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Home | BakerHostetler

Patrick Campbell, Jonathan New Author Law360 Article on Whistleblower Programs

DOJ Antitrust Division Adds to Guidance on the Evaluation of Corporate Compliance Programs in Criminal Antitrust Investigations

BakerHostetler Alumni Newsletter – Fall 2024

Can Doge Really Cut $2 Trillion From The Federal Budget? Likely Yes.

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<a href="#crypto">Crypto Integration Initiatives Continue, Crypto Exchange Data Published</a>

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<a href="#sec">SEC Approves Bitcoin ETF Options on Two US Exchanges</a>

<a href="#global">Global DCA Publishes Proposed Guidelines for Digital Assets</a>

<a href="#web3">Web3 Platform Launches New Privacy Tools</a>

<a href="#fsb">FSB and BIS Reports Address Crypto Policy, Tokenization, Stablecoins</a>

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Crypto Integration Initiatives Continue, Crypto Exchange Data Published

By <a href="https://www.bakerlaw.com/KeithRMurphy">Keith R. Murphy</a>

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According to a recent report, a major U.S. fintech company intends to purchase a stablecoin infrastructure provider. While the fintech company itself has not confirmed the figure, the deal reportedly is valued at $1.1 billion.

In other news, hardware wallet manufacturer Ledger announced that it has partnered with DeFi protocol THORChain to allow users to swap assets across blockchains from within the Ledger mobile app, according to a recent report. This is reportedly the first time Ledger has integrated a DeFi protocol into its mobile user app for purposes of enabling native swaps between blockchains. The report also quotes THORChain’s founder discussing potential additional integrations in the future.

And finally, according to a press release, OxScope recently released its 2024 CEX Market Report. According to the release, the report evaluates major shifts in the market share of various centralized exchanges over the past year. The release notes that the 22 centralized exchanges covered in the report had a combined total spot trading volume of $14.6 trillion, and that among other findings, the world’s largest exchange by volume had a 13% year-over-year market share loss, resulting in gains for other exchanges. A related report also discussing the CEX Market Report results notes that the world’s largest exchange also saw a year-over-year loss in its crypto derivatives market share and that smaller exchanges have been able to capitalize on these declines by growing their own market shares.  

For more information, please refer to the following links:

<a href="https://www.reuters.com/markets/deals/fintech-giant-stripe-buy-crypto-startup-bridge-2024-10-21/" target="_blank" rel="noreferrer noopener">Fintech giant Stripe to buy crypto startup Bridge</a>

<a href="https://cointelegraph.com/news/ledger-live-enables-thorchain-s-decentralized-native-cross-chain-swaps" target="_blank" rel="noreferrer noopener">Ledger Live enables THORChain’s decentralized native cross-chain swaps</a>

<a href="https://www.0xscope.com/blog-posts?slug=the-2024-cex-market-report" target="_blank" rel="noreferrer noopener">OKX, Bybit, Bitget Benefit from Binance Market Share Slump</a>

<a href="https://cointelegraph.com/news/binance-crypto-com-lose-ground-dex-rise" target="_blank" rel="noreferrer noopener">Binance, Crypto.com lose ground to rivals, DEX’s on the rise: Report</a>

SEC Approves Bitcoin ETF Options on Two US Exchanges

In two separate Orders on October 18, the U.S. Securities and Exchange Commission (SEC) granted accelerated approval to list and trade options on multiple spot bitcoin Exchange Traded Funds (ETFs) on two major U.S. exchanges.  

According to one of the Orders, the listing exchange believes “options on the [bitcoin ETFs] would permit hedging and allow for more liquidity, better price efficiency and less volatility with respect to the underlying [ETFs].” Both Orders find that the option proposals met the criteria and guidelines set by the SEC. Specifically, each bitcoin ETF is duly registered with the SEC, qualifies as an NMS stock, and is “characterized by a substantial number of outstanding shares that are widely held and actively traded.”

Both Orders additionally find that adequate surveillance programs are in place for the options. In the respective Orders, both exchanges state they intend to apply the same surveillance procedures to the new options products that are applied to other options products listed on the exchanges. The Orders also state that the underlying shares are also “subject to safeguards related to addressing market abuse and manipulation.”

The Orders further state that the position limits established by the Orders are “intended to prevent the establishment of options positions that can be used or might create incentives to manipulate or disrupt the underlying market to benefit the options position.” The Orders limits were set based on a bitcoin market capitalization of approximately $1.165 trillion calculated as of August 27, 2024. Both Orders exclude the bitcoin ETF options from FLEX trading, which the SEC states it will consider in the context of separate proposals.

<a href="https://cointelegraph.com/news/sec-approves-new-york-stock-exchange-listing-bitcoin-options-etf" target="_blank" rel="noreferrer noopener">SEC approves NYSE, CBOE listings of Bitcoin options ETFs</a>

<a href="https://www.law360.com/fintech/articles/1892119?nl_pk=443df714-8612-4cc7-92bb-12102189ef09&utm_source=newsletter&utm_medium=email&utm_campaign=fintech&utm_content=2024-10-22&read_main=1&nlsidx=0&nlaidx=1" target="_blank" rel="noreferrer noopener">NYSE, Cboe Win SEC Approval For Bitcoin ETP Options</a>

<a href="https://www.sec.gov/files/rules/sro/cboe/2024/34-101387.pdf" target="_blank" rel="noreferrer noopener">SECURITIES AND EXCHANGE COMMISSION  (Release No. 34-101387; File No. SR-CBOE-2024-035)</a>

<a href="https://www.sec.gov/files/rules/sro/nyseamer/2024/34-101386.pdf" target="_blank" rel="noreferrer noopener">SECURITIES AND EXCHANGE COMMISSION  (Release No. 34-101386; File No. SR-NYSEAMER-2024-49)</a>

Global DCA Publishes Proposed Guidelines for Digital Assets

By <a href="https://www.bakerlaw.com/RobertAMusiala">Robert A. Musiala Jr.</a><a href="https://www.bakerlaw.com/VeronicaReynolds"></a>

In a recent press release, the “The Global Digital Asset and Cryptocurrency Association (Global DCA), in collaboration with the Global Blockchain Business Council (BGGC), The Digital Chamber and the Proof of Stake Alliance … announced the ‘Proposed Information Guidelines for Certain Tokens Made Available in the United States.’” According to materials published by the Global DCA, the proposed guidelines “provide a comprehensive voluntary framework aimed at enhancing transparency and enabling informed decision-making for those involved in token markets” and address seven key areas: (1) Token Offering and Sale Information; (2) Material Participants; (3) Governance; (4) Distributed Ledger Technology (DLT); (5) Token Information; (6) Financial Information; and (7) Risk Factors. The press release notes that the proposed guidelines “are informed by U.S. securities, commodities, and consumer protection regulations as well as industry best practice” and seek to align with “global standards, including the European Union's Markets in Crypto-Assets Regulation (MiCA).” The proposed guidelines are open for public comments through January 31, 2025.

<a href="https://www.prnewswire.com/news-releases/the-global-digital-asset--cryptocurrency-association-announces-proposed-information-guidelines-for-certain-tokens-made-available-in-the-united-states-302281089.html" target="_blank" rel="noreferrer noopener">The Global Digital Asset & Cryptocurrency Association Announces Proposed Information Guidelines for Certain Tokens Made Available in the United States</a>

<a href="https://global-dca.org/proposed-u-s-disclosure-guidelines/" target="_blank" rel="noreferrer noopener">Proposed Information Guidelines for Certain Tokens Made Available in the United States</a>

Web3 Platform Launches New Privacy Tools

By <a href="https://www.bakerlaw.com/RobertAMusiala">Robert A. Musiala Jr.</a>

Web3 services platform Chainlink recently published a blog post introducing “two new privacy-preserving capabilities of the Chainlink Platform … that enable financial institutions to maintain data confidentiality, data integrity and support regulatory compliance when transacting across the multi-chain economy.” According to the blog post, Chainlink’s new “Blockchain Privacy Manager … enables private chains to be integrated with the public Chainlink Platform, providing access to crucial offchain data such as Proof of Reserve (PoR), Net Asset Value (NAV), market prices, and identity data, without exposing sensitive private chain data to third parties.” The Blockchain Privacy Manager also enables Chainlink’s new “CCIP Private Transactions” feature, which allows institutions to transact across multiple private blockchains while keeping the transaction details fully confidential.

<a href="https://blog.chain.link/ccip-private-transactions-blockchain-privacy-manager/#:~:text=CCIP%20Private%20Transactions%20works%20by,as%20they%20are%20processed%20on" target="_blank" rel="noreferrer noopener">Introducing the Chainlink Platform Privacy Suite: CCIP Private Transactions, Blockchain Privacy Manager, and DECO Sandbox</a>

<a href="https://cointelegraph.com/news/chainlink-private-blockchain-transactions-institutions" target="_blank" rel="noreferrer noopener">Chainlink launches private blockchain transactions for institutions</a>

FSB and BIS Reports Address Crypto Policy, Tokenization, Stablecoins

The Financial Stability Board (FSB) recently published a status report on its G20 Crypto-asset Policy Implementation Roadmap. According to an FSB press release, the status report finds that “Jurisdictions have made progress in implementing the policy and regulatory responses developed by the [International Monetary Fund], FSB, and standard-setting bodies (SSBs)” and a majority of FSB members expect to reach alignment with the FSB Framework for crypto-assets and stablecoins by 2025. However, the press release notes that “challenges remain,” including those related to cross-border crypto-asset activities that originate from offshore jurisdictions and the prevalence of noncompliance with applicable laws and regulations. Among other recommendations, the FSB report emphasizes that “[s]tablecoins should be subject to specific regulatory requirements due to their vulnerability to a sudden loss in confidence and to potential runs on the issuer or underlying reserve assets.”

The Bank for International Settlements (BIS) recently published a report titled “Tokenisation in the context of money and other assets: concepts and implications for central banks.” The report “focuses on the … creation of digital tokens on programmable platforms that provide an infrastructure on which multiple issuers, investors, payers and payees may issue, trade and settle transactions with money and other assets.” Among its many findings, the BIS report finds that tokenization presents opportunities to “reduce the frictions present when disparate systems are needed to issue, trade and settle different types of assets,” which can “potentially decrease transaction costs, enable new use cases and better match supply and demand.” Key risks of tokenization discussed in the report include credit and liquidity risks, custody, access policies, and operational and cyber risks.

Another recent BIS paper addresses stablecoins, money market funds and monetary policy. Among other things, the paper finds that while crypto market shocks have little impact on money market funds (MMFs) or traditional financial markets, they negatively affect stablecoins; and conversely, U.S. monetary policy shocks significantly influence both MMFs and stablecoins, though in opposite ways. According to the report, prime MMFs tend to grow following contractionary monetary policy while the market capitalization of stablecoins declines. The paper further finds that stablecoins do not act as a safe haven from either crypto or traditional financial shocks and that as monetary policy tightens, demand for stablecoins decreases.

<a href="https://www.fsb.org/2024/10/g20-crypto-asset-policy-implementation-roadmap-status-report/" target="_blank" rel="noreferrer noopener">G20 Crypto-asset Policy Implementation Roadmap: Status report</a>

<a href="https://www.bis.org/cpmi/publ/d225.pdf" target="_blank" rel="noreferrer noopener">BIS Report to the G20: Tokenisation in the context of money and other assets: concepts and implications for central banks</a>

<a href="https://www.bis.org/publ/work1219.htm" target="_blank" rel="noreferrer noopener">Stablecoins, money market funds and monetary policy</a>

Weekly Blockchain Blog – October 28, 2024

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