Digital Assets, the Regulatory Void and Director Oversight

September 13, 2021

In an article published by The Review of Securities & Commodities Regulation, asset management partner and Chicago Office Managing Partner Paulita Pike and Senior Attorney David Geffen provide an overview of fund directors’ oversight of investments in cryptocurrencies and other digital assets.

In the piece, after noting the absence of tested market infrastructure and of regulation for this new asset class, Paulita and David focus first on technical considerations of blockchain technology and the limited regulatory jurisdiction of the SEC, the CFTC, and federal banking regulators. They then turn to the implications that the absence of infrastructure and regulation has for boards, including oversight of new service providers, and issues surrounding custody, valuation, and liquidity of digital assets. Consequently, their closing thought is that, as digital assets find their way into registered products, boards will need to be more diligent and sophisticated in their scrutiny and oversight of this new asset class.