Reed Smith Client Alerts

Digital assets, popularly referred to as “cryptocurrencies”, “coins”, and “tokens”, continue to provoke regulatory attention and create discord amongst regulators. Recent actions by the U.S. Commodity Futures Trading Commission (“CFTC”) and the U.S. Securities and Exchange Commission (“SEC”) demonstrate that activities by the issuers of tokens may draw scrutiny from either or both agencies. As new token issuance schemes hit the market every day, cryptocurrency market participants must be cautious because multiple regulatory enforcement arms are becoming increasingly active in this rapidly evolving arena.


On September 27, we discussed the latest CFTC enforcement action involving cryptocurrencies in a client alert available here. In that case, the CFTC brought an enforcement action against a group of defendants for fraudulently soliciting investments for a pooled fund that traded the digital asset bitcoin. Interestingly, the pooled fund did not trade derivative instruments (e.g., futures, options, swaps). The CFTC nevertheless asserted its general jurisdiction over commodities under the Commodity Exchange Act. The CFTC’s view is that any digital asset-related transaction or solicitation that involves fraud or manipulation is within the CFTC’s territory.