CFDB Partner Michael Frisch Co-Authors Article Examining Regulatory Issues With Forward Contracts on Crypto Assets

Early-stage investors in crypto projects sometimes turn to the deliverable forward contract — a promise to sell (and deliver) a specified quantity of tokens at a specified price to a buyer at a future date — to liquidate their position or hedge the downside risk attendant to their investment. For a U.S.-based firm subject to the jurisdiction of the Commodity Futures Trading Commission (“CFTC”), such arrangements can be traps for the unwary, and can raise questions about whether the contract is a “swap” under the Commodity Exchange Act (the “Act”) and its regulations.

Contracting to sell a portion of your tokens can be a good way for an investor to lock in some profit and better define its risk. But if the contract is a “swap,” a bevvy of regulatory consequences follow. “Highlighting Regulatory Issues with Forward Contracts on Crypto Assets” by Croke Fairchild Duarte & Beres LLC Partner Mike Frisch, Alexander Lindgren, and with contributions from Karl Lindgren, takes a close look at what investors need to know to protect their interests and remain compliant with current regulations.

Mike and his CFDB colleagues have significant experience helping clients navigate government regulation, and structure deals and investments, in the cryptocurrency, digital assets, Web3, and DeFi space. Mike draws on this substantial experience to counsel clients on regulatory compliance, investigations, and enforcement matters involving digital assets. He also advises them on investments and corporate and organizational structuring, governance, and best practices.