Recent Developments in the Regulation of Cryptocurrencies and Other Virtual Assets

Skadden, Arps, Slate, Meagher & Flom LLP

In a series of articles, we discuss recent efforts by regulators and other governmental bodies to set expectations and standards, or pursue governmental initiatives, with respect to cryptocurrencies and other virtual assets and the impact of these efforts on businesses engaged in virtual asset activities.

Toomey Introduces Proposal for Payment Stablecoin Regulatory Framework
April 15, 2022

A discussion draft piece of legislation from Sen. Pat Toomey would create a new regulatory structure for issuance of payment stablecoins that would set standards for reserve assets. Issuers, however, would be allowed an option to be licensed at the state or federal level, and some issuers would not be subject to regulation as depository institutions, in contrast to the Biden administration’s proposed approach.

The Federal Reserve Weighs Risks and Benefits of a US Central Bank Digital Currency
February 4, 2022

A Federal Reserve discussion paper cites the potential benefits of a central bank digital currency as well as the risks a CBDC could pose to the U.S. financial system and the larger economy.

Federal Regulators Move To Regulate Stablecoins Through Banking Laws Plus New Legislation
November 16, 2021

A presidential working group proposes measures to address the risks of stablecoins by bringing them within existing banking laws through new legislation. In the interim, the group outlines possible measures banking and other regulators could take to mitigate the identified risks.

FATF Updates Its Global Guidelines for the Regulation of Virtual Assets With an Eye to Emerging Technologies
November 11, 2021

The Financial Action Task Force, the international body that drafts standards for combatting money laundering and the financing of terrorism, released new guidelines that seek to be technology neutral. They include broad definitions that will bring a wide array of virtual asset businesses within the regulatory perimeter.

US Treasury Provides Detailed Guidance for the Virtual Currency Industry on Sanctions Compliance
November 10, 2021

The U.S. Treasury’s Office of Foreign Assets Control issued its most comprehensive guidance to date on the application of sanctions rules to virtual currency companies, putting the cryptocurrency industry on notice of what is required for compliance.