Crypto and Digital Asset Attorneys
Regulatory status analysis, licensing, and compliance counsel for businesses that issue, hold, move, or trade digital assets anywhere in the United States.
A digital asset business faces the same question from three directions at once. Is the asset a security under the federal securities laws? Is the business a money transmitter under the Bank Secrecy Act and the state money transmission statutes? Is it a virtual currency business under a state regime such as New York’s? The answers depend on what the asset is, what the business does with it, and where its customers are, and the answer under one framework does not decide the answer under the others.
Industria Business Lawyers advises token projects, custodians, wallet providers, payment platforms, exchangers, and operating companies that accept or hold digital assets on where they stand under each framework and what registration, licensing, or program obligations follow. The work usually begins with a written regulatory status memo and continues into the licensing, compliance, and documentation the memo calls for.
Every project is different, and not every model triggers every rule. The value is in knowing which rules apply to yours before a regulator, a bank, or a counterparty asks.
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Find Out Which Rules Apply to Your Project
Digital Asset Questions We Handle
The federal and state rules were written for banks, brokers, and money transmitters and are applied to digital assets by definition and guidance. These are the questions that decide a project’s regulatory footprint.
Whether the Asset Is a Security
Section 2(a)(1) of the Securities Act defines a security to include a note, stock, bond, evidence of indebtedness, and an investment contract, among other instruments. Whether a particular token or arrangement falls inside that definition depends on how it was sold, what the purchaser expects, and who is doing the work. We analyse the asset and the offering against the statutory definition and document the conclusion.
Whether the Business Is a Money Transmitter
FinCEN guidance FIN-2019-G001 states that exchangers and administrators of convertible virtual currency generally qualify as money transmitters under the Bank Secrecy Act while users do not, and that the treatment of an intermediary depends on who owns the value, where it is stored, who controls it, and how it moves. A money transmitter must register with FinCEN, maintain a written anti money laundering program, and consider state licensing. Our money transmitter licensing page covers that analysis. Whether a platform must also register with FinCEN as a money services business, and the 180-day deadline that applies, is covered on our FinCEN MSB registration page.
State Virtual Currency Licensing
New York provides that no person shall, without a license obtained from the superintendent, engage in any virtual currency business activity, which its regulation defines to include receiving virtual currency for transmission, storing or holding custody of virtual currency on behalf of others, and buying and selling virtual currency as a customer business, where the activity involves New York or a New York resident. Other states fold virtual currency into their money transmission statutes, as Florida does. We identify which state regimes reach your customers.
Custody, Wallets, and Control of Customer Assets
Whether a business holds customer assets, holds keys, or can direct a transfer decides much of its status under both the money transmission rules and state virtual currency regimes. We review the technical architecture and the customer agreements together, because the regulator will look at both.
Trading Platforms and Exchanges
A platform that brings together buyers and sellers may raise exchange, broker dealer, or alternative trading system questions under the Exchange Act if the assets traded are securities, and money transmission questions if they are not. Our exchange and trading platform page covers the analysis.
Compliance Programs and Documentation
Once status is settled, the business needs the documents that go with it: the anti money laundering program, the customer terms, the custody and transfer policies, and the disclosures a bank partner or state examiner will ask for. Our AML compliance page covers the program in detail.
Three Frameworks, One Business
The securities laws, the Bank Secrecy Act, and state licensing statutes each ask a different question about the same activity.
Securities. The question is about the asset and the offering. If the asset is a security, the registration and exemption rules of the Securities Act apply to its sale, and anyone effecting transactions in it for others may be a broker under section 3(a)(4) of the Exchange Act, which defines a broker as any person engaged in the business of effecting transactions in securities for the account of others.
Money transmission. The question is about the flow of value. If the business accepts value from one person and transmits it to another, or exchanges virtual currency for real currency or other virtual currency as a business, the federal money transmitter rules and the state money transmission statutes are engaged regardless of whether the asset is a security.
State virtual currency regimes. The question is about the activity and the customer’s location. New York’s regulation reaches transmission, custody, exchange, and issuance activity involving New York or a New York resident. A business can be outside the securities laws and still need a state license, or exempt from state licensing and still need to register with FinCEN.
What that means in practice. A single memo that answers all three questions for the specific model, and a compliance build that follows from the answers, is the foundation for everything the business does next.
What Our Clients Say About Us
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I would recommend working with Aaron and team.”
Julien Genestoux from Unlock, Inc
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They consistently deliver thorough and timely work. For any small business looking for dependable and knowledgeable corporate counsel, we wholeheartedly recommend IBL.”
Felipe Pinto from Revolve Labs
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As a result, we’ve continued to rely on them as our go-to legal counsel for ongoing corporate matters.”
Zachary Panos from Fourcaster LLC
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The attorneys were incredibly responsive, guiding me through every step of the process with clarity and professionalism. They took the time to address all my questions and concerns, ensuring that I felt confident in each decision we made. Their attention to detail and thoroughness were evident in the documents they prepared, which gave me peace of mind knowing that everything was handled properly. What stood out most was their commitment to my vision. They not only provided legal advice but also offered valuable insights into the industry, helping me navigate potential challenges and seize opportunities. Their strategic approach was instrumental in setting up a robust fund structure that aligns with my goals. Overall, working with IBL was a fantastic experience. They made a complex process manageable and stress-free. Thank you for your outstanding support.””
Jeff from Solar Carbon Credit Fund
Tell Us About Your Matter
How We Work a Digital Asset Regulatory Matter
Model and Asset Review +
What the asset is and how it was or will be distributed, what the business does with it, what it holds or controls, and where its customers are.
Securities Analysis +
The asset and the offering against the statutory definition of a security, with the conclusion and its basis in writing.
Money Transmission Analysis +
The flow of value against the federal money transmitter definition, its exclusions, and FinCEN’s virtual currency guidance.
State Licensing Assessment +
Each state where customers are, against that state’s money transmission statute and any virtual currency regime, with New York addressed specifically where it applies.
Regulatory Status Memo +
A single written memo covering all three frameworks, written so that the business, its bank, and any future acquirer can rely on it.
Licensing and Registration +
FinCEN registration, state applications, and any securities filings the memo calls for.
Compliance Build and Maintenance +
The anti money laundering program, customer agreements, custody policies, and ongoing updates as the model or the rules change.
FAQ
01 • Digital Assets Is my token a security?
It depends on what it is and how it is sold. The Securities Act defines a security to include an investment contract among many other instruments, and the analysis turns on the facts of the offering and the purchaser’s expectations. A written analysis of the specific asset is the only reliable answer.
02 • Digital Assets Does a crypto business need to register with FinCEN?
If it is a money transmitter. FinCEN’s 2019 guidance states that exchangers and administrators of convertible virtual currency generally qualify as money transmitters while users do not. A money transmitter must register under 31 CFR 1022.380 and maintain a written anti money laundering program.
03 • Digital Assets Do I need a New York BitLicense?
New York requires a license to engage in virtual currency business activity involving New York or a New York resident, which its regulation defines to include transmission, custody, exchange, and issuance activity. Whether a particular business’s activity involves New York or its residents is the first question.
04 • Digital Assets If my asset is not a security, am I unregulated?
No. The money transmission rules and state licensing regimes apply to the flow of value regardless of whether the asset is a security. A business can be outside the securities laws and still need FinCEN registration and state licenses.
05 • Digital Assets What does a regulatory status memo cover?
The securities question, the money transmission question, and the state licensing question for the specific model, each answered separately with the statutes, rules, and guidance relied on, and a list of the registrations, licenses, and program documents the answers require.
Talk to a Digital Asset Regulatory Attorney
Token projects, custodians, exchangers, and operating companies anywhere in the United States. Call (202) 860-1210 or describe your model through the form. Every project is different, and not every model triggers every rule. We will tell you which frameworks apply to yours and what follows from each.
This page provides general information about the regulation of digital assets under federal securities law, the Bank Secrecy Act, and state licensing statutes and does not constitute legal advice. Reading it does not create an attorney client relationship. Statutes, rules, and guidance cited were reviewed on the date this page was last updated and are subject to change. The regulatory status of a particular asset or business depends on its specific facts.