[co-author: Rebecca Friedemann]

Department of Justice announces criminal and civil cryptocurrency initiatives as Securities and Exchange Commission Chair Gensler continues to develop the agency’s regulatory and enforcement agenda.

TAKEAWAYS

• Despite an unsettled regulatory landscape surrounding digital assets, expect the SEC to deem many digital assets to be securities, as it continues aggressively policing the cryptocurrency markets and asserting an expansive view of jurisdiction.

• DOJ’s implementation of both criminal and civil enforcement initiatives creates additional risk for participants in the digital asset markets, particularly with respect to cybersecurity, the False Claims Act and anti-money laundering violations.

• Mindful of the trends in regulation and enforcement activity, market participants should review their policies, procedures, systems and controls to ensure compliance with all applicable laws and consult with counsel when necessary.

From the moment that Gary Gensler’s name was floated as President Biden’s likely pick to lead the Securities and Exchange Commission (SEC), market participants assumed that digital assets would emerge as a regulatory and enforcement priority for the Commission. On the regulatory front, Chair Gensler’s position seems to be that the Howey test provides adequate guidance in the digital realm (frustrating many commenters who hoped that Gensler would agree with the crypto industry regarding the need for a broad new regulatory...

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