Blockchain Week in Review – August 2017 #6

by Perkins Coie

Below is a summary of some of the significant legal and regulatory actions that occurred over the past week. This alert is not intended to be a comprehensive list of all such developments, but rather a selection of publicly-reported news that may be of particular interest.

U.S. Developments

Regulatory Updates

Alabama’s New Virtual Currency Regulations
This month, the Alabama Monetary Transmission Act officially replaced the 1961 “Sale of Checks Act.” The bill was passed by the Alabama Legislature in May.  The new Money Transmitter Act covers the regulation of traditional money transfers to virtual currency. It also provides new tools for law enforcement to track international financial crimes. Alabama SB 173 / HB 215 (Regular Session 2017).

Pres. Trump Signs the “Countering America’s Adversaries Through Sanctions Act,” Which Will Leverage Technology to Improve Efforts To Stop the Financing of Terrorism
Congress passed a bill, which the President signed, earlier this month to provide congressional review and to counter aggression by the Governments of Iran, the Russian Federation, and North Korea.  The law introduces strategies for countering terrorist threats from these countries and issues sanctions on these countries to deter terrorist activity and financing.  In the new law, Congress also directs the executive branch to conduct an investigation and provide a report related to methods of terrorist funding. Specifically, the law articulates a goal to develop a national strategy for combatting terrorism and other illicit financing. To develop this strategy, the executive branch is responsible to provide Congress with a report within the next year that evaluates (among other things) threats to the U.S. related to illicit financing of terrorism, existing efforts to minimize those threats, the role of the private financial sector in preventing illicit finance, and discusses ways to enhance intergovernmental cooperation to combat illicit finance. The report will include a “discussion of and data regarding trends in illicit finance, including evolving forms of value transfer” including cryptocurrencies.  Congress plans that the analysis should include current and developing ways to leverage technology to improve the effectiveness of efforts to stop the financing of terrorism and other forms of illicit finance, including better integration of open-source data.  Public Law No.: 115-44

Litigation Updates

Former US Secret Service Agent Pleads Guilty to Money Laundering
A former special agent, Shaun W. Bridges, with the U.S. Secret Service pleaded guilty this week to charges of money laundering in the Northern District of California.  Bridges was assigned to the Baltimore Silk Road Task Force from 2012-2014.  His responsibilities on this task force included conducting forensic computer investigations in an effort to locate, identify, and prosecute targets involved with the covert online marketplace for illicit goods.  Bridges pleaded guilty in 2015 to one count of money laundering and one count of obstruction of justice related to his theft and diversion of over $800,000 in digital currency, which he took control of in his role on the task force. This new count of money laundering is related to Bridges’ theft of an additional 1,600 bitcoin—taken from a digital wallet belonging to the U.S. government.  DOJ Press Release 8.16.2017

The SEC Suspends Trading of Shares of an OTC-Traded Technology Company Due To Questions About the Company’s Public Communications
Last week, pursuant to Section 12(k) of the Exchange Act, the U.S. Securities and Exchange Commission (“SEC”) temporarily suspended trading of shares in an OTC-traded technology company. The SEC issued the order as a result of questions surrounding the accuracy of the company’s assertions in press releases to investors concerning, among other things, the activities of the company with respect to business plans in the telecommunications industry and plans for an initial coin offering (“ICO”). The SEC issued an order of suspension of trading, which noted substantively that the SEC considered the securities of CIAO Group, Inc. (CIK No. 0001489039) to have a “lack of current and accurate information.”  The company’s trading suspension is scheduled to occur from August 10, 2017 through August 23, 2017. 8.9.17 SEC Order.  8.9.17 SEC Release No. 81367.

Fintech Updates

Mexico insists that NAFTA Talks Must Include Discussion of Fintech
This week, a negotiator for Mexico noted that any talks to renegotiate the North American Free Trade Agreement (“NAFTA”) need to include a discussion about the opportunities in new financial services.  The negotiator pointed to Fintech’s rapid growth in Mexico.  Renegotiations of NAFTA started this week at US President Trump’s request. Representatives from the U.S., Canada, and Mexico are in Washington D.C. for the discussions and the three sides are looking to modernize the agreement to include provisions for transparency, e-commerce, and other technological developments that have occurred since entering into the original Agreement 23 years ago.  Reuters

International Developments

Singapore Takes a Position on Digital Token and Virtual Currency Related Investments
Last week, the Monetary Authority of Singapore (“MAS”) and Commercial Affairs Department (“CAD”) issued a joint statement, which advises consumers on the perceived risks associated with digital token and virtual currency related investment schemes.  The statement advises that ICOs are vulnerable to money laundering and terrorist financing risks, tokens can represent ownership or a security interest over and issuer’s assets or property, and digital tokens may represent a debt owed by an issuer and be considered a debenture. Singapore does not yet regulate token sales, but where digital tokens fall within the definition of securities, issuers of such tokens would be required to follow securities regulation and registration requirements.  MAS Media Release 8.1.2017. Business Times.

Brazil Announces Plans To Regulate Crowdfunding via ICO
Last month, Brazil’s Securities Commission, the Comissão de Valores Mobiliários (“CVM”), published initial legislation instruction (Instrução CVM No. 588) regulating crowdfunding via ICOs. The instructions state that ICOs are the equivalent of a crowdfunding platform and should register with the CVM.  Companies that use the platform are then exempt from registration with the CVM. Some commentators have noted that the instruction is “highly limiting to the exercise of crowdfunding in Brazil” and that “if a company in Brazil wants to conduct an ICO, it will have to register with the CVM, even if the amount to be collected is lower than the limit” established by the instruction.  Brazilian crowd funding platforms will also need to comply with numerous requirements outlined in CVM No. 588, including requirements regarding information available to investors and requirements on the offering of securities. The Instruction does not regulate fundraising for offering gifts, rewards, goods, or services.  CVM Instruction 588.  Source.

National Bank of Ukraine Issues Statement About Digital Currency Regulation
The National Bank of Ukraine (“NBU”), Ukraine’s central bank, issued a statement about the country’s regulations as they relate to digital currencies and the legal status of cryptocurrencies.  This clarification comes on the heels of several arrests of individuals for allegedly illegally mining Bitcoin earlier this month.  The NBU’s position is that only one currency may be used in the Ukraine at the present, and that currency is hryvnia. No other currency may be used as a form of payment in Ukraine.  This position is a point of controversy in the Ukraine.  Source.  Guidance.

Australian Government Announces Plan to Regulate Digital Currencies
This week, the Minister for Justice in Australia issued a press release announcing the first state of reforms to strengthen Australia’s Anti-Money Laundering and Counter-Terrorism Financing Act.  The Bill is intended to achieve several goals including: (1) closing a regulatory gap by bringing digital currency exchange providers under the authority of the Australian Transactions and Reporting Analysis Centre (“AUSTRAC”), (2) strengthening AUSTRAC’s investigation and enforcement powers, (3) increasing police and customs officers’ search and seizure powers at the border, and (4) providing regulatory relief to industry through the deregulation of low-risk industry sectors. The Minister tried to balance the threat of organized crime and terrorism with ensuring excessive regulation does not hinder the country’s financial sector. Press Release 8.17.2017

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Perkins Coie | Attorney Advertising

Written by:

Perkins Coie

Perkins Coie on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.