The California Department of Financial Protection and Innovation (DFPI) may soon have another regulatory regime under its belt—answering the long-open question of digital asset regulation in California.
California legislators have passed the Digital Financial Assets Law that would require a license to “engage in digital financial asset business activity” with or on behalf of any
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Lender Fees At Risk?
A New York state court has voided a $1.3 million loan agreement to a corporate borrower because the loan agreement’s stated interest rate of 34% violated New York’s criminal usury law statute.
The loan agreement was governed by Virginia law, which doesn’t allow corporate borrowers to plead a usury defense. However, because this borrower was based and licensed in New York,…
Kirschner Court Adopts Fact Specific Analysis to Conclude That Loans Are Not Securities
The United States Court of Appeals for the Second Circuit recently affirmed the 2020 Kirschner v. JP Morgan Chase Bank, N.A. ruling that a secured $1.775 billion syndicated term loan to Millennium Laboratories LLC (Millennium) was not a security. The decision is great news for the loan market, but a slightly different set of facts…
6 Questions Blockchain Founders Should Ask When Launching a Product or Token
As any founder knows, operating in the blockchain space requires navigating a myriad of regulatory regimes. While every product and token are different, below are 6 key questions that any founder should ask themselves as they launch their product or token:
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Loan Trading 101: How to Ensure You Get It Right with Transfer Restrictions
If you know anything about syndicated loan trading, you probably know the basics of transfer restrictions.
New term lenders typically need the consents of the administrative agent and the borrower in order to be admitted to the syndicate. New revolving lenders usually need those consents, plus the consents of any banks that issue letters of…
Crypto Regulation Marches On With Potential Consequences for Trading Systems
A flurry of recent activity has reinforced the SEC’s commitment to regulate crypto assets, including trading systems that trade crypto asset securities.
WHAT HAPPENED?
The SEC shared additional information in April 2023 on whether and how its proposal to expand the definition of “exchange” would affect trading systems for crypto asset securities. The SEC initially…
5 Ways Venture Investment in Blockchain Differs from Investment in Traditional High-Growth Startups
Venture investments in blockchain companies are often similar to investments in traditional, high-growth technology startups. However, there are a few differences any company or investor should know about:
- Board Seats: Lead investors in venture backed companies often require a right to designate a member of the company’s board of directors. Having a seat on the
…
5 Things to Know About Token Warrants
Venture capital investors in blockchain companies often require formal rights to receive tokens or other digital assets created by those companies. Typically, these rights are provided through an instrument called a “token warrant.” While token warrants are most frequently issued in priced rounds, they have become increasingly prevalent in connection with SAFE or other convertible…
Cooperatives: An Ownership Model for Digital Networks
Turbulence in crypto and blockchain has shed light on a question that has received increasing attention: how web3 companies share ownership in digital networks, including through tokens.
As the industry wrestles with this question, builders and investors should consider adding cooperatives to their ownership structures. A handful of web3 projects have done so, but the…
CFPB Makes an Entrance: Crypto Products Targeted
Ending doubts regarding its interest in the space, the Consumer Financial Protection Bureau (CFPB) has for the first time publicly acknowledged its investigation of a crypto company — and it’s likely a sign of things to come.
The agency hinted at increased enforcement in a summary of consumer crypto complaints in November 2022. The CFPB…