Compliance Hot Spots: Treasury's Top Lawyer Says Crypto Poses Regulatory 'Imperatives' | Facebook Snags DOJ Antitrust Lawyer | Who Got the Work
Welcome to Compliance Hot Spots, our briefing on compliance, enforcement and government affairs. The U.S. Treasury's general counsel says the agency is preparing a detailed look at the regulatory "imperatives" that cryptocurrencies pose. Plus: Facebook's hired a top US Justice Department antitrust lawyer, and scroll down for our regular installment of Who Got the Work. Thanks, always, for reading this newsletter—and your feedback is welcome. Contact me at cbarber@alm.com or 202-828-0315, and follow me on Twitter @cryanbarber.
Treasury's Top Lawyer Says Crypto Poses Regulatory 'Imperatives'
As the U.S. Treasury Department prepared a report on financial technology earlier this year, it delved into transformations in lending and payments—and explored how changes in regulation could help spur continued innovation.
Largely unaddressed in the 200-page report was perhaps the hottest topic in the fintech world: cryptocurrencies. But the Treasury Department will be speaking up soon.
On Tuesday, during an event at the U.S. Chamber of Commerce, the Treasury Department’s top lawyer, Brent McIntosh, signaled that regulators will come out early next year with a clearer articulation of the federal government’s approach to cryptocurrencies.
“We have a number of work streams going, we meet regularly on it, and I would expect that early next year we will have something—I don’t know whether it’s going to take the shape of a report or not—but we’re going to come to a landing ground on how we think about cryptocurrencies,” McIntosh said.
McIntosh, a former Sullivan & Cromwell partner who sold off up to $30,000 in bitcoin after joining the Trump administration, said regulators “have an interest in getting out of the way of good, responsible innovation and letting it happen.” Still, he said, “there are certain imperatives that we are not going to quit chasing merely because the word ‘crypto’ is tacked in front of the asset or the currency.”
“We are not going to sit by while cryptocurrency becomes a safe haven for illicit finance or financing of terrorism or money laundering. ‘Crypto’ is not a synonym for immune from the rule of law,” he added.
In spite of the immense interest in digital assets, cryptocurrency issues don’t actually take up much of McIntosh’s time. “Cryptocurrencies take up about 5 percent of my time at Treasury,” he said, “and they’re about 80 percent of the questions I get” at speaking engagements.
Treasury Secretary Steven Mnuchin convened a working group under the interagency panel to coordinate regulators’ review of cryptocurrencies, McIntosh said. The group is working under that panel, the Financial Stability Oversight Council, “not because we regard cryptocurrencies as a financial stability challenge—at this point, we do not—but because it had all the right parties in the same place,” he said.
>> More reading over at Bloomberg:Goldman Says Regulatory Hurdles Prevent Holding of Crypto Assets /// “One of the things they ask me is ‘Can you hold our coins?’ and I say ‘No, we cannot,” said Justin Schmidt, head of digital asset markets. “One of the things we have to take into consideration when we’re building out our business is what we can and cannot do from a regulatory perspective.”
Compliance Headlines: What We're Reading
>> "A Federal Trade Commission staff comment released this week signifies that the FTC intends to hold its ground as a present and future player on privacy and data security issues—and that’s good news for in-house counsel," according to my colleague Sue Reisinger, writing at Corporate Counsel. Victoria Redgrave, former in-house litigation counsel, said a big take-away from the report is that the agency's approach remains consistent despite the fact the commissioners are relatively new at the agency.
>> Mark Robbins, a member of the Merit Systems Protection Board, "is a one-man microcosm of a current strand of government dysfunction. His office isn’t a high-profile political target. No politician has publicly pledged to slash his budget. But his agency’s work has effectively been neutered through neglect." Robbins, through a series of events, is the sole member, and chairman, of the board. And he can't do anything without another member. Here's the full AP story.
>> Lawyers from Davis Polk & Wardwell have a new post up at NYU School of Law's Program on Corporate Compliance and Enforcement titled "SEC Debuts Roadmap for Resolving Illegal ICOs." From the post: "The ultimate message to the hundreds of companies that may have conducted illegal ICOs in the past few years seems to be that the SEC will force you to unwind the transaction, force you to file public company reports, and fine you to boot."
>> "DLA Piper and Hogan Lovells have teamed up with global crypto-asset leaders to found a new industry body aiming to support growth in the sector and implement a code of conduct for those operating in this emerging line of work," according to The American Lawyer.
>> "A compliance monitor for Standard Chartered PLC’s New York branch, put in place following settlements concerning sanctions and money-laundering failures, will no longer be required after Dec. 31," The Wall Street Journal reports. The bank, effective Jan 1., will have an independent consultant to work on compliance matters, according to WSJ. Navigant Consulting Inc.'s Ellen Zimiles had served as the compliance monitor.
Who Got the Work
>> "Embattled auto industry titan Carlos Ghosn has hired top-gun corporate defense lawyers Brad Karp and Michael Gertzman of Paul, Weiss, Rifkind, Wharton & Garrison in New York to fight allegations that he underreported his income and misused company money, according to a source familiar with the matter," my colleague Phillip Bantz reports at Law.com.
>> A team from Akin Gump Strauss Hauer & Feld has registered to lobby for the software company Palantir Technologies, according to a new registration. The Akin team—Ryan Thompson and John Gilliland—will advocate on "information technology issues" at the U.S. Department of Agriculture.
>> San Francisco-based Juul Labs, the vaping company making headlines, has bolstered its lobbying engagement in Washington. The company recently teamed up with Empire Consulting Group on issues regarding legislation and FDA regulation relating to e-cigarettes and vaping. Covington & Burling in late October registered to lobby for Juul. The company said this month it would temporarily stop selling certain flavored products as the FDA stepped up regulatory oversight.
>> Barnes & Thornburg inked a $50,000 contract with the Embassy of Hungary "directed primarily at religious freedom and immigration issues," according to a new U.S. Justice Department filing. Craig Burkhardt, a Washington-based partner at the firm, is the lead attorney on the engagement.
Notable Moves & New Hires
>> Facebook recently beefed up its in-house legal team, hiring Kate Patchen, a top U.S. Justice Department antitrust lawyer in San Francisco. Patchen had been a trial attorney in the office from 2004 to 2014, before she was promoted to assistant chief. Financial Times first reported the move, and Business Insider has more here.
>> Duane Pozza, a former assistant director in the FTC’s consumer protection bureau, has joined Wiley Rein as a partner in the firm’s telecom, media and technology practice. My colleague Ryan Lovelace has more here. Wiley Rein described Pozza as the “go-to” attorney for fintech matters at the FTC. “Duane brings an impressive combination of private and government experience in emerging technologies,” Wiley Rein managing partner Peter Shields said in a statement. “His mastery of compliance, regulations, and policy—along with his private-practice litigation experience—will help clients stay ahead of the curve in this fast-moving area.”
>> Mike Lempres, Coinbase’s former chief legal officer, has left the crypto company for venture capital firm Andreessen Horowitz, an early Coinbase investor. Lempres told my colleague Caroline Spiezo: “I’ve been looking for a transition for a while. Not from Coinbase, I love Coinbase. It was time. The hypergrowth is tough to go through. It’s great to go through, but presents some stresses. This gives me an opportunity to take a step back, which is what I’ve wanted to do. Advise some folks. Andreessen Horowitz is probably the greatest place on earth to be doing this.” The Recorder
>> John Wood, the new general counsel to the U.S. Chamber of Commerce, is seeking a higher profile for the litigation center. Wood recently hired former U.S. Justice Department lawyer Daryl Joseffer as chief counsel for appellate litigation, and he brought on former McGuireWoods appellate lawyer Jonathan Urick as senior counsel. Wood spoke with my colleague Sue Reisinger over at Corporate Counsel. Read the full interview here.
