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ARTICLE · 16 APRIL 2018

Regulators And Courts Clarify Virtual Currency Regulation, But Overall Framework Remains Murky

A&O Shearman
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This update serves to cover virtual currency regulatory developments over the past two months in the U.S., U.K. and EU.

United StatesTechnology
Donna Parisi
Donna Parisi
Geoffrey Goldman
Geoffrey Goldman
Lona Nallengara
Lona Nallengara
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Introduction

This update serves to cover virtual currency regulatory developments over the past two months in the U.S., U.K. and EU. This follows our previous virtual currency regulatory updates1 as part of Shearman & Sterling's FinTech initiative, and we will continue to keep a close eye on these developments as they unfold.

Federal Court Upholds That Virtual Currencies Are Commodities

On March 6, 2018, the United States District Court for the Eastern District of New York confirmed that virtual currencies are commodities within the anti-fraud jurisdiction of the Commodity Futures Trading Commission (CFTC).2 The order, which came in the form of a preliminary injunction, follows the CFTC's January 18, 2018 civil enforcement action against Patrick K. McDonnell and his company CabbageTech, doing business as Coin Drop Markets (CDM), alleging that McDonnell had induced customers to send money and virtual currencies to CDM in exchange for virtual currency trading

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