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Covington is a leading global provider of legal services to market participants in the financial services industry and has been for decades. The rapid growth of the “fintech” industry—comprised of companies that make use of new technologies to provide financial services traditionally offered by banks, companies that partner with banks to provide financial services using innovative technologies, and other companies that provide financial technology services—has created significant opportunities for all segments of the financial services industry.
Covington’s attorneys in Washington, New York, London, and San Francisco are uniquely well situated to provide sophisticated legal counsel in the areas of financial institutions, consumer financial services, technology and IP transactions, venture capital and emerging companies, capital markets and securities, mergers and acquisitions, insurance coverage, privacy and cybersecurity, and derivatives compliance and enforcement to companies in the fintech sector.
We advise on a range of different fintech matters, including:
- Financial services compliance and licensing requirements applicable to new financial technologies
- Acquisitions of financial technology providers
- Commercial agreements between financial institutions and technology companies
- IP licensing agreements involving financial technology companies
- Venture capital and “angel” investing matter
- Insurance coverage for emerging payment technologies
- Financial services applications of new technologies such as “blockchain”
- Major technology and social networking companies’ provision of services to the financial services industry
- Regulation of consumer reporting agencies, data brokers, and “big data” service providers
Fintech Regulatory and Transactional Counsel
We advise on a range of fintech matters, including financial services compliance and licensing requirements applicable to new financial technologies, acquisition of financial technology providers, and financial services applications of new technologies.
JD.Com in Investment in and Joint Venture with ZestFinance, Inc.
Representation of JD.com in connection with its investment in and joint venture with ZestFinance, Inc.
Innovative New Product for Global Communications Firm
Advising a global network that enables institutions to send and receive information about financial transactions on an innovative new communications technology platform.
Strategic Alliance and Outsourcing
Representation of a company in the fintech sector in a complex strategic alliance and outsourcing transaction to create an innovative post-financial trade processing and technology service for large banks in Europe and Asia.
Public Capital Raising by Fintech Issuer
Representation of Cenkos Securities, plc as nominated adviser, broker and bookrunner in relation to an IPO on AIM and two follow-on offerings by FAIRFX GROUP plc, an international payment services provider.
Prosper in Acquisition of American Healthcare Lending
Representation of Prosper Marketplace, Inc. in its acquisition of a healthcare lending platform, American Healthcare Lending, LLC, and merger with Prosper’s wholly owned subsidiary, Prosper Healthcare Lending, LLC.
New EU Legislation for the Fintech Sector
Advising a number of firms on the provisions of the new Payment Services Directive 2 and how to implement the changes.
Prosper in Acquisition of BillGuard
Representation of Prosper in its acquisition of BillGuard, a personal finance analytics company.
Legg Mason Investment in Precidian Investments LLC
Representation of Legg Mason, Inc. in its investment in Precidian Investments LLC, a leader in the creation of innovative financial technology products, specializing in exchange-traded fund and mutual fund development, and associated trading and pricing technologies.
WSFS Bank in Strategic Investment and partnership with ZenBanx
WSFS Bank in its strategic investment and partnership with ZenBanx Holdings, which offers a mobile, multi-currency account that will allow consumers to hold balances denominated in up to five currencies in a single account.
Prosper in First-of-its-Kind Transaction
Representation of Prosper Marketplace in a variety of securities advisory and transactional matters, including in a first-of-its-kind registration of $500 million of borrower dependent notes and restructuring into a bankruptcy remote vehicle, several rounds of venture financings, as well as ongoing disclosure, SEC reporting and SEC regulatory matters.
Prosper in Six Rounds of Funding
Representation of Prosper Marketplace in its last six rounds of financing, including its most recent $165M Series D financing.
Bitcoin Technology in Transfer of Currency from Currency-Controlled Jurisdiction
A multinational company regarding a transaction to use Bitcoin and related blockchain technologies to transfer currency from a currency-controlled jurisdiction to the United States and European Union.
Class Action Cases Challenging "True Lender" Status
Representing Celtic Bank, a leading provider of SBA loans, in two class action lawsuits challenging the bank's "true lender" status.
Online Lenders Alliance in CFPB Rulemaking
Representation of leading industry trade association of online lenders in responding to CFPB small dollar rulemaking.
OCC Special Purpose Bank Charters
Several online lending and payments platforms regarding the Office of the Comptroller of the Currency’s special purpose national bank charter for fintech companies and other regulatory matters.
Whitepaper on Cybersecurity Advantages of Blockchain Technologies
Advising Microsoft and the Chamber of Digital Commerce in the development of a whitepaper exploring the cybersecurity advantages of blockchain technologies.
American Express’s divestiture of its global travel business
Representation of American Express in the divestiture of its global travel business to form a joint venture with Certares LP, which was the largest foreign investment ever in a travel management company and included Middle Eastern government-owned investors.
BBVA in Acquisition of Simple
Representation of Banco Bilbao Vizcaya Argentaria, an international financial group based in Spain, in its acquisition of financial technology company Simple. The $117 million acquisition is part of BBVA's strategy to lead the technology-driven change that is transforming the financial services industry. According to Francisco González, Chairman and CEO of BBVA, Simple will reinforce BBVA’s “global digital transformation while BBVA will provide the means to help Simple maximize its outstanding growth potential.”
April 27, 2018, Cov Financial Services
Last month, Cboe Global Markets, Inc. (“Cboe”) responded to a staff letter on cryptocurrency funds and related investment products published by the SEC earlier this year. The SEC staff letter recognized that proponents of cryptocurrencies have identified a range of potential benefits and that innovation is important, but the SEC also identified a number of...… ...
April 25, 2018, Bloomberg Law
Michael Nonaka is quoted in a Bloomberg Law article regarding Rep. Patrick McHenry's statements at a recent conference stressing that a proposal to modify how banks comply with investment requirements in local communities must take account of new technologies such as mobile banking. According to Nonaka, the Treasury's report, which included recommendations for ...
April 12, 2018, The Recorder
The Recorder highlights the arrival of Suzanne Bell to Covington's Technology Transactions practice. Bell says she was attracted to the firm's strong regulatory practice given the increased intersection between the technology sector and government regulations. Bell adds that she is looking forward to using her experience in technology transactions to assist ...
Law Firms Hitch a Ride on the Blockchain Wagon
April 3, 2018, Washington Lawyer
Michael Nonaka is quoted in a Washington Lawyer article regarding legal opportunities surrounding blockchain. While some lawyers might eventually become blockchain-specialty attorneys, blockchain is looking “more like a technology you have to know about if you’re in certain industries,” says Nonaka. For instance, highly regulated industries such as energy and ...
March 23, 2018, Cov Financial Services
On March 22, 2018, the Government Accountability Office (“GAO”) issued a report on the regulation of financial technology (“fintech”) in response to a request from Congress for more information on “fintech activities.” The report concludes that agencies that regulate fintech firms should coordinate with each other more closely, develop offices of innovation (for ...
March 14, 2018, Cov Financial Services
On March 6, 2018, the Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) released its response to Senator Ron Wyden’s (D-OR) request for information relating to FinCEN’s oversight and enforcement of virtual currency activities. In the letter, FinCEN outlined its intent to regulate certain operators of initial coin offerings (“ICOs”) as ...
March 9, 2018, Cov Financial Services
When bitcoin entered the public’s eye for the first time in 2013, it was touted as one of the greatest inventions for the unbanked in Africa. The World Bank estimates that of the 2 billion people without access to the modern financial system, a third live in Sub-Saharan Africa. In recent months, bitcoin and cryptocurrency...… Continue Reading
March 9, 2018, Cov Financial Services
Blockchain is a powerful innovation that is poised to bring substantial positive change to the financial services industry as well as many other industries. Despite such promise, blockchain, like any emerging financial services technology, must be evaluated from the perspective of cybersecurity risk – both to an individual financial institution and to the ...
February 16, 2018, Cov Financial Services
Yesterday, the Federal Communications Commission sent a letter to an individual in Brooklyn, New York, alleging that a device in the individual’s residence that is being used to mine Bitcoin is generating spurious radiofrequency emissions, causing interference to a portion of T-Mobile’s mobile telephone and broadband network. The letter states that on November ...
February 12, 2018, Cov Financial Services
Data is of particular importance to businesses in the financial sector. This blog post provides a high level overview of how United States copyright law treats data. U.S. copyright protection for raw, unstructured data is generally regarded as thin or unavailable. The reason for this is that such raw data may not satisfy the creativity...… Continue Reading
February 11, 2018, Cov Financial Services
On February 6, 2018, the Conference of State Bank Supervisors (“CSBS”) – the nationwide organization representing banking regulators from all 50 states, the District of Columbia, Guam, Puerto Rico, and the U.S. Virgin Islands – announced that seven states have agreed to a compact that standardizes five major areas of the licensing process for money...… Continue ...
February 8, 2018, Cov Financial Services
On February 7, 2018, the New York State Department of Financial Services (“DFS”) issued guidance for all virtual currency business entities (“VCBEs”) regarding the prevention of market manipulation and other wrongful activity. In a brief, two-page document, the DFS: (1) emphasized the importance of effectively preventing and responding to fraud and similar ...
December 15, 2017, Cov Financial Services
On December 11, 2017, SEC Chairman Jay Clayton issued a Statement on Cryptocurrencies and Initial Coin Offerings (the “Statement”) reflecting his own views on cryptocurrencies and initial coin offerings (“ICOs”)* and their relationship to federal securities laws. The Chairman’s Statement follows three separate public enforcement actions brought by the SEC since ...
If OCC Charter Case Is Dismissed, State Regulators Will Likely Sue Again, Say Fintech Attorneys
August 3, 2017, Corporate Counsel Magazine
Michael Nonaka is quoted in a Corporate Counsel Magazine article regarding the Office of the Comptroller's argument that it cannot be sued over its plans for a special purpose national bank charter. According to Nonaka, "it's a fair assumption" the Conference of State Bank Supervisors would continue to pursue litigation against the OCC if the case is thrown out, ...
SEC Warns on Initial Coin Offerings--Update
July 25, 2017, The Wall Street Journal
David Martin is quoted by The Wall Street Journal in an article regarding the SEC's warning on initial coin offerings. The SEC's report will likely "chill the waters a bit for these offerings," says Martin.
American Regulators Playing FinTech Catch-Up
June 15, 2017, Law360
Michael Nonaka is quoted in a Law360 article examining how U.S. regulators are fostering fintech innovation. According to Nonaka, the CFTC and FINRA initiatives are important steps to get the agencies up to speed on fintech issues. “It’s certainly a step forward, it’s a step in the right direction for the regulators to be able to do new initiatives that will ...
May 31, 2017, The National Law Journal
Michael Nonaka is quoted by The National Law Journal in an article regarding the likelihood that the U.S. will introduce a regulatory sandbox for fintech companies to test new products and business models without regulatory consequences. According to Nonaka, there is "great value" in a sandbox for entrepreneurs, but "in order for a sandbox to work, you have to ...
Proposed Restrictions on Mexican Remittances Could Hinder Fintechs, Probably Not Banks
May 11, 2017, Forbes
Michael Nonaka is quoted in a Forbes article regarding the prospect of President Trump's taxing remittances for a Mexico border wall, and the possibility of an increase in the use of digital currencies as a result. In discussing banks and payment companies' experience in this field, Nonaka indicates that these institutions have taken the proposed rules in ...
Fintech Startup, Covington To Launch Blockchain Council
January 6, 2017, Law360
Sebastian Vos is quoted in a Law360 article regarding the launch of a Global Blockchain Business Council at this year’s World Economic Forum by Covington and The Bitfury Group. “Blockchain has the potential to be the next great technological innovation, revolutionizing areas from cross-border payments, trade finance and land registries to government records,” ...
December 11, 2016, Harvard Law School Forum on Corporate Governance and Financial Regulation
December 5, 2016, Covington Alert
On December 2, 2016, Comptroller of the Currency Thomas J. Curry announced that the Office of the Comptroller of the Currency (“OCC”) would move forward with issuing special purpose national bank charters to financial technology (“fintech”) companies. The OCC released a whitepaper1 outlining its authority to issue charters to fintech companies, its approach to ...