An Immensely Active Space In The Crypto Ecosystem
With Wide-Ranging Regulatory Implications
Decentralized Finance (DeFi) is a dynamic, innovative, and immensely active space in the broader blockchain and cryptocurrency ecosystem that holds some of the most extensive opportunities with the potential for dispersion of legacy banking and financial corporates. To illustrate, decentralized exchanges (DEXes) or peer-to-peer exchanges saw over $1 trillion in trading volume in 2021.
While there is strong potential for capitalization on the opportunities present in the space, DeFi is arguably the most regulatory-heavy sector of blockchain and crypto. Ensuring compliance with the patchwork style regulatory framework on the state, federal, and international levels is essential. In the United States, depending on the specifics of the offering at hand, the relevant federal regulators include the Securities and Exchange Commission (SEC), Department of Justice (DOJ), the Financial Criminal Enforcement Network (FinCEN), the Internal Revenue Service (IRS), the Commodity Futures Trading Commission (CFTC).
- Federal & State Law Regulatory Review & Advisory Including The SEC & CFTC
- ATS Platform Registration
- Decentralized Autonomous Organizations (DAOs)
- Money Service Business Registration
- Money Transmitter Licensing
- Broker-Dealer Application
- New York BitLicense Application
- Anti-Money Laundering (AML) & Know Your Customer (KYC) Compliance
- Investment Company Act of 1940 & Investment Advisers Act of 1940 Compliance
- Privacy & Cybersecurity Law
- Transfer Agent & Reporting Compliance
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Decentralized Finance (DeFI) refers to the use of platforms such as Ethereum to offer an
alternative financial system that is open for anyone to use, and which allows centralized
intermediaries to be replaced by decentralized applications (DApps). – Elliptic DeFi Regulatory Report
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DeFi & DLT Law News
Unpacking Treasury’s DeFi Risk Assessment
The United States Treasury Department released its Illicit Finance Risk Assessment of Decentralized Finance (the “assessment”). The assessment comes as a response to the September 2022 White House framework for digital assets, which specifically asked Treasury to provide a risk assessment for DeFi. The assessment attempts to define DeFi — a term that, according to Treasury, is “often used loosely in the virtual asset industry” — and enumerates a number of illicit finance risks.
Regulators Investigate Crypto-Exchange Developer Uniswap Labs
The Securities and Exchange Commission is investigating the startup behind one of the biggest cryptocurrency exchanges, as regulators probe further into parts of the digital-asset market that have resisted oversight, according to people familiar with the matter.
Cannabis, Crypto & Crowdfunding In First Of Its Kind Litigation Finance Offering
An agricultural research and commercial hemp operation called Apothio LLC is officially the first plaintiff to attempt to fund a civil case by asking individual investors to buy crypto tokens in a crowdfunded “initial litigation offering.”