As reported earlier by The New York Times (NYT) and Bitcoin Magazine[1], Intercontinental Exchange (ICE), parent company of the New York Stock Exchange (NYSE), is developing an online trading platform that would allow large investors to trade bitcoin directly. As news about the ICE platform continues to develop, Bitcoin Magazine spoke with lawyers Ben Sauter and Dave McGill of Kobre & Kim, a New York City law firm which specializes in disputes and investigations, to examine the regulatory issues surrounding the launch of such a platform, including swap contracts and the implications the ICE platform might have on cryptocurrency trading in the future.
Sauter and McGill are also participating lawyers in the Digital Currency & Ledger Defense Coalition[2] (DCLDC), a coalition of lawyers and academics whose collaborated effort focuses on understanding the regulatory and legal issues surrounding cryptocurrencies and blockchain technology to protect individual constitutional rights and civil liberties in connection with regulatory and law enforcement scrutiny.
For a large financial institution such as ICE or Goldman Sachs, figuring out how to develop a cryptocurrency trading platform is a potentially complicated analysis that begins with the question of whether or not a cryptocurrency is a security. If a cryptocurrency is deemed a security by the Howey test[3], “there are a lot more regulatory requirements,” according to McGill.
While many people agree, including Peter Van Valkenburgh[4], director of research at the Coin Center, that the Howey test can act as the ultimate clarifier of which cryptocurrency is a security and which is not; the distinction is also important for another reason. Ultimately, the Howey test gives guidance in which regulatory agency polices which cryptocurrency. At this point, securities fall under the U.S.
