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Cryptocurrency
Legal Clarity in a Decentralized Financial Revolution
Cryptocurrency has transformed global finance—introducing new opportunities for investment, innovation, and inclusion. Yet, with its growth has come a complex and rapidly evolving regulatory landscape. Governments and enforcement agencies worldwide are redefining how digital currencies should be classified, taxed, and controlled under existing financial and securities laws.
At SJKP LLP, our Cryptocurrency Practice provides sophisticated legal counsel to clients operating across the digital asset spectrum—from early-stage blockchain startups to institutional investors, crypto exchanges, and payment platforms. We help clients anticipate regulatory trends, mitigate risk, and operate with confidence in compliance with both U.S. and international frameworks.
Our attorneys combine deep market insight with technical fluency, bridging the gap between innovation and regulation. Whether advising on licensing, token offerings, anti-money laundering compliance, or SEC enforcement defense, we deliver strategic guidance that empowers clients to thrive in the evolving world of digital finance.
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1. Understanding Cryptocurrency Regulation
Navigating a Fragmented and Evolving Legal Landscape
Cryptocurrency does not fit neatly into traditional regulatory categories. Depending on its function and structure, a digital asset may be treated as a security, commodity, property, or payment instrument. Understanding these distinctions is critical to maintaining compliance and protecting business continuity.
The Role of U.S. Federal Regulators
Multiple U.S. agencies assert authority over cryptocurrencies:
- - The Securities and Exchange Commission (SEC) treats certain tokens as securities under the Howey Test.
- The Commodity Futures Trading Commission (CFTC) oversees derivatives and commodities markets involving digital assets.
- The Financial Crimes Enforcement Network (FinCEN) enforces AML (Anti-Money Laundering) rules under the Bank Secrecy Act (BSA).
- The Internal Revenue Service (IRS) classifies cryptocurrencies as property, imposing capital gains taxes on transactions.
SJKP LLP assists clients in interpreting how these overlapping regimes apply to their business models, ensuring compliance across all relevant agencies.
State-Level Regulation and Licensing
In addition to federal oversight, many states impose their own money transmission and virtual currency licensing requirements. For example, New York’s BitLicense and similar frameworks in California and Florida mandate strict operational and cybersecurity standards. We help clients assess whether licensing is required, prepare filings, and design internal compliance systems that satisfy both state and federal expectations.
Global Regulatory Coordination
Cryptocurrency is inherently borderless—but the law is not. We guide multinational clients in harmonizing compliance obligations across jurisdictions, addressing issues such as cross-border AML reporting, OFAC sanctions compliance, and adherence to FATF travel rule standards.
2. Legal Structuring and Token Issuance
Building Compliant and Sustainable Cryptocurrency Offerings
For entrepreneurs and investors, token creation and issuance present both opportunities and risks. Regulators closely examine whether digital tokens qualify as securities or utility assets—and the consequences of misclassification can be severe.
Determining Token Classification
Our attorneys conduct detailed token classification analyses based on the token’s functionality, marketing, and network design. By applying tests established by the SEC, CFTC, and federal courts, we help clients determine whether their tokens qualify as:
- - Securities tokens (subject to SEC registration or exemption)
- Commodity tokens (governed by CFTC regulations)
- Utility tokens (used for network participation or access)
A correct classification from the outset protects clients from enforcement actions and builds investor confidence.
Structuring Token Offerings and Private Sales
We assist clients in structuring Initial Coin Offerings (ICOs), Security Token Offerings (STOs), and Private Placements under Regulation D, Regulation S, or other exemptions. Our counsel ensures that offering materials, investor disclosures, and marketing practices align with U.S. securities law while maintaining operational flexibility for global participation.
Smart Contracts and Governance Models
Legal enforceability remains crucial in decentralized ecosystems. SJKP LLP advises on the legal implications of smart contracts, DAO governance, and token-holder voting rights—ensuring that decentralized systems maintain accountability, transparency, and compliance with applicable laws.
3. Crypto Exchange Compliance and AML Obligations
Protecting Innovation Through Rigorous Compliance Frameworks
Crypto exchanges and custodians operate under significant regulatory scrutiny. Failures in AML, KYC, or sanctions compliance have led to some of the industry’s most high-profile enforcement actions.
Designing AML and KYC Programs
We help exchanges, DeFi platforms, and wallet providers design FinCEN-compliant AML programs, including policies for:
- - Customer due diligence (CDD) and beneficial ownership verification
- Suspicious activity reporting (SAR) procedures
- Transaction monitoring and recordkeeping
- OFAC sanctions screening and blockchain analytics integration
These programs protect both institutional integrity and consumer trust.
Responding to Enforcement and Investigations
Our team represents clients in regulatory audits and investigations initiated by the SEC, CFTC, DOJ, or state agencies. We prepare responses to subpoenas, negotiate settlements, and develop corrective compliance plans that minimize financial and reputational damage.
Custody, Consumer Protection, and Data Security
Beyond compliance, exchanges must safeguard user assets and data. SJKP LLP advises on custodial frameworks, insurance arrangements, and cybersecurity policies that align with evolving federal and state requirements—protecting both investors and operators from systemic risk.
4. Taxation, Reporting, and Cross-Border Implications
Clarifying the Financial Responsibilities of Crypto Ownership
As crypto adoption grows, taxation and reporting have become central to legal compliance. Misreporting can trigger audits, penalties, or even criminal exposure.
Cryptocurrency Tax Treatment and Reporting
Under IRS guidance, cryptocurrency is treated as property, meaning each transaction—whether sale, exchange, or payment—can generate a taxable event. Our tax attorneys assist individuals and corporations in:
- - Calculating capital gains and losses
- Reporting transactions on IRS Form 8949 and Schedule D
- Managing Form 1099-DA compliance for exchanges and brokers
- Structuring entities to optimize tax efficiency
International Transfers and FATCA/FATF Obligations
Global operations often trigger FATCA reporting and FATF travel rule requirements. We guide multinational clients in implementing protocols for transaction traceability and record retention, ensuring compliance with cross-border information-sharing standards.
Estate Planning and Corporate Holdings
Cryptocurrency is now a recognized asset class in estate planning and corporate balance sheets. We help clients document ownership, design succession structures, and address custody and transfer risks associated with crypto-based estates or corporate treasuries.
5. Regulatory Enforcement, Litigation, and Defense
Protecting Clients in High-Stakes Crypto Disputes
The cryptocurrency industry has become a focal point for enforcement by U.S. regulators. As agencies refine their policies, investigations and litigation are accelerating.
SEC and DOJ Enforcement Actions
SJKP LLP represents clients facing investigations related to unregistered securities offerings, market manipulation, and fraud allegations. We engage directly with SEC enforcement divisions and DOJ prosecutors, preparing detailed responses, defending against charges, and pursuing favorable settlements or dismissals.
Private Litigation and Investor Disputes<
We defend companies and executives in class actions and shareholder lawsuits arising from token sales or exchange practices. Our approach blends aggressive advocacy with a strategic focus on dispute resolution and reputational preservation.
Internal Investigations and Risk Assessments
Our firm also conducts internal audits and compliance reviews to detect and mitigate potential violations before they escalate. By identifying weaknesses early, we help clients strengthen internal controls and demonstrate proactive compliance to regulators.
6. Why Choose SJKP LLP for Cryptocurrency Matters
Global Perspective. Legal Precision. Future-Proof Strategies.
At SJKP LLP, we believe that cryptocurrency represents not just technological progress, but a new era of financial freedom—and with it, new responsibilities. Our Cryptocurrency Practice helps clients navigate this evolving environment with foresight, rigor, and integrity.
We have advised crypto exchanges, DeFi developers, institutional investors, and token issuers on building compliant, scalable, and legally resilient operations. Our lawyers combine regulatory expertise with an entrepreneurial mindset—allowing us to craft legal solutions that protect innovation while meeting the highest standards of compliance.
From early-stage structuring to complex enforcement defense, we stand beside our clients at every step of their crypto journey.
At SJKP LLP, we don’t just interpret the law—we help shape how it applies to the future of digital finance.
The information provided in this article is for general informational purposes only and does not constitute legal advice. Reading or relying on the contents of this article does not create an attorney-client relationship with our firm. For advice regarding your specific situation, please consult a qualified attorney licensed in your jurisdiction.
Certain informational content on this website may utilize technology-assisted drafting tools and is subject to attorney review.
