The Next Frontier: Virtual Currencies - Unclaimed Property ...
The Next Frontier: Virtual Currencies Presented by: Sara A. Lima Reed Smith LLP
Wilson Barmeyer Sutherland Asbill & Brennan LLP
UPPO Presentation Disclaimer Use of the Unclaimed Property Professionals Organization, Inc., (UPPO) name of copyrighted materials in this presentation does not constitute an endorsement by UPPO of a member, vendor, product or service. The content represents the opinions of the author and not necessarily those of UPPO. This information is not intended as legal advice and should not be used to replace the advice of legal counsel.
UPPO Antitrust Statement UPPO has a policy of strict compliance with U.S. federal antitrust laws. UPPO members and/or meeting attendees cannot come to understandings, make agreements, or otherwise concur on positions or understandings, make agreements, or otherwise concur on positions or activities that in any way tend to raise, lower or stabilize prices or fees. Members and/or attendees can discuss pricing models, methods, systems, and applications, as well as certain cost matters that do not lead to an agreement or consensus on prices or fees to be charged. However, there can be no discussion as to what constitutes a reasonable, fair or appropriate price or fee to charge for any service or product. Information may be presented with regard to historical pricing activities so long as such information is general in nature and does not include data on current prices or fees being charged in any trade area. Any discussion of current or future prices, fees, discounting, and other terms and conditions of sale, which may lead to an agreement or consensus on prices or fees to be charged, is strictly prohibited.
Today’s Agenda • Describe what “virtual currencies” are and discuss various categories • Relate these technologies to unclaimed property principles and identify existing guidance • Summarize best practices given evolving legal landscape
What is Virtual Currency • Virtual Currency: – Digital representation of value – Can be digitally traded – Functions as: • Medium of exchange; and/or • Unit of account; and/or • Store of value
– Does not have legal tender status
Types of Virtual Currency • Convertible vs. Non-Convertible Virtual Currency – Convertible virtual currency has equivalent value in fiat currency and can be exchanged for fiat currency (e.g., Bitcoin and Dogecoin) – Non-convertible virtual currency exists in a specific online domain and cannot be exchanged for fiat currency (e.g., Amazon credits, World of Warcraft Gold).
Types of Virtual Currency • Centralized vs. Decentralized Virtual Currency – Centralized virtual currency has single third party administrator that sets rules for the virtual currency’s use, maintains currency ledger and may redeem virtual currency. – Decentralized virtual currency is distributed, open-source, math-based peer-to-peer virtual currency that have no central administrating authority, and no central monitoring or oversight
Virtual $ and Unclaimed Property • • • • • • •
What is the property? When is it dormant? How can you remit it? Who is the holder? Who is the owner? Which state gets it? What do they get?
Lots of Questions… Very few answers…
What IS it?
Potential Paradigms • Similar to Gift Cards? – May be relevant for nonconvertible virtual currencies
• Similar to Stock? – May be relevant for convertible currencies
• Similar to Deposit Accounts?
What IS It and Practical Considerations for Reporting
Who is the holder?
Who is the holder? –
Intermediaries • • •
–
Vendor agreements • •
– –
Delaware vs. New York Young America rebate cases Delaware v. Card Compliant FCA action (pending) Reporting obligation Indemnity
Custody & Possession vs. Obligation & Liability Planning
Who is the Owner? • • • •
Issues with fraud and definition of “apparent owner” First or second priority? Due diligence? Holder liability for wrongful escheat
Audit & Compliance
• Record retention • Reconciliation process • Legal developments/ambiguities: Best practices for preserving holder rights
Questions? Recommendations?
Contact Information Sara A. Lima Reed Smith LLP 215 851 8872 [email protected] Wilson Barmeyer Sutherland Asbill & Brennan LLP 202.383.0824 [email protected]
Wilson Barmeyer Sutherland Asbill & Brennan LLP
UPPO Presentation Disclaimer Use of the Unclaimed Property Professionals Organization, Inc., (UPPO) name of copyrighted materials in this presentation does not constitute an endorsement by UPPO of a member, vendor, product or service. The content represents the opinions of the author and not necessarily those of UPPO. This information is not intended as legal advice and should not be used to replace the advice of legal counsel.
UPPO Antitrust Statement UPPO has a policy of strict compliance with U.S. federal antitrust laws. UPPO members and/or meeting attendees cannot come to understandings, make agreements, or otherwise concur on positions or understandings, make agreements, or otherwise concur on positions or activities that in any way tend to raise, lower or stabilize prices or fees. Members and/or attendees can discuss pricing models, methods, systems, and applications, as well as certain cost matters that do not lead to an agreement or consensus on prices or fees to be charged. However, there can be no discussion as to what constitutes a reasonable, fair or appropriate price or fee to charge for any service or product. Information may be presented with regard to historical pricing activities so long as such information is general in nature and does not include data on current prices or fees being charged in any trade area. Any discussion of current or future prices, fees, discounting, and other terms and conditions of sale, which may lead to an agreement or consensus on prices or fees to be charged, is strictly prohibited.
Today’s Agenda • Describe what “virtual currencies” are and discuss various categories • Relate these technologies to unclaimed property principles and identify existing guidance • Summarize best practices given evolving legal landscape
What is Virtual Currency • Virtual Currency: – Digital representation of value – Can be digitally traded – Functions as: • Medium of exchange; and/or • Unit of account; and/or • Store of value
– Does not have legal tender status
Types of Virtual Currency • Convertible vs. Non-Convertible Virtual Currency – Convertible virtual currency has equivalent value in fiat currency and can be exchanged for fiat currency (e.g., Bitcoin and Dogecoin) – Non-convertible virtual currency exists in a specific online domain and cannot be exchanged for fiat currency (e.g., Amazon credits, World of Warcraft Gold).
Types of Virtual Currency • Centralized vs. Decentralized Virtual Currency – Centralized virtual currency has single third party administrator that sets rules for the virtual currency’s use, maintains currency ledger and may redeem virtual currency. – Decentralized virtual currency is distributed, open-source, math-based peer-to-peer virtual currency that have no central administrating authority, and no central monitoring or oversight
Virtual $ and Unclaimed Property • • • • • • •
What is the property? When is it dormant? How can you remit it? Who is the holder? Who is the owner? Which state gets it? What do they get?
Lots of Questions… Very few answers…
What IS it?
Potential Paradigms • Similar to Gift Cards? – May be relevant for nonconvertible virtual currencies
• Similar to Stock? – May be relevant for convertible currencies
• Similar to Deposit Accounts?
What IS It and Practical Considerations for Reporting
Who is the holder?
Who is the holder? –
Intermediaries • • •
–
Vendor agreements • •
– –
Delaware vs. New York Young America rebate cases Delaware v. Card Compliant FCA action (pending) Reporting obligation Indemnity
Custody & Possession vs. Obligation & Liability Planning
Who is the Owner? • • • •
Issues with fraud and definition of “apparent owner” First or second priority? Due diligence? Holder liability for wrongful escheat
Audit & Compliance
• Record retention • Reconciliation process • Legal developments/ambiguities: Best practices for preserving holder rights
Questions? Recommendations?
Contact Information Sara A. Lima Reed Smith LLP 215 851 8872 [email protected] Wilson Barmeyer Sutherland Asbill & Brennan LLP 202.383.0824 [email protected]
