The Blockchain Monitor

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In this issue:
• <a href="#US">US Firms Launch Bitcoin Products, Seek Approvals, Advocate for Crypto Rules</a>
• <a href="#Multiple">Multiple Federal and State Agencies Take Actions Against Crypto Industry Firms</a>
<a id="US"></a>US Firms Launch Bitcoin Products, Seek Approvals, Advocate for Crypto Rules

By: <a href="https://www.bakerlaw.com/JoannaFWasick">Joanna F. Wasick</a>

According to reports, in an internal memorandum issued earlier this week, a major U.S. investment bank informed its financial advisers that it is launching access to three funds that enable bitcoin ownership. Clients with at least $2 million in assets held by the firm will be able to access the three funds.

The 45-day window has begun for a decision by the U.S. Securities and Exchange Commission (SEC) on the VanEck exchange-traded fund (ETF) filing. During this time, the SEC must approve, decline or extend the review period. As reported previously, the Chicago Board Options Exchange filed to list the ETF in January. The SEC officially published the company’s submission on March 15. The public also has a three-week period to submit comments on the SEC website.

On Monday, Coin Center, an independent nonprofit research and advocacy center focused on cryptocurrency-related public policy issues, published its third comment letter regarding a <a href="https://www.theblockchainmonitor.com/2021/01/fincen-proposes-new-crypto-record-keeping-rules-sec-and-cftc-issue-digital-asset-guidance-sec-closes-2020-with-multiple-enforcement-actions-against-blockchain-firms/#FinCEN">proposed rule</a> from the Financial Crimes Enforcement Network (FinCEN) that would impose new requirements on certain cryptocurrency transactions involving cryptocurrencies. The letter focused on the proposed rule’s customer counterparty identification requirements and the creation of currency transaction report obligations for cryptocurrency transactions over $2,000. Coin Center criticized the rule as hampering innovation and infringing privacy rights. As reported previously, FinCEN published a <a href="https://www.theblockchainmonitor.com/2021/01/fincen-extends-crypto-rule-comment-period-crypto-products-launch-enforcement-agencies-target-crypto-crimes-in-us-japan-and-china/">notice</a> in January extending the comment period for the proposed rule to March 29, 2021.

Ant Group, the financial technology affiliate of e-commerce giant Alibaba, retained its position as the largest holder of blockchain patents in 2020, according to a report recently published by International Asset Management, which cited data from Clarivate’s Derwent World Patents Index. Ant Group now has 2,298 blockchain patents, having added 586 in 2020. A major U.S. technology firm came in fourth, with 647 blockchain patent filings.

For more information, please refer to the following links:
<ul>
 	<li><a href="https://www.cnbc.com/2021/03/17/bitcoin-morgan-stanley-is-the-first-big-us-bank-to-offer-wealthy-clients-access-to-bitcoin-funds.html">Morgan Stanley becomes the first big U.S. bank to offer its wealthy clients access to bitcoin funds</a></li>
 	<li><a href="https://cointelegraph.com/news/sec-has-45-days-to-respond-to-vaneck-bitcoin-etf-filing">SEC has 45 days to respond to VanEck Bitcoin ETF filing</a></li>
 	<li><a href="https://www.coincenter.org/app/uploads/2021/03/Coin-Center-Third-Fincen-Comment-2021.pdf">Coin Center: Further Supplemental Comments to the Financial Crimes Enforcement Network on Requirements for Certain Transactions Involving Convertible Virtual Currency or Digital Assets</a></li>
 	<li><a href="https://www.coindesk.com/ant-group-leads-chinese-dominated-2020-list-of-blockchain-patents">Ant Group Leads China-Dominated 2020 List of Blockchain Patent Holders</a></li>
</ul>
<a id="Multiple"></a>Multiple Federal and State Agencies Take Actions Against Crypto Industry Firms

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

The Securities and Exchange Commission recently obtained a temporary restraining order and asset freeze against an individual alleged to have falsely represented himself as an investment advisor who misappropriated funds from over 450 investors through a Ponzi-like scheme, according to a recent SEC litigation release. The defendant purportedly told investors that their money would be pooled into a fund investing in digital assets, but instead utilized the assets for personal expenses. The SEC is also seeking disgorgement from several entities and an individual related to the defendant.

A recent publication by the Federal Bureau of Investigation highlights the alleged sustained hacking activity of North Korean government-linked cyber criminals and related theft of cryptocurrencies, noting that federal charges against three North Korean hackers were <a href="https://www.theblockchainmonitor.com/#Enforcement">unsealed</a> in February. The story notes that the likely targets of the malicious cryptocurrency applications were employees of virtual currency exchanges.

According to a recent report, the Commodity Futures Trading Commission (CFTC) is investigating a large cryptocurrency exchange that is not registered with the CFTC, to determine whether it allowed U.S. residents to buy and sell derivatives that are policed by the regulator. The report notes that the CFTC views virtual currencies such as Bitcoin and Ether as commodities, and asserts jurisdiction over their futures and other derivatives. The report further notes that the company has not been accused of misconduct.

The Texas State Securities Board has issued emergency cease and desist orders against three unregistered cryptocurrency and alternative asset platforms, according to a news release this week. One of the companies targeted is alleged to advertise cryptocurrency investments in plans with exorbitant guaranteed returns, while the other two companies are promoting plans with similar guaranteed returns tied to investments including precious metals, oil and gas, and forex. All the offerings are deemed to be fraudulent, according to the news release.

For more information, please refer to the following links:
<ul>
 	<li><a href="https://www.sec.gov/litigation/litreleases/2021/lr25046.htm">SEC Halts Alleged Ongoing Offering Fraud Involving Digital Asset Trading Fund</a></li>
 	<li><a href="https://www.fbi.gov/news/stories/north-korean-hacks-show-virtual-currency-vulnerabilities-031121">FBI: Charges Against North Korean Hackers Show Cyber Thieves Shifting to Virtual Currency Markets and Exchanges</a></li>
 	<li><a href="https://www.bloomberg.com/news/articles/2021-03-12/crypto-exchange-binance-investigated-by-u-s-over-who-s-trading">Binance Probed by CFTC Over Whether U.S. Residents Made Trades</a></li>
 	<li><a href="https://www.ssb.texas.gov/news-publications/commissioner-issues-two-orders-stopping-three-online-investment-scams">Commissioner Issues Two Orders Stopping Three Online Investment Scams</a></li>
</ul>

core/freeform

US Firms Launch Bitcoin Products, Seek Approvals; Federal and State Agencies Take Enforcement Actions Against Cryptocurrency Industry Firms