What to be Thankful for in Payments and Crypto

At Adam Atlas Attorneys at Law we are thankful to our clients for engaging us for legal advice in support of their visionary ideas.

1. Digital Payments Explosion. With Covid rendering cash dirtier than usual (‘lol’) nearly everyone in electronic payments is breaking records, including AmazonShopifyPaypalAdyen and Square. Rapid migration from f2f to online sales has created a lot of activity for new and existing payfacsISOs and other payment processors.

2. Wirecard. Other than producing one of the top three payments videos of all time (the other two being about lawyers who help launder money and the unforgettable and classic bitconnect video), the Wirecard fiasco has given all investors and payments companies alike a stiff reminder that they too must answer to reality. It has also created opportunities for investors to pick up some of the good parts of Wirecard.

3. Cryptocurrency Enforcement Framework from the U.S. Department of Justice. Author of the framework, Attorney General William Barr said, “Cryptocurrency is a technology that could fundamentally transform how human beings interact, and how we organize society.  Ensuring that use of this technology is safe, and does not imperil our public safety or our national security, is vitally important to America and its allies.” To that end, the framework sets out the threats, illicit uses and enforcement strategies under the law. Here is a short summary of the framework. At a minimum, crypto businesses should adhere to BSA best practices in AML and risk mitigation and take advantage of the many third party services that help scrub addresses and users for sanctionsdark web and illegal activity.

4. DeFi. For those who missed Bitcoin’s early leaps in value, or the ICO moment, there is now DeFi. Decentralized finance platforms, such as Uniswap and Curve offer the theoretically irresistible opportunity to eliminate centralized exchanges and their fees by allowing users to trade peer-to-peer at a discount through secure and trustless contracts mostly on the Ethereum blockchain. Meanwhile, liquidity providers for the platform earn fees (governance tokens) in consideration for allowing their assets to serve as liquidity in the decentralized exchange. Here is a list of the sixteen largest DeFi platforms together with some notes on them. Like all new crypto services, DeFi has had a handful of blunders, such as the hack at Harvest and the other hack at bzx. A lot of legal work remains to be done (by us 😉 on these platforms.

5. Banks Taking Crypto. The OCC has published guidance expressly permitting banks to accept fiat as reserves for stablecoins. This is a tip-of-the-hat to stablecoins that have already been licensed in states like New York are building impressive balances and backing eye-watering transactions on a daily basis. The OCC guidance does not, however address the many stablecoins that do not track who actually holds them, in the way that a bank account tracks who holds an account.  Wyoming has become the darling of crypto by granting charters to Special Purpose Depository Institutions that can take Bitcoin and other crypto on deposit. There is no news on whether those institutions will end up also needing other state MSB licenses as some other trusts have learned. Here is our running tally of www.banksthattakebitcoin.com – there are 5.

Wishing you a very Happy Thanksgiving and Holiday Season!