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03/14/2023 -
SVB and Distressed Banks: Lessons Learned from a Wild Weekend
US governmental authorities, including the US Department of the Treasury, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation, took actions to provide both insured and uninsured depositors of Silicon Valley Bank (SVB) (as well as Signature Bank) access to their deposits beginning Monday, March 13. However, despite these actions, many customers are still dealing with the aftermath of an uncertain weekend, and practical questions remain to be answered.
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03/13/2023 -
Silicon Valley Bank Shutdown: Antitrust Considerations
While complex questions remain about what impact the Silicon Valley Bank (SVB) crisis will have on the financial services and emerging business sectors, it is important to be mindful of antitrust considerations when mitigating risk. As seen in prior financial crises, antitrust observers will closely scrutinize conduct in response to the crisis to assess whether any industry efforts to stabilize SVB or other banks and avoid further contagion have, in turn, harmed competition under federal and/or state antitrust law. We identify the antitrust considerations relevant to industry collaborations in response to the SVB crisis and discuss how firms may mitigate antitrust risk.
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03/12/2023 -
Silicon Valley Bank Collapse: Initial Issues Raised
The California Department of Financial Protection & Innovation on March 10 declared Silicon Valley Bank insolvent and appointed the FDIC as receiver. To help with the resolution of SVB, the FDIC created the Deposit Insurance National Bank of Santa Clara, which will essentially serve as a bridge bank to facilitate access to SVB deposits insured by the FDIC. Having a large insured depository institution fail without warning is a significant event that has already caused ripples across the financial industry, although many see the risk of serious contagion in the financial sector as relatively low. In this LawFlash, our lawyers break down some high-level questions that many are asking in this quickly evolving situation.
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02/24/2023 -
States, Countries Focus on Fraud Prevention and Customer Protection in Crypto, All Things FinReg
New York has enhanced its fraud prevention tools, while consumers can identify crypto scams using California’s scam tracker. A week after the US Securities and Exchange Commission (SEC) proposed amendments to cover cryptoassets under the Custody Rule applicable to investment advisers, federal banking agencies issued a statement reminding banks of their risk management obligations in connection with holding crypto companies’ deposits. The United Kingdom is considering fund tokenization, particularly as it relates to retail investors, and the Hong Kong Securities and Futures Commission is gearing up for a crypto exchange platform licensing regime while considering whether retail investors should trade on licensed crypto platforms.
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02/17/2023 -
Roundup of Recent Developments in the Digital Asset Space, All Things FinReg
In the continuation of our new blog series highlighting recent developments in the digital asset space, this post details continued action policy and enforcement actions by US regulators.
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02/13/2023 -
Staking as a Service, Regulating Digital Assets in the UK and Dubai, and More, All Things FinReg
In this new series, we will provide an overview of recent noteworthy developments in the digital asset space around the world. The start of February was a busy period for regulators in the United States, where the US Securities and Exchange Commission (SEC) settled charges against an exchange in connection with its staking services and where other regulators issued digital asset guidance. Both the United Kingdom and Dubai Virtual Asset Regulatory Authority introduced plans to regulate digital asset activities. The Hong Kong Monetary Authority released a framework for stablecoin regulation, but it is unclear whether a new law will be adopted or existing laws will be amended to incorporate the framework.
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02/09/2023 -
NYDFS to Crypto Custodians: Proceed with Caution, All Things FinReg
In the depth of a crypto winter, the New York State Department of Financial Services (DFS) issued guidance (the Guidance) on custodial standards for those with a BitLicense or that are registered as New York state limited purpose trust companies that engage in virtual currency (VC) business activity (VC Trust Companies and, together with BitLicensees, VC Custodians). In addition to providing customer segregation and compliance standards, DFS also announced in the Guidance its position that a VC Custodian that enters into a sub-custody arrangement must obtain prior DFS approval before the arrangement’s implementation.
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January 2023 -
The Trends—and Traps—That Will Shape 2023
The last few years have thrown many surprises at businesses. Organizations across all sectors have faced inflation, global conflicts, supply chain challenges, a pandemic, and continually changing government policies. In 2023, many companies are looking to get ahead of the issues that are expected to shape the next few years. In a high-level overview of what’s in store for various global industry sectors, Morgan Lewis lawyers highlight some of the major trends they are tracking and what regulatory and legislative developments are on the horizon.
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12/28/2022 -
Digital Asset Brokers: Proceed with Caution
The IRS has effectively delayed the implementation of the new digital asset broker rules under Internal Revenue Code Sections 6045 and 6045A.
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12/21/2022 -
FDIC Proposes Updates on Its Official Signage Rule To Better Align With Changing Banking Landscape, All Things FinReg
The FDIC Board of Directors issued a proposal on December 13 amending and updating the rules regarding the use of the official FDIC sign and advertising statements to better reflect the modern consumer banking landscape. As noted in a memorandum from the FDIC staff, the update is also meant to address the growth of the fintech sector and partnerships between banks and fintechs. The proposed rule also seeks to clarify instances when FDIC deposit insurance coverage is being misrepresented to consumers.
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12/09/2022 -
Public Companies: Consider Updating Disclosures to Reflect Risks Posed by Cryptoasset Markets, All Things FinReg
Just shy of a month since FTX declared bankruptcy, the US Securities and Exchange Commission’s (SEC’s) Division of Corporation Finance (Division or staff) published informal guidance on how public companies could be asked to address the possible impact of financial distress in the cryptoasset market. The guidance includes a “sample” crypto-specific comment letter focused on disclosure that public companies should consider providing in filings made under the Securities Act of 1933 (Securities Act) and Securities Exchange Act of 1934 (Exchange Act), as applicable.
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12/05/2022 -
Congressional Hearings on FTX Collapse May Lead to Crypto Regulations, All Things FinReg
The Senate Agriculture, Nutrition & Forestry Committee held a hearing, “Why Congress Needs to Act: Lessons Learned From the FTX Collapse,” on December 1, 2022, receiving testimony from Commodity Future Trading Commission (CFTC) Chairman Rostin Behnam. With the exception of very few exchanges during the Q&A portion of the hearing, the committee, which asked several questions about the CFTC’s oversight of FTX’s CFTC-registered affiliate, LedgerX, was supportive of the CFTC and did not lay much blame at the feet of the regulator. Rather, many senators were most eager to discuss robust, “whole of government” oversight and regulation of the digital asset economy.
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09/14/2022 -
How Early-Stage Life Sciences Companies Can Avoid Potential Legal Missteps Through These Five Key Commercial Agreements
In the early days of a life science company, there can be confusion and a number of landmines where legal missteps may happen. As part of our 2022 Startup & Accelerate Webinar Series, we look at five key commercial agreements that startup and early-stage life science companies should consider implementing to help protect and assist in the strategic growth of business.
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02/10/2022 -
'Madden Fix' Rules Withstand a Key Test: What Happens Next, All Things FinReg
More than six years after it was decided, the practical consequences of the US Court of Appeals for the Second Circuit’s Madden v. Midland Funding, LLC decision continue to diminish. The decision—which held that, under some circumstances, a loan originated by a bank became subject to state usury laws once transferred to a non-bank—implicitly rejected the long-standing doctrine of “valid when made” and once threatened to upend the lending industry. It has been repeatedly narrowed and rarely expanded.
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06/17/2021 -
Basel Committee Proposes Risk-Based Regulatory Capital Treatment for Many Cryptoassets, All Things FinReg
The Basel Committee on Banking Supervision (Basel Committee), a committee of global central bankers and regulators, issued a Consultative Document on June 10 on the prudential treatment of cryptoasset exposures for international banks (the Proposal). The Basel Committee has asked for comments by September 10, 2021.
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04/28/2021 -
OCC Conditionally Approves Trust Company Charter for Crypto Firm, All Things FinReg
The OCC granted preliminary conditional approval on April 23 to an application to charter Paxos National Trust (Paxos) as an uninsured national trust bank. Paxos, which currently operates as a New York state-charted limited liability trust company regulated by the New York Department of Financial Services and has indicated in public statements that it intends to maintain both federal and state licenses, will be permitted under the OCC approval to provide “a range of services associated with digital assets,” including custody, payment, exchange, and other agent services related to cryptocurrency.
