Virtual Currency, Digital Assets and Blockchain Technology

  • Holland & Knight's Virtual Currency, Digital Assets and Blockchain Technology Team helps clients understand blockchain, ways that it may benefit their businesses, and the emergence of related public policy and regulatory issues.
  • Our attorneys are well versed in enforcement matters relating to digital assets, and many of our team members combine a hands-on knowledge of technology with the business perspective that comes from decades of serving clients in the industries most affected by blockchain.
  • We advise users, administrators, exchangers and miners of virtual and cryptocurrencies, as well as financial institutions, on compliance with respective licensing and regulatory obligations, so that their business models can overcome the legal hurdles required to fully tap the potential of digital currencies.
Blockchain

Overview

Holland & Knight's Virtual Currency, Digital Assets and Blockchain Technology Team helps clients understand blockchain, how it may benefit their businesses and the emergence of related public policy issues.

Our attorneys wrote the book on blockchain technology and the law. Holland & Knight Partners Josias N. Dewey, Jeffrey R. Seul and Shawn S. Amuial are co-authors of The Blockchain: A Guide for Legal and Business Professionals, a Thomson Reuters book. Our team also includes former U.S. Security and Exchange Commission (SEC) attorneys who are well versed in enforcement matters relating to digital assets. Our attorneys understand virtual currency, digital assets and blockchain technology at the deepest level.

Our blockchain lawyers draw on substantive backgrounds in financial services and banking, real estate, gaming, taxation, intellectual property, mergers and acquisitions, data security, anti-money laundering, corporate law and insurance. These attorneys combine hands-on knowledge of technology – some are even active coders – with the business perspective that comes from decades of experience serving clients in the industries most affected by blockchain.

Securities and Commodities Regulation

Our lawyers have extensive experience advising clients on the application of federal and state securities and commodities laws to digital assets, including transactions involving tokenized assets, investment vehicles and decentralized finance (DeFi) products. Our clients include both issuers of digital assets as well as asset managers who invest in them.

Financial Institutions

We routinely advise financial services companies, ranging from startups to publicly traded banks, on matters relating to digital assets, including DeFi strategies. Our lawyers have extensive experience representing lenders who lend against digital asset collateral, including facilities utilizing securities intermediaries to hold digital assets as financial assets. We have negotiated custody agreements with a number of the largest providers of custody services to the digital asset space.

We also represent banking institutions in connection with the issuance of stablecoins, including issues around banking regulatory matters raised by such activities, including holding reserves backing stablecoins.

Digital Asset Recovery

We have extensive experience in matters involving the recovery of digital assets. Our attorneys have served in the capacity of a receiver, independent intermediary and Fair Fund distribution agent in cases involving digital assets. As part of these engagements, the firm developed its own proprietary data analytics tool, known as BlockBlade, to help trace stolen digital assets across multiple blockchains.

Intellectual Property

Our lawyers have filed several patent applications covering blockchain technology. We have also advised clients on intellectual property matters pertaining to non-fungible tokens (NFTs), including copyright matters pertaining to artwork.

Taxation

Our tax lawyers advise clients on the proper tax treatment of virtual currency investments and other transactions, including in the context of estate planning.

Representative Engagements

Financial Institutions

  • Counsel to state-chartered bank in connection with all aspects of involvement in Diem payment network (Facebook-sponsored stable coin), including role as coin issuer and custodian of reserve backing coin
  • Counsel to financial institutions engaged in lending transactions secured by digital assets, including credit facilities in excess of $100 million

Capital Markets

  • Represented large capital markets trade association with analysis and report on feasibility of using blockchain and distributed ledger technology for corporate debt markets, which included extensive analysis of issues around consortium governance and antitrust considerations
  • Selected by large Wall Street consortium to participate with several Wall Street banks (including three of 10 largest U.S. banks) and European financial institutions to develop and architect a distributed ledger-based platform for new financial products; scope of work includes analysis of legal impediments and regulatory assessment

Debt Markets

  • Engaged by Loan Syndications and Trading Association (LSTA) to prepare three-part white paper on blockchain technology, including smart contracts, and its impact on syndicated corporate debt

Privacy and Data Security Compliance

  • Counsel to Fortune 500 company for the European Union's General Data Protection Regulation (GDPR), privacy and other matters relating to the development and adoption of blockchain and distributed ledger technology

Crypto-Investment Banking and Private Fund Management

  • Counsel to several crypto-investment banks, including advising on all aspects of dealer activities, broker-dealer licensing requirements, security token issues and Financial Crimes Enforcement Network (FinCEN) regulation of activities
  • Counsel to several crypto-investment fund managers and investors, advising on securities, Investment Company Act and Investment Advisers Act requirements, and Know Your Customer (KYC)/anti-money laundering (AML) requirements

Court-Appointed Receiver in SEC Enforcement Action

  • One of our partners, Josias N. Dewey, was appointed by the U.S. District Court for the Central District of California as receiver for Titanium Blockchain Infrastructure Services Inc. (TBIS). The SEC alleged in an enforcement action that TBIS and its president, Michael Alan Stollery, a self-described "blockchain evangelist," were engaged in a fraud involving an initial coin offering (ICO) that raised up to $30 million from investors in and outside the U.S. The SEC's complaint charged, among other things, that the defendants lied about business relationships with the Federal Reserve and dozens of well-known corporations, including PayPal, Verizon, Boeing and The Walt Disney Co., that TBIS' website contained fabricated testimonials from corporate customers, and that Stollaire publicly – and fraudulently – claimed to have relationships with numerous corporate clients. Being one of only two SEC receiverships involving an ICO, Mr. Dewey's role has involved several novel legal issues, including many arising out of his efforts to recover virtual currency assets for the benefit of defrauded investors. He has recovered virtual currency through the location of private keys stored in several different ways, including paper wallets, hardware wallets, software wallets and hosted wallets with virtual currency exchanges, both in the U.S. and abroad. These efforts have involved "chain analytics" and tracing virtual currency through mixers, tumblers and other techniques used to obfuscate transactions recorded on a blockchain. Virtual currency recovered has included Bitcoin, Bitcoin Cash, Litecoin, Ethereum, Dash, ZCash and several alt coins.

Smart Contract Audits

  • Counsel to smart contract audit firm that developed the most commonly used ERC-20 token contract in the Ethereum community in connection with Regulation D, Rule 506(c) Simple Agreement for Future Tokens (SAFT) offering; the scope of our engagement included U.S. securities laws, KYC/AML and cross-border tax matters (Protocol: Ethereum)

Virtual Currency Exchange

  • Counsel to offshore virtual currency exchange in evaluation of token generation for infrastructure costs; the scope of our engagement included U.S. securities laws, Commodity Futures Trading Commission (CFTC) regulatory matters, KYC/AML and money transmitter licensing requirements (Protocol: Bitcoin/Ethereum)

Payment Ecosystem

  • Counsel to alternative payment systems network in token issue intended to promote and foster growth within a larger ecosystem; the scope of our engagement included U.S. securities laws, KYC/AML, bank licensing requirements and cross-border structuring (Protocol: Hyperledger Fabric)

Financial Products

  • Counsel to California-based public benefits corporation on dual-token structure, including one for Regulation D, exempt offering and the other as a vehicle to tokenize payment streams from class of otherwise illiquid interests in real estate interests; the scope of our engagement included U.S. securities laws, Investment Advisers Act, Investment Company Act, corporate tax structuring and KYC/AML, and representation also included considerations around the need to restrict tradability of tokens to only accredited investors (Protocol: Stellar)

Real Estate

  • Counsel to company tokenizing real estate investment vehicles; the scope of our engagement included considerations around U.S. securities laws, Foreign Account Tax Compliance Act (FATCA) and Foreign Investment in Real Property Tax Act (FIRPTA) reporting and withholding requirements, and KYC/AML (Protocol: Ethereum)

Advertising Technology (AdTech)

  • Counsel to marketing analytics platform in Regulation D, Rule 506(c) SAFT offering of utility tokens intended to promote and foster growth of AdTech platform; the scope of our engagement included U.S. securities laws and KYC/AML (Protocol: Ethereum)

Stablecoin

  • Counsel to developer of virtual currency incorporating price stability mechanism in Regulation D, Rule 506(c) SAFT offering of utility tokens intended to reduce volatility and promote cross-border remittances (Protocol: Ethereum)

API-SDK Development/Payment Integration

  • Counsel to U.S.-based company that developed software development kits (SDKs) with application programming interfaces (APIs) allowing integration of multiple blockchain payment solutions within a single wallet in connection with token generation event (TGE) of the company's tokens on Ethereum public network; the tokens were marketed and sold as utility tokens intended to promote and foster growth of the platform, and the scope of our engagement included U.S. securities laws and CFTC (Protocol: Ethereum)

Consumer Products

  • Counsel to Singapore-based company that developed a functioning, consumer goods provenance platform in connection with TGE of the company's tokens on Ethereum public network; the tokens were marketed and sold as utility tokens intended to promote and foster growth of a consumer safety provenance platform, and the scope of our engagement included U.S. securities laws, CFTC and KYC/AML (Protocol: Ethereum)

Mobile Gaming/Daily Fantasy Sports

  • Counsel to existing daily fantasy sports operator in connection with Regulation D, Rule 506(c) and Regulation Crowdfunding (CF) SAFT offering of utility tokens intended to promote and foster growth of new user adoption of mobile play platform; the scope of our engagement included U.S. securities laws, money transmission laws and KYC/AML (Protocol: Ethereum)

Developer Utilities Provider

  • Counsel to U.S.-based startup that provides developers with utilities and services around open source code; the scope of our engagement included KYC/AML and state money transmission laws (Protocol: Undecided)

ICO Advisors

  • Counsel to ICO advisors on U.S. securities, Commodity Exchange Act issues and broker-dealer regulations, including potential Section 17(b) violations

Enforcement Actions

  • Represented token generator in front of SEC regarding potential securities violations, including direct dealings with the head of the SEC's ICO Task Force; engagement concluded with favorable outcome for the client

Bitcoin Promotion

  • Counsel to one of the two largest daily fantasy sports platforms in 1) acquisition of bitcoin, 2) development of contest terms and conditions, and 3) tax implications

Mining

  • Represented mining operator's development and launch of large-scale mining data, including preparation of the form of development license agreements and cross-border tax analysis

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