At the end of 2019, the Department of Defense (“DoD”) took another step to limit the potential cyber risks posed by telecommunications equipment manufactured by Chinese companies (and potentially Russian
Continue Reading DoD’s Squeeze of Chinese Telecom Equipment Continues

To gain insight into where the Securities and Exchange Commission (“SEC”) and Commodity Futures Trading Commission (“CFTC”) have been focusing their oversight and what their priorities will be in 2020, look no further than their recent words and deeds. A common thread running through the recent public statements and enforcement activity of both agencies is a commitment to maximizing the resources at their disposal to expedite resolutions, whether by leveraging technology, deploying multi-pronged approaches, engaging in industry outreach, or coordinating with fellow regulators.
Continue Reading Regulatory Moves Show Financial Watchdogs Working Smarter, if Not Harder

Under its new leader, the New York Department of Financial Services (“DFS”) has staked out high ground for itself by self-identifying as the “regulator of the future” DFS’s pronouncement came in a July press release issued about a month after Linda Lacewell was confirmed as the agency’s third superintendent. The press release, issued to announce the creation of a new Research and Innovation Division, signals that DFS is attempting to harness the increasing technological tools available to regulators, while making New York an attractive place for financial firms to do business. “The financial services regulatory landscape needs to evolve and adapt as innovation in banking, insurance and regulatory technology continues to grow,” Lacewell said in the press release. “This new division and these appointments position DFS as the regulator of the future, allowing the Department to better protect consumers, develop best practices, and analyze market data to strengthen New York’s standing as the center of financial innovation.”
Continue Reading New York’s Department of Financial Services: the Self-Styled “Regulator of the Future”

The Enforcement Division of the United States Securities and Exchange Commission (“SEC”) recently released its annual enforcement report (“Report”) for fiscal year 2018. The Report reflects an increased focus on retail investors, cryptocurrency, cybercrime, and individual accountability. Further, it showcases that SEC enforcement continues to be robust under the Trump administration, despite industry and media expectations to the contrary.

In fiscal year 2018, the SEC brought 821 enforcement actions, an approximately 8.8% increase from last year. The SEC collected approximately $3.9 billion in monetary penalties, a 4% increase from last year. Notably, however, a significant portion of this amount came from a single case, in which $1.8 billion in disgorgement and penalties were awarded for a large-scale corruption scheme. Moreover, while total monetary penalties rose, there was a decrease in the total amount of disgorgement imposed. This is likely due in part to the Supreme Court’s 2017 Kokesh decision, which held that SEC claims for disgorgement are subject to a five-year statute of limitations.  
Continue Reading SEC Enforcement’s Annual Report Prioritizes Retail Investors, Cryptocurrency, Cybercrime, and Individual Accountability

Over the past couple of years, the crypto industry has come under heavy scrutiny from skeptical regulators seeking to root out fraud and protect investors amid the initial coin offering boom that generated over $4 billion in 2017. However, this skepticism is starting to give way to a more business-friendly attitude.

Crypto firms have made notable headway with regulators in recent months, securing authorizations to act as custodians of digital assets and working towards approval of the first bitcoin-based exchange traded fund (“ETF”). These developments may reflect an evolving collaborative environment that bodes well for the future of blockchain-based innovations.
Continue Reading Crypto Firms Make Inroads with State and Federal Regulators

The Commodity Futures Trading Commission (“CFTC”) obtained an important court win and boost to its regulatory authority over Cryptocurrencies this month. A federal district court in Massachusetts recently issued a decision in CFTC v. My Big Coin Pay Inc. which affirmed the CFTC’s position that all virtual currencies are commodities and subject to CFTC jurisdiction.[1] The opinion follows another recent district court opinion in New York, CFTC v. McDonnell, in which a court also interpreted the Commodity Exchange Act (“CEA”) to find that cryptocurrencies constitute a commodity under the CEA.[2] CFTC Chairman Giancarlo in a speech last week in Minneapolis further emphasized the CFTC is continuing to increase civil enforcement actions with 83 having been filed in the last CFTC fiscal year resulting in over $900 million in civil penalties.[3] The current political efforts to dismantle the Dodd Frank Act apparently have done little to slow down the CFTC Division of Enforcement, in particular when it comes to regulating cryptocurrencies.
Continue Reading CFTC Cryptocurrency Enforcement Receives Further Judicial Support