Cryptocurrencies Pose Serious Challenges for Regulators. The issue of how to classify cryptocurrencies will likely determine how the market is regulated and, ultimately, how it matures and grows. One of the biggest questions facing the industry is whether cryptocurrencies are securities or commodities. While the SEC takes is taking its time setting clear rules, the industry is left continuing to guess.
Lack of Regulatory Clarity Impacts Investors. On June 29, 2022, the SEC rejected Grayscale Investment’s proposal to convert Grayscale® Bitcoin Trust (OTCQX: GBTC) to a spot Bitcoin exchange-traded fund (ETF). Since there is strong investor demand for such products, the SEC’s rejection could put U.S. investors at a competitive disadvantage. Read our client advisory discussing these issues here. (“With Regulation in Flux, the SEC Disapproves Proposed Grayscale Investments’ Spot Bitcoin ETF”)
NFTs and IP Rights. While many brands, including Gucci, Adidas, and Visa, are finding ways to use Non- Fungible Tokens (“NFTs”) to the benefit their businesses, blockchain technology also presents new challenges with respect to the enforcement of intellectual property rights. One particular challenge is the creation of blockchain domain names. Read our AdLaw post on point here. See also our Law360 article entitled “Strategies For Combating Unauthorized Blockchain Name Use.”
