Below is our quarterly newsletter. If you would like to be added to our distribution list, please contact us. This summer saw many exciting developments in the digital assets space as well bitcoin hedge fund uk case law evolution that may expand the liability of fund managers.
We would like to provide you with a brief overview of those topics and a few noteworthy items as we move into the fourth quarter of Advisers who have questions on any changes to the new Form ADV should contact their compliance groups. OCIE observed that all BDs and funds, and nearly all RIAs, maintained cybersecurity-related policies and procedures addressing protection of client information.
The Advertising Rule generally prohibits RIAs from distributing advertisements or other communications that contain untrue, false or misleading statements. The most common Advertising Rule deficiencies observed include: The SEC alleged that analysts received tips from a third-party political intelligence analyst who had a source within the Centers for Medicare and Medicaid Services, and that the adviser then used those tips to generate trading bitcoin hedge fund uk.
Now that the exchange is live, LedgerX is the first CFTC-approved exchange to facilitate and clear options on digital assets. LedgerX plans to initially offer physically-settled and day-ahead swaps on Bitcoin to U.
We will keep managers apprised of ongoing developments. Such an exception could serve to incentivize small, day-to-day transactions. The bill also calls upon the Treasury Department to issue guidance on whether a gain or loss should be recognized in virtual currency transactions. If approved, the bill will apply to virtual currency transactions beginning January 1, The second ICO was marketed similarly but with respect to the diamond industry.
The SEC is seeking to bar the businessman from participating in any offering of digital securities in the future. The announcement sent shockwaves throughout the cryptocurrency industry, highlighted by declines across various token prices. Many see this ban as a temporary stop-gap measure to give PBoC time to develop industry oversight.
The DOL Fiduciary Rule, discussed in our previous quarterly update, may face bitcoin hedge fund uk delays before full implementation.
The proposal included amendments to a few of the Fiduciary Rule exemptions, including the best interest contract exemption, which permits investment advisers to retail retirement clients to continue their current fee practices. Critics claim that the delay will cause more bitcoin hedge fund uk in the market during the extended transition period, and that the delay is the first step in an attempt by opponents of the rule to eliminate it completely. In a shift to a risk-based approach to AML regulations, there will be two separate due diligence procedures depending on the risk assessment of investors.
Certain investors that are deemed to be high-risk, such as politically exposed persons, will have to go through a more extensive verification process, while low-risk investors will be able to submit to a simplified due diligence process. If you have any questions, we recommend that you reach out bitcoin hedge fund uk your administrator or offshore counsel. United Stateswhich we discussed in a previous update.
Biotechnology Value Fund, L. Given this evolution of Section 16 liability, managers of multiple funds that hold positions in the same security should carefully monitor beneficial ownership and evaluate whether a reporting obligation may exist for their funds. This will ease the reporting burden, as well as cut down on compliance costs for firms.
Of interest to fund managers, the amendments exempt from bitcoin hedge fund uk scope: The agenda for this event can be located hereand any advisors who are interested in attending can register here. As you plan your regulatory compliance timeline for the coming months, please keep the following dates in mind:.
Mallon can be reached directly at We hope you are enjoying the summer. Below is an overview of noteworthy items, as well as what to expect as we move into the third quarter. The SEC closed requests for comment on the proposal on June 8, The statement was released in anticipation of a DOL request for information from the SEC to promote consistency and clarity with respect to implementation of bitcoin hedge fund uk rule between the two agencies.
Public submissions remain open and are currently available for review. On August 15,the SEC reached a settlement with an outsourced CCO and his consulting firm, which offered compliance consulting and outsourced CCO services to investment advisory firms. The action indicates that outsourced compliance persons solely relying on internal bitcoin hedge fund uk of AUM and number of advisory contracts, without further confirmation, are at risk of filing false reports and subject to enforcement with the SEC.
The CFTC will review rules with an ultimate goal of reducing regulatory burdens and costs for industry participants. The solicitation period for comments began on May 3, and will close on September 30, The amendments provide for greater anti-retaliation measures against employers who attempt to retaliate against employees that report employer CEA violations. Further, the amendments help clarify the process of determining whistleblower awards.
The amendments will become effective July 31, Specifically, the amendment will allow the manner and form of recordkeeping to be technology-neutral i. The amendments do not expand or decrease any existing requirements pertaining to regulatory records covered by other CFTC regulations.
This one-day symposium is for managers, investors and service providers in the cryptocurrency space and discussion points will include cryptocurrency investment, as well as legal and operational issues pertaining to this new asset class. The key-note speaker will be Olaf Carlson-Wee, Founder and CEO of Polychain Capital, and the symposium will include a number of other speakers representing the perspectives of investment management, fund administration, audit and tax, custody of funds, offshore fund formation and bitcoin hedge fund uk.
Early bird registration for investors, manager and students ends August 31st. Currently aimed at those bitcoin hedge fund uk exchanges or wallet services we do not believe bitcoin hedge fund uk asset fund managers will need to obtain this licence.
More information can be found here. The SEC granted the petition in April and has yet to bitcoin hedge fund uk any further comments. As digital asset trading has increased over the past few months, many are looking at the review of the petition as a potential indicator of future cryptocurrency regulation to come. The Petitioner argued that some digital assets should be considered securities, and that current regimes in the United Kingdom and Singapore can be modeled domestically to successfully facilitate the issuance and trading of digital assets.
As of today, the SEC has not responded to the petition, but we expect the frequency of petitions and requests for no-action letters to increase bitcoin hedge fund uk this space continues to grow. Managers with questions regarding the applicability of these exemptions should discuss with counsel.
Many fund managers and other investment advisers may unintentionally be deemed to be fiduciaries to bitcoin hedge fund uk retirement investors under the amended rule.
Fund managers with investments from covered accounts or that wish to accept contributions from covered accounts will need to consider whether their current business activities and communications with investors could constitute a recommendation, including a suggestion that such investors invest in bitcoin hedge fund uk fund. Under certain circumstances, fund managers may be deemed fiduciaries.
We recommend that investment advisers contact their counsel regarding making any necessary updates to the applicable documents. The amendment will require an annual analysis to evaluate training needs, develop a written training plan, and implement training in response to the needs evaluated.
The amendments also provide for record-keeping of the plans and analysis to promote compliance. Municipal advisors will have until December 31, to comply with the new requirements. To further clarify the requirements, the MSRB will be hosting an education webinar for municipal advisors on Thursday October 12,from 3: The grace period for municipal advisor representatives and municipal advisor principals that have not passed the Series 50 examination to qualify as a municipal advisor representative or principal will be ending on September 12, Thereafter, all municipal advisor professionals who either engage in municipal advisory activities or engage in the management or supervision of municipal advisory activities will be required to pass the Series The MSRB has a content outline which specifies eligibility, the structure of the exam, and the regulations to be tested.
Among some of the more bitcoin hedge fund uk notes are the following:. We recommend contacting your tax advisors to discuss any potential issues regarding the above updates and deadlines. In a series of four items press release, investigative report, statement and investor bulletinthe SEC comes out with a strong warning to sponsors of Initial Coin Offerings ICOs to be careful of the U. While many will undoubtedly think the SEC missed a great opportunity to provide robust guidance and leniency to the industry, most market bitcoin hedge fund uk recognize that this series of discussions was the most likely outcome for many of these instruments i.
Below we provide an overview of the various parts of the release as well as some of our observations. The SEC cautions market participants to make sure they examine their activity with respect to ICOs and other structures built on blockchain and distributed ledger technology. Most importantly the release states:. In light of the facts and circumstances, the agency has decided not to bring charges in this instance, or make findings of violations in the Report, but rather to caution the industry and market participants: The report ends by listing a number of SEC enforcement actions involving virtual currencies.
The SEC also provides the following warning to the industry: Whether or not a particular transaction involves the offer and sale of a security—regardless of the terminology used—will depend on the facts and circumstances, including the economic realities of the bitcoin hedge fund uk. Those who offer and sell securities in the United States must comply with the federal securities laws, including the requirement to register with the Commission or to qualify for an exemption from the registration requirements of the federal securities laws…These requirements apply to those who offer and sell securities in the United States, regardless whether the issuing entity is a traditional company or a decentralized autonomous organization, regardless whether those securities are purchased using U.
In addition, any entity or person engaging in the activities of an exchange, such as bringing together the orders for securities of multiple buyers and sellers using established nondiscretionary methods under which such orders interact with each other and buyers and sellers entering such orders agree upon the bitcoin hedge fund uk of the trade, must register as a national securities exchange or operate pursuant to an exemption from such registration.
The statement also warns of bad actors and red flags. Investor Bulletin — provides background on ICOs, discussed various concepts applicable to bitcoin hedge fund uk digital asset industry blockchain, virtual currency, virtual currency exchanges, smart contractsand discusses the crowdfunding regulations. The bulletin also alerts investors to the issues with bitcoin hedge fund uk money back in the event of a scam tracing issues, international scope of digital assets, the bitcoin hedge fund uk there is no central regulator and there is no ability for the SEC to freeze digital assets and describes the normal things to be careful of that are common in many scams.
The following are some quotes from the various items produced by the SEC which we found interesting, and our thoughts on those quotes. Report on The DAO. This Report also serves to stress the obligation to comply with the registration provisions of the federal securities laws with respect to products and platforms involving emerging technologies and new investor interfaces.
This is important because it shows that some ICOs or digital assets like ETH can be instruments other than securities. The best advice we have here is to look at the Coinbase Securities Law Framework to come up a best guess. As described above, the Platforms provided users with an electronic system that matched orders from multiple parties to buy and sell DAO Tokens for execution based on non-discretionary methods. This will likely give unregistered crypto exchanges pause with respect to many digital asset instruments.
We fully expect to a number of frauds and other enforcement actions taken with respect to ICOs in the future. We also believe that there is the possibility in the future for some sort of digital asset specific crowdfunding platform or a digital asset broker-dealer. Bitcoin hedge fund uk promoter should have a clear business plan that you can read and bitcoin hedge fund uk you understand.
The rights the token or coin entitles you to should be clearly laid out, often in a white paper or development roadmap. You should specifically ask about how and when you can get your money back in the event you wish to do so.
For example, do you have a right to give the token or coin back to the company or to receive a refund? Or can you resell the coin or token? Are there any limitations on your ability to resell the coin or token?
Calling people xenophobes without hearing what they have to say is as immature as believing Alex Jones. Re keen on getting your strategy funded by someone, you. After waiting long time to get additional Hashrate, I did not get anything. A securitizing actor requires enough social and political capital to convince their audience of the existential threat.