Crypto Exchanges and Banks Announce New Digital Asset Offerings
By Keith R. Murphy and Brandon Hansen
According to a recent press release, a major stablecoin consortium announced a new partnership with a leading international crypto exchange. The exchange has now integrated USDG and seeks to offer the stablecoin to its 60 million customers across 180 countries. According to the press release, the integration of USDG by the exchange “reflects a shared commitment to advancing greater inclusivity to the global financial industry through centralized and decentralized infrastructure.” And following the consortium’s announcement that USDG is available in the EU and also compliant with MiCA, the exchange is now supporting USDG for its customers in the EU region, according to the release.
In another recent press release, a British multinational bank is now allowing institutional clients to trade bitcoin and ether through its UK branch. The bank already reportedly offers trading services to clients of more than 70 crypto assets via two independent subsidiary groups. In the new offering, the bank’s institutional clients will be capable of conducting spot crypto trading directly through the bank’s existing platforms, according to the release.
In a final notable press release, following the acquisition of a leading U.S. retail futures platform, a U.S.-based cryptocurrency exchange announced the launch of its U.S. derivatives offering. According to the release, alongside the exchange’s preexisting spot market offering and instant account funding, the launch will allow users to seamlessly trade extensive volumes of crypto futures while managing risk and performance, all on one multi-asset trading platform.
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Reports Provide New Data on Various Areas of Digital Asset Market
By Robert A. Musiala Jr.
Recent reports provided new data on various areas of the digital asset market. In two separate reports, a major U.S. crypto exchange provided current market analyses of “staking-based ETH ETFs,” spot BTC and spot ETH. With regard to staking-based ETH ETFs, the first report notes that “[a] carefully structured staking ETF can … mitigate fee drag and under-staking risks by (1) staking the majority of its assets, (2) maintaining a small liquidity reserve, and (3) utilizing staking vault transfers, credit, or repo lines for significant outflows.” Among other things, the second report comments on BTC reaching a new all-time high and ETH achieving “a record daily ETF inflow.”
In other news, according to recent reports, the memecoin launch platform Pump.fun reportedly raised approximately $500 million in an initial coin offering. And a final recent report provides details on the top 10 U.S. public companies holding BTC as a treasury asset.
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US House Passes Three Digital Asset Bills, GENIUS Act Signed into Law
By Robert A. Musiala Jr.
On July 17, the U.S. House of Representatives passed three major bills in the digital assets space. The GENIUS Act, which regulates stablecoins, had previously passed the U.S. Senate. The GENIUS Act was signed into law on July 18. On July 17, the House also passed the CLARITY Act, which regulates digital asset markets, and the Anti-CBDC Surveillance Act, which would bar the federal government from exploring the issuance of a central bank digital currency (CBDC). The Clarity Act and Anti-CBDC Surveillance Act now advance to the Senate.
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US Bank Regulators Publish Guidance on Crypto-Asset Safekeeping
By Keith R. Murphy
On July 14, the Office of the Comptroller of the Currency and the Board of Governors of the Federal Reserve System issued a joint statement (Joint Statement) titled “Crypto-Asset Safekeeping by Banking Organizations." The Joint Statement focuses on “safekeeping,” which it defines as “the service of holding an asset on a customer’s behalf.” The Joint Statement notes that it “discusses how existing laws, regulations, and risk-management principles apply to this activity, and does not create any new supervisory expectations.”
The Joint Statement provides guidance for banking organizations engaged in crypto-asset safekeeping. The guidance focuses on the following areas: (i) general management risk considerations; (ii) cryptographic key management; (iii) additional risk management considerations; (iv) legal and compliance risk; (v) third-party risk management; and (vi) audit. Within these categories, the Joint Statement addresses many of the unique risks related to safekeeping crypto assets and provides guidance for mitigating the identified risks.
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SEC Publishes Statement on Crypto Asset ETP Disclosures
By Jonathan Cardenas
On July 1, the U.S. Securities and Exchange Commission (SEC) Division of Corporation Finance (Division) issued a statement on the application of the federal securities laws to offerings and registrations of securities by issuers of crypto asset exchange-traded products (crypto asset ETPs). In its statement, the Division identifies crypto asset ETPs as investment products listed and traded on national securities exchanges that are typically structured as trusts that hold either spot crypto assets or derivative instruments that reference crypto assets. The statement notes that the trusts are issuers of securities that must register their offerings and classes of securities under the Securities Act of 1933 and the Securities Exchange Act of 1934 and that must comply with related disclosure requirements and anti-fraud provisions thereunder. The Division notes that the crypto asset ETPs that are addressed in its statement are not registered as investment companies under the Investment Company Act of 1940.
The statement reflects the Division’s observations with respect to its reviews of prior disclosures made in connection with crypto asset ETP filings, including disclosures made in relation to the prospectus summary, risk factors, description of business, description of securities, plan of distribution, management, conflicts of interest and financial statements sections of offering documentation. For each section, the statement provides a brief overview of the required disclosures and detailed examples of the types of content disclosed in crypto asset ETP filings previously reviewed by the Division.
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SEC Commissioner Peirce Publishes Statement on Tokenized Securities
By Jonathan Cardenas
On July 9, U.S. Securities and Exchange Commission (SEC) Commissioner Hester M. Peirce issued a statement on the tokenization of securities. In her statement, Peirce expressed her view that “[t]okenized securities are still securities” that must adhere to the federal securities laws. In particular, Peirce pointed to the potential application of federal securities laws to tokenized securities that are issued directly by an issuer or issued indirectly by an unaffiliated third party, either of which would potentially be deemed a “receipt for a security” or a “security-based swap” depending on a facts and circumstances analysis. Peirce also emphasized that the SEC “stands ready to work with market participants to craft appropriate exemptions and modernize rules” where appropriate.
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On-Chain Exploits and Cross-Chain Crimes Continue to Rise
By Lauren Bass
Last week a decentralized finance (DeFi) platform was reportedly breached when a hacker exploited a vulnerability in the platform’s “Rebalancer contract,” deployed malicious code and drained over $3.5 million in cryptocurrency from user accounts. According to reports, the stolen tokens – which included 2.3 million USDC and 227,000 USDS – were then traded for Wrapped Ethereum (WETH). The platform has since warned users to revoke access to the tainted Rebalancer contract.
This recent exploit is another in a long line of hacks that have plagued cryptocurrency platforms and services this year. According to reports, more than $2.47 billion in cryptocurrency has been stolen as a result of scams, hacks and other threats – representing a 3 percent increase from 2024.
But that number pales in comparison to the $21.8 billion that has allegedly been laundered this year through “cross-chain” and high-risk activity, according to a recent report published by a blockchain analytics firm. The report defines “cross-chain” activity as “the anonymized movement of illicit crypto funds through decentralized exchanges (DEXs), cross-chain bridges, or no-KYC coin swap services,” and suggests that such activity has increased almost threefold from estimates in 2023 ($7 billion) and 2022 ($4 billion). Given the growing adoption and integration of cryptocurrency within “traditional” financial systems, these threats may have far-reaching effects, according to the report.
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