshua Krumholz, Ieuan G. Mahony & Brian J. Colandreo, Holland & Knight LLP 18 Initial Coin Offerings: A comparative overview of securities regulatory environments in the US, UK and Asia Pacifi c Justin Cooke, Richard Cohen & Jason Denisenko, Allen & Overy LLP 34 The custody of digital assets Jay G. Baris, Shearman & Sterling LLP 47 The rise of the security token Joshua Ashley Klayman, Klayman LLC & Infl ection Point Blockchain Advisors, LLC 60 Cryptocurrency and other digital assets for asset managers Gregory S.

4 Rowland & Trevor I. Kiviat, Davis Polk & Wardwell LLP 89 The yellow brick road for consumer tokens: The path to SEC and CFTC compliance David L. Concannon, Yvette D. Valdez & Stephen P. Wink, Latham & Watkins LLP 100 Custody and transfer of digital assets: Key legal considerations Michael H. Krimminger, Colin Lloyd & Sandra Rocks Cleary Gottlieb Steen & Hamilton LLP 120 An introduction to virtual currency money transmission Regulation Michelle Ann Gitlitz & Grant E. Buerstetta, Blank Rome LLP 131 The rise of the crypto asset investment fund: An overview of the crypto fund ecosystem Jonathan Cardenas, Yale Law School 148 Cryptocurrency compliance and risks: A European KYC/AML perspective Fedor Poskriakov, Maria Chiriaeva & Christophe Cavin, Lenz & Staehelin 162 Aspects of state securities Regulation Greg Strong & Rodrigo Seira, DLx Law, LLP 174 The Regulation of Blockchain technology Joseph F.

5 Borg & Tessa Schembri, WH Partners 187 Country chapters Argentina Juan M. Diehl Moreno & Santiago E. Eraso Lomaquiz, Marval, O Farrell & Mairal 192 Australia Peter Reeves & Georgina Willcock, Gilbert + Tobin 197 Austria Ursula Rath & Thomas Kulnigg, Sch nherr Rechtsanw lte GmbH 208 Belgium Muriel Baudoncq & France Wilmet, Janson Baugniet 215 Bermuda Michael Hanson & Adam Bathgate, Carey Olsen Bermuda 225 British Virgin Clinton Hempel & Mark Harbison, Carey Olsen 236 IslandsCanada Conrad Druzeta, Simon Grant & Matthew Peters, Bennett Jones LLP 242 Cayman Islands Alistair Russell & Dylan Wiltermuth, Carey Olsen 253 China Lefan Gong & Luping Yu, Zhong Lun Law Firm 261 Cyprus Karolina Argyridou, K. Argyridou & Associates LLC 267 Estonia Priit L tt & Carel Kivimaa, PwC Legal 272 France Christophe Perchet, Juliette Loget & St phane Daniel, Davis Polk & Wardwell LLP 282 Germany Dennis Kunschke & Dr.

6 Stefan Henkelmann, Allen & Overy LLP 291 Gibraltar Joey Garcia & Jonathan Garcia, ISOLAS LLP 304 Guernsey David Crosland & Felicity White, Carey Olsen LLP 313 Hong Kong Yu Pui Hang, L&Y Law Offi ce / Henry Yu & Associates 324 India Ashwin Ramanathan, Anu Tiwari & Rachana Rautray, AZB & Partners 334 Ireland Maura McLaughlin, Pearse Ryan & Caroline Devlin, Arthur Cox 341 Japan Taro Awataguchi, Anderson M ri & Tomotsune 348 Jersey Christopher Griffi n, Carey Olsen 358 Korea Jung Min Lee, Samuel Yim & Joon Young Kim, Kim & Chang 366 Liechtenstein Dr. Ralph Wanger & Laura Johann, BATLINER WANGER BATLINER Attorneys at Law Ltd. 372 Malta Malcolm Falzon & Alexia Valenzia, Camilleri Preziosi Advocates 377 Mexico Juan Carlos Tejado & Miguel Gallardo Guerra, Bello, Gallardo, Bonequi y Garcia, 385 Netherlands Bj rn Schep, Christian Godlieb & Willem R ell, De Brauw Blackstone Westbroek 394 Portugal Filipe Lowndes Marques, Mariana Sol de Albuquerque & Jo o Lima da Silva, Morais Leit o, Galv o Teles, Soares da Silva & Associados, Sociedade de Advogados, SP, RL 402 Russia Vasilisa Strizh, Dmitry Dmitriev & Anastasia Kiseleva, Morgan, Lewis & Bockius LLP 411 Singapore Franca Ciambella, En-Lai Chong & YingXin Lin, Consilium Law Corporation 419 South Africa Angela Itzikowitz, Ina Meiring & Era Gunning, ENSafrica 431 Spain Alfonso L pez-Ibor, Pablo St ger & Zhongbo Jin, Ventura Garc s & L pez-Ibor Abogados 437 Switzerland Daniel Haeberli.

7 Stefan Oesterhelt & Urs Meier, Homburger 442 Taiwan Robin Chang & Eddie Hsiung, Lee and Li, Attorneys-at-Law 453 UAE Joby Beretta, The Bench 458 United Kingdom Simon Lovegrove & Albert Weatherill, Norton Rose Fulbright LLP 468 USA Josias Dewey, Holland & Knight LLP 478 Venezuela Luisa Lepervanche, Mendoza, Palacios, Acedo, Borjas, P ez Pumar & C a. (Menpa) 487 PREFACEOver the last two years, an obscure technology once associated only with the virtual currency Bitcoin, has become one of the most important technologies under development today. No longer known only as the technology on which Bitcoin was built, it has either been deployed or is under active development in virtually every industry. Financial services, healthcare, energy, capital markets, and many other industries are seeing legacy technology challenged by proposed Blockchain -based has also exploded in terms of its geographic impact.

8 Once a novelty that was only familiar to people in a handful of countries, the technology is now relevant to the global economy. In some countries, like Venezuela, virtual currency has taken a prominent role in the day-to-day lives of ordinary citizens. Yet, for all of the interest, popularity and media attention, many, including lawyers, struggle to understand the underpinnings of the technology and its implications for policymakers and other offi cials. This diffi culty is compounded by the extraordinarily broad application of the technology across numerous industries. Certain implementations of the technology look very little like others. Some seek to supplement or replace traditional fi at currency, while others have no native virtual currency at all.

9 Some are accessible by anyone with a computer or smart phone, while others are only accessible by those having credentials. This diversity of implementations and use cases, together with misguided statements espousing absolute truths about the technology, lead to confusion for most trying to tackle Blockchain . While Blockchain has taken a much more prominent role in society, it remains a relatively nascent technology, having existed for less than ten years. This brief history has caused tension when the technology has been deployed in areas traditionally subject to extensive Regulation , such as capital-raising and money transmission. Policymakers and other offi cials have often struggled to apply laws crafted decades ago, in many cases, built on assumptions now being challenged by the technology.

10 In part, this continues to be driven by the technology s ability to disintermediate market participants, many of whom have traditionally been relied upon as unoffi cial gatekeepers in certain industries. No consistent policy has yet to evolve, with numerous states within the taking very different approaches to the technology, while the government has relied on its agencies to navigate the myriad of issues. The picture is no clearer on the international stage, where some nations have sought to foster the growth of the technology, and others have sought to eliminate the technology from their jurisdiction. This uncertainty has contributed to the lack of commercially deployed Blockchain solutions, and many of the following chapters focus on these grey areas where much work remains to be hope is that this publication will provide the reader with an understanding of some of the most critical issues facing practitioners and others involved in this area of technology and policy.