Lee A. Schneider

Why the Proposed Blockchain Token Safe Harbor Makes Sense

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The application of the U.S. securities laws to blockchain tokens has been a controversial subject, with the Securities and Exchange Commission (SEC) taking an aggressive posture.  On February 6, 2020, SEC Commissioner Hester Peirce proposed a non-exclusive safe harbor from certain of those laws for sales and other distributions of certain blockchain tokens (sometimes called token generation events, airdrops, SAFTs, ICOs or IEOs), as well as secondary trading in such tokens.

Token sales became a popular tool in 2016-17 for blockchain projects to seek initial traction for their network or platform by selling the digital item native to the platform … Read more

Will FinTech Disruption in the ‘20s Be Roaring?

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In recent podcasts, we addressed three themes, among other topics: how artificial intelligence and machine learning (AI/ML) can change how decisions get made; how blockchain can transform how we transact and how we record and communicate things; and how technology shapes how we trade stocks.  We entered 2020 with a lot to watch.  Perhaps this decade will be the “roaring ‘20s of FinTech.”

From Here to There for AI/ML.  The promise of AI/ML is transformative, and companies (small and large, new and longstanding) are fast at work developing and deploying real-world applications, from autonomous driving to growing crops to detecting … Read more

Debevoise & Plimpton Discusses OCC and CFPB’s Approaches to FinTech

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This is the fourth in a series examining the increased regulatory scrutiny on new and innovative financial technologies (“FinTech”).[1]

This update considers the initiatives of two federal regulatory agencies—the Office of the Comptroller of the Currency (the “OCC”) and the Consumer Financial Protection Bureau (the “CFPB” or “Bureau”)—and their approaches to balancing regulation with FinTech innovation.[2] In examining these two models, we first discuss the OCC’s recent issuance of a framework regarding responsible innovation and the establishment of an office to implement the framework. Then, we discuss the CFPB’s Project Catalyst, and its recent report on its efforts … Read more

Debevoise & Plimpton Discusses Regulatory Developments in FinTech

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In this update, we review a number of recent regulatory developments that may impact firms engaged in the industry of new and innovative financial technology (“FinTech”). First, we discuss the Federal Deposit Insurance Corporation’s (“FDIC”) new guidance on examining third-party lenders, including the risks and potential takeaways for parties to marketplace lending (“MPL”) arrangements. Second, we examine the Office of the Comptroller of the Currency’s (“OCC”) recent proposed rule outlining a receivership framework for non-FDIC insured national banks, focusing particular attention on the implications for FinTech firms. We conclude with takeaways for MPL and FinTech firms to consider as they … Read more

Debevoise & Plimpton discusses SEC’s Guidance on Supervisory Liability for a Broker-Dealer’s Compliance and Legal Personnel

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On September 30, the staff of the Securities and Exchange Commission’s (the “SEC”) Division of Trading and Markets addressed an issue of great interest to the compliance and legal community concerning the circumstances under which the compliance and legal staffs of broker-dealers may be viewed as “supervisors” and thus face liability under the securities laws for failing to supervise firm employees.[1] The guidance, which appears in the form of responses to frequently asked questions (the “FAQs”), seems to confirm the industry’s long-held view that supervisory liability does not attach unless a compliance or legal employee truly functions in a supervisory

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Debevoise discusses SEC Amendments to Financial Responsibility and Custody Rules

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On July 30, the Securities and Exchange Commission (the “SEC”) adopted new rules with respect to broker-dealer financial responsibility and custody. The rules came in two separate rulemakings. The first concerns amendments to SEC Rules 15c3-1 and 15c3-3 (and related “books and records” and notification rules).[1] The second concerns new broker-dealer notification and audit requirements with respect to custody activities.[2]  In summary, the new rules and amendments:

  • Amend Rule 15c3-1 to, inter alia, clarify the regulatory capital treatment of (i) liabilities assumed by third parties, (ii) capital infusions that are, or are permitted to be, withdrawn within one year of

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