United States: Ask Me Anything: Fenwick Lawyers Talk Blockchain And Cryptocurrency

Last Updated: October 7 2019
Article by Can Sun and Daniel S Friedberg

Innovators in the rapidly evolving blockchain and cryptocurrency space must navigate a variety of important legal and regulatory considerations. Fenwick blockchain co-chairs Can Sun and Dan Friedberg teamed up with ObEN for an Ask Me Anything session on Reddit, sharing their insights on community questions. Read on for their answers to 10 of the top questions from the community:

1. How has education at the university level integrated blockchain in business courses or tech courses? Did you go to college for a specific degree and then learn about blockchain and crypto post grad?

Most colleges do not offer blockchain majors (yet!), though a small handful of universities have started introducing programs as well as certificate courses, including NYU, MIT and Stanford. Many universities also offer at least one or two classes relating to blockchain and cryptocurrencies. The basics of blockchain technology are often covered by advanced computer science or mathematics classes such as cryptography as well. We have found the best background training is in computer science or mathematics.

2. If I'm thinking about doing an ICO for my project, what are the common things I have to look out for to make sure I'm doing things legally?

An ICO, or initial coin offering, comes in many flavors and formats, but often involves a sale of tokens or other cryptocurrency to the public. An ICO must comply with the laws applicable to both the issuer and any investors. The United States has the most stringent laws. A threshold question that must be considered prior to conducting an ICO is whether the tokens or cryptocurrency constitute "securities" in an applicable jurisdiction, and if so, the securities laws must be complied with. Another important area involves compliance with know-your-customer (KYC) and anti-money laundering rules. There are also tax, employment and intellectual property considerations. It is important for you to seek qualified legal advice with respect to any ICO.

3. I live in California, and I wonder why states can't mandate their own policies on crypto. Congress is always making a big deal about states' rights, and states being the laboratories of democracy. But other countries like South Korea are way more forward thinking and have implemented special "regulation-free zones," like Busan. How can we get the same sort of thing for California?

The laws governing cryptocurrencies often fall within the purview of federal agencies. That being said, there are some areas of the law that remain reserved to the states, or where state regulatory agencies have concurrent jurisdiction, and some states (most notably Wyoming) have taken a more liberal approach toward the regulation of cryptocurrencies. It is also true that other countries are more willing to experiment with this new industry. You can always speak with your local representatives regarding grassroots efforts to change cryptocurrency laws to make your state more favorable to cryptocurrency. At the federal level however, congressional action would be required to change existing laws, and while several bills have already been proposed in recent years, a wholesale revamp of existing laws looks highly unlikely at this point.

4. What countries are most favorable for cryptocurrency?

Singapore and Malta are often considered favorable jurisdictions. Japan, Gibraltar, Estonia, as well as many countries in Africa and Southeast Asia have also taken steps to promote the use of cryptocurrencies.

5. What is the difference between a cryptocurrency and a crypto that is considered a security?

"Cryptocurrency" is a broadly used term to refer to any digital asset on a blockchain, and can come in a variety of flavors. Security tokens are a subset and represent those cryptocurrencies that are securities under the laws of their jurisdiction. Each jurisdiction has its own laws and regulations for determining whether a cryptocurrency is also a security. In the United States, we have the Howey test, which considers a token to be a security if there is an investment of money by the purchaser in a common enterprise with an expectation of profits solely or predominantly from the efforts of others. As you can imagine, this is a highly factual test and needs to be analyzed in light of the specific circumstances of each cryptocurrency.

6. What happens if I own crypto that has been deemed a security? Can I no longer trade it if it is on an exchange?

If the cryptocurrency is treated as a security in your jurisdiction, you can only trade it if the cryptocurrency is either registered or an exemption from registration is available. Most cryptocurrency exchanges are not licensed to trade securities.

7. What are the biggest legal barriers to an ETF being granted?

The biggest barrier to an ETF, or exchange-traded fund, being granted is that the U.S. Securities and Exchange Commission must approve the financial instrument. Currently, the SEC remains concerned about digital asset custody issues as well as market manipulation.

8. If I'm under 16 and I have been investing in crypto, do I need to report my investment gains?

Yes, even minors generally need to comply with all tax laws.

9. Is the SEC lawsuit against KII supposed to set an example [out there that] they want law to be enforced by courts? And if successful, the SEC can go after bigger players? As an entrepreneur in the crypto space, what kind of offerings are currently considered safe and legal?

Unfortunately, we're unable to speak to the specifics of any particular lawsuit or company. However, we do want to note that it is possible to structure a token offering in compliance with U.S. laws. The specifics will depend on the nature of your tokenomics and business model, the technology, as well as how funds are raised and used.

10. What if you are working in the United States on a visa? Are your crypto earnings considered taxable? Only income earned in the U.S. is supposed to be taxable and crypto trading profits by definition is earned on the internet, not in any country.

We're unable to comment generally on individual tax liabilities as it depends on your specific circumstances, but we note that generally, under U.S. tax laws, a U.S. taxpayer must report income earned anywhere in the world to the IRS under a variety of rules and regulations, and it does not matter where the trading gain occurs.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
14 Oct 2019, Conference, Washington, United States

Privacy+Security Academy will host Privacy+Security Forum as a three-day conference that breaks down the silos of privacy and security by bringing together seasoned thought leaders.

16 Oct 2019, Briefing, California, United States

Practising Law Institute to host a live one-hour briefing on "How AI Can Help Lawyers - Today and Tomorrow."

22 Oct 2019, Other, New York, United States

DLaw will be hosting a two-day summit on Disruptive Innovations in Legal Services providing a meaningful exploration of digital technology for the legal services professionals from specific emerging tools to new business models to creative client acquisition and retention strategies.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions