Stablecoins in Commercial Transactions: UCC Issues With Formation and Payments on Blockchain, Regulatory Framework
Course Details
- smart_display Format
On-Demand
- signal_cellular_alt Difficulty Level
- work Practice Area
Banking and Finance
- event Date
Monday, August 2, 2021
- schedule Time
1:00 p.m. ET./10:00 a.m. PT
- timer Program Length
90 minutes
-
This 90-minute webinar is eligible in most states for 1.5 CLE credits.
This CLE course will discuss stablecoins in the context of commercial transactions, with a particular focus on UCC rules regarding settlement of payments, adverse claims, discharge of underlying obligations, and security entitlement. The panel discussion will include the current regulatory framework around stablecoins and blockchain and how it impacts financial transactions with stablecoin.
Ms. Simmons practices in the firm’s Financial Services and Capital Markets Groups, is head of its payments practice and co-head of its FinTech practice. She represents clients in the development of payments, settlement, clearing and other financial technology businesses and systems; in the structuring and development of financial products, novel securities and structured transactions; in insolvency related matters and resolution planning, including living wills; and in regulated transactions such as the development of new lines of business and corporate acquisitions. Ms. Simmons’ practice areas include U.S. banking and commodities laws and regulation, payments, technology and outsourcing matters, bankruptcy and insolvency issues relating to complex transactions, corporate restructuring, derivatives structuring and regulation, U.S. securities laws and capital markets transactions.
Ms. Nunn is Co-Leader of the firm’s Banking Industry Team. Her practice focuses on complex civil litigation, enforcement litigation, white collar defense, transactional due diligence, creation and review of corporate compliance programs, and investigations. Ms. Nunn also counsels on novel issues connected to new communication technologies, blockchain, cryptocurrencies, payments, artificial intelligence, and big data. She has handled high-stakes cases on behalf of a wide range of clients, including banks, financial services firms, fintech companies, pharmaceutical companies, technology companies, and private equity firms in connection with civil trials and hearings, regulatory investigations and enforcement proceedings, state licensing, product development, regulatory compliance, examination, transactional matters, False Claims Act investigations, antitrust disputes and consumer protection lawsuits.
Cryptocurrencies like bitcoin offer an accessible and borderless way to make payments, but price volatility and unpredictable transaction costs render them impractical for day-to-day use. Stablecoins are digital assets pegged to the value of another asset, often the U.S. dollar, thus increasing their acceptance as a medium of exchange in commercial transactions. Still, stablecoins present legal and regulatory issues.
Stablecoins differ from traditional financial infrastructures where transactions run through a licensed intermediary. They straddle the divide between currencies on the one hand and investment securities and commodities on the other. Counsel should understand the regulatory framework around stablecoins, including how they might be categorized by securities regulators and the current rules and guidance regarding custody and engagement by banks in blockchain networks.
Counsel must fully grasp fundamental concepts regarding settlement finality, rules for adverse claims, discharge of the underlying obligation, and the concept of a security entitlement. UCC Article 8 (securities) and UCC Articles 3, 4, and 4A (payment, adverse claims) offer a framework for understanding the rights and obligations of the parties to a transaction involving stablecoin.
Listen as our authoritative panel discusses the transactional and regulatory issues relating to stablecoins and best practices for counsel when transacting with these digital currencies.
- How a stablecoin is created
- Applying UCC concepts to stablecoin payments
- UCC Articles 3, 4, and 4A: settlement finality, adverse claims, discharge of the obligation
- Article 8: investment securities
- Bank regulatory concerns
- Securities regulatory concerns
- Central Bank Digital Currencies
The panel will review these and other key issues:
- How does a stablecoin vary from other cryptocurrencies, and how does it retain a stable value?
- What are some issues to consider when making payments on the blockchain?
- How can a bank take possession of custody as security for a loan?
- When will a stablecoin be regarded by regulators as a security? A commodity?
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