Key Considerations for the Prospective Blockchain Investor
Prospective purchasers of blockchain assets can now navigate through global exchanges (i.e., Coinbase or Kraken) to invest in various forms of tokens. Investments in tokens, however, are only the tip of the iceberg for those who are interested in undertaking financial exposure in blockchain projects. Here, we will provide a high-level overview of common forms of securities that blockchain investors may choose to acquire.
Tokens.
As perhaps the most straightforward form of blockchain investment, tokens can be purchased by investors either from the token issuer directly or through a secondary market. Tokens can take various forms, including utility tokens, security tokens, payment tokens, or stablecoins.
Equity.
Rather than acquiring tokens themselves, investors can purchase equity of companies that either have issued tokens or plan to do so in the future. Whereas certain issuers may distribute tokens directly, others may have a business model related to blockchain more generally. These investments may take the form of an issuer’s common or preferred stock. As an alternative to a purchase of share, investors may instead receive an instrument convertible into equity such as a Simple Agreement for Future Equity (a “SAFE”) or a convertible note. As a further incentive for equity investment, issuers may offer an option to purchase tokens at a future point in time (such as a “warrant”; more on this below).
Pre-Purchase Agreement for Tokens.
When an issuer has not yet minted tokens but intends to do so in the near future, the issuer may decide to issue pre-purchase agreements. As a play on the SAFE acronym, a pre-purchase agreement for tokens is often referred to as a Simple Agreement for Future Tokens (or a “SAFT”). However, unlike a standard Y-Combinator form of SAFE, there is not yet an industry standard form for a SAFT, although certain forms have gained in popularity.
Below are key considerations to be taken into account when evaluating an investment in a SAFT:
Valuation. Whereas a SAFE typically defers on the determination of valuation to a future point in time, a SAFT is often drafted as a pre-purchase agreement with a specified price per token. In exchange for an early investment while the token is still in development, an investor is given a price per token more favorable than that which will be offered to future investors upon a token launch. Less often, a SAFT may be drafted more analogously to a SAFE and will defer the valuation question to the future. With this formulation, the price per token will be determined based on the rate offered by the issuer upon token launch and may offer a percentage discount.
Deadline. Unlike a typical form of SAFE, a SAFT often includes a maturity date upon which the investor’s purchase price must be returned if a token has not been issued. The inclusion of a maturity date protects the investor against the risk of a company either pivoting its business and deciding not to issue tokens or failing to develop the intended token. Even with a maturity date, a SAFT is not without risk. Issuers often use funds received pursuant to a SAFT in connection with the development of their project and may not have funds available to make a repayment upon maturity.
Token Warrant.
A token warrant provides an investor with the option, but not the obligation, to purchase tokens prior to the warrant’s expiration at a set price. A token warrant may be sold on its own, but it most often issued alongside another security such as stock or an instrument convertible into shares of stock.
Below are key considerations to be taken into account when evaluating a token warrant:
Expiration Date. Whereas some warrants expire upon a specific date, others may expire sooner upon the achievement of a milestone. A common milestone is the initial launch of the applicable token. Additionally, token warrants often permit for multiple exercises; for example, subsequent exercises may be permitted if additional tokens are launched or if the quantity of a token previously minted is increased.
Price. An investor could pay a nominal amount upon issuance of a token warrant for the right to buy tokens at a price offered in the future; for example, at the price that tokens are offered to insiders or at a discount to the price that tokens are offered to the public. Alternatively, a token warrant could be drafted as a “penny warrant” whereas the investor is granted a right to purchase tokens for nominal amount (for example, $0.01 total) in the future.
Allocation. The allocation of tokens to be issued may be provided as a predetermined number of tokens or as a percentage of the future tokens issued. Alternatively, as is often the case when warrants are issued in connection with an equity investment, a warrant may grant to the investor a right to purchase their “pro rata” percentage of the future token issuance. Although on its face this calculation may initially appear straightforward, the formula itself is often a point of considerable discussion among the investor and the issuer. An investor-favorable calculation would permit an investor to purchase their pro rata percentage (or perhaps a multiple of their pro rata percentage) of the total number of tokens generated. Issuers may push back, offering a pro rata issuance only of the percentage of tokens allocated to insiders. The definition of “insiders” is itself a negotiated term, and may include the issuer’s founders, other investors, and key employees. Given the significant economic impact that this initially innocuous term may have, all elements of the calculation of the investor’s allocation should be carefully considered by all parties involved.
Additional Terms for Consideration.
Vesting. In any transaction that involves the future issuance of tokens, there is likely to be a tension between the issuer, who in order avoid an immediate sell-off upon grant would prefer to lock up the tokens from future sales for an extended period of time, and the investor, who would prefer to be permitted to freely transfer their tokens as soon as permitted by law (which in the United States may involve compliance with transfer restrictions under the securities laws). Investors may consider requesting that the tokens vest in accordance with a pre-determined schedule, whereas issuers may prefer to retain flexibility to set a vesting schedule upon the token launch. As a middle-ground, parties may consider permitting a lock-up of tokens to be determined by the issuer at launch, but in no event more restrictive than the least restrictive vesting schedule applicable to any insiders.
Governing Law. Across jurisdictions, the treatment of tokens continues to evolve at a rapid pace. Investors must consider not only the applicable law in the jurisdiction in which they reside, but also the local laws of the token issuer. Given the potential regulatory disparity between jurisdictions, investors should seek the advice of local counsel.
Regulatory Updates. In the United States, blockchain tokens are likely to be considered “securities”. However, this is a rapidly-evolving regulatory landscape under which the classification and treatment of blockchain tokens may be reconsidered. For example, the SEC has recently created a new “Crypto Task Force” and has rescinded certain controversial staff guidance related to the accounting treatment of custodied crypto assets. Investors and issuers alike should procure legal counsel to ensure continued compliance with all applicable laws and regulations.
Mass. Appeals Court Clarifies Chapter 93A Violations in Landlord-Tenant Dispute
The Appeals Court of Massachusetts recently took up another summary process action concerning landlord-tenant rights and Chapter 93A violations in Hayastan Indus., Inc. v. Guz. In a summary decision[1], the court affirmed a liability finding against a landlord for Chapter 93A violations under several distinct theories.
Plaintiff, a corporate entity, purchased a manufactured home and the lot it resided on from the bank after defendants defaulted on their loan. Plaintiff then brought a summary process action in the Housing Court to take possession of the manufactured home, and the tenants counter-claimed for Chapter 93A violations. The Housing Court entered judgment dismissing plaintiff’s claim for possession of the manufactured home and found plaintiff violated Chapter 93A.
The Appeals Court agreed that the Housing Court erred in concluding that the 30-day notice to quit delivered to the tenants without cause violated the M.G.L. c. 140, § 32J requirement, which is designed to protect owners of manufactured homes. At the time of the notice to quit, the tenants no longer owned the manufactured home and were no longer entitled to the statute’s protections. Thus, the Housing Court erred in dismissing the possession claim based on a M.G.L. c. 140, § 32J violation and in finding a Chapter 93A violation based on this statutory violation.
The Appeals Court further determined, however, that the Housing Court did not err when it concluded that an April 27, 2020, letter plaintiff sent to the tenants violated the Massachusetts eviction moratorium during the COVID-19 pandemic. While the letter did violate the eviction moratorium, the Appeals Court disagreed with the Housing Court that this technical violation was a “serious interference” with a tenancy such that it violated Massachusetts’ quiet enjoyment statute. The Housing Court therefore vacated that ruling and the damages awarded on this claim. This issue was remanded to the Housing Court for the limited purpose of determining whether the technical violation of the eviction moratorium caused the tenants a loss as required to recover under G.L. c. 93A.
Finally, the Appeals Court did not believe the judge erred in finding a violation of Chapter 93A due to plaintiff’s inclusion of lot fees in the summary process complaint, when such fees had previously been adjudicated by the Housing Court not to be owed by the tenants. The Housing Court found that plaintiff “commenced eviction proceedings approximately nine days after purchasing the home because it intended to make repairs and put it on the market for sale,” which supported the conclusion that the notice to quit was motivated by business reasons. These “business reasons” amounted to conduct in trade or commerce for the purposes of Chapter 93A. The Housing Court found, and the Appeals Court agreed, that even though the summary process complaint was amended to remove the demand for lot fees, the elements of c. 93A were still met at the time the summary process complaint was served. Thus, the demand for invalidated lot fees amounted to an unfair or deceptive business practice, which caused defendant to suffer an emotional injury in the form of lost sleep and anxiety. The Appeals Court noted that the failure of the company to apprise itself of the legal effect of the pending appeal did not amount to the sort of negligence that precludes liability under G.L. c. 93A.
The Appeals Court decision on the final issue seems to run contrary to established law that petitioning activity is typically immune from Chapter 93A liability.[2] It does not appear that plaintiff’s petitioning activity was frivolous or designed to frustrate competition.[3] Rather, plaintiff sought to take possession of a property it recently purchased through a summary process complaint and amended the complaint to remove the demand for lot fees it was not owed prior to actual litigation on the issue. This case highlights what appears to be a trend at the trial court level to expand the scope of Chapter 93A liability.
[1] A summary decision is a decision primarily directed to the parties and represent only the views of the panel that decide the case. It may be cited for its persuasive value but is not binding precedent.
[2] See Morrison v. Toys “R” Us, Inc., 441 Mass. 451, 457 (2004) (Chapter 93A “has never been read so broadly as to establish an independent remedy for unfair or deceptive dealings in the context of litigation, with the statutory exception as to those ‘engaged in the business of insurance’”).
[3] See Bristol Asphalt Co., Inc. v. Rochester Bituminous Products, Inc., 493 Mass. 539 (2024).
FCA Publishes Policy Statement on UK’s Commodity Derivatives Regulatory Framework Reform
On 5 February 2025, the UK Financial Conduct Authority (FCA) published a policy statement (PS25/1) setting out its response and final position in relation to reforming the UK’s commodity derivatives regulatory framework (Framework).
Background
The FCA consulted on the changes to the Framework in December 2023 (CP23/27), proposing key changes regarding commodity derivatives transactions in the UK. These proposals related to the shift in responsibility for setting position limits from the FCA to trading venues, enhanced position management controls and monitoring, a narrower application of position limits to only certain commodity derivatives contracts, and available exemptions, including the potential removal of the ancillary activities test.
CP23/27 formed part of the UK’s Wholesale Markets Review, enacted by the Financial Services and Markets Act 2023 and was intended to be a review of the UK’s secondary market structure which the FCA has been conducting with HM Treasury (HMT).
Further details on CP23/27 can be found in our previous article (available here).
Reforms to the Framework
In PS25/1, the FCA has amended the following proposals in CP23/27:
Trading Venue Position Limits. Trading venues will continue to set position limits with minor technical changes implemented by the FCA. Position limits in both ‘spot months’ and ‘other months’ will now be required.
Exemptions. After concerns were raised regarding trading venues granting hedging exemptions only when satisfied that such positions can be reasonably managed, the FCA amended the risk management control to be less prescriptive – trading venues will be expected to assess their own indicators as to whether such positions can be liquidated in an orderly way.
Position Reporting. Trading venues must have the power to obtain over-the-counter (OTC) position data, however, in relation to the circumstances when such reporting is required, trading venues are expected to consider the risk that positions in OTC markets pose to their markets and satisfying the FCA that their powers are used appropriately. The FCA is also awaiting a further broadening of powers from a legislative standpoint by HMT to provide directions in relation to OTC position reporting.
Ancillary Activities Exemption (AAE). PS25/1 confirms that the FCA’s earlier proposals relating to AAE, including the issuance of guidance on its application, will not be implemented. Instead, the AAE quantitative test and RTS 20 will continue to operate until at least 2027 as the FCA considers a permanent solution.
UK vs EU Reforms
The UK is treading a fine line in diverging from the EU, and the AAE changes no longer being implemented will mean the UK’s opportunity for more significant divergence has passed for now, until a permanent solution is brought forward.
However, the passing of position limits responsibilities from the FCA to trading venues compared to the EU’s approach where they are set by the relevant national competent authorities reinforces the UK’s principles-based approach.
The UK and EU appear to be aligned on fundamental principles in relation to commodities derivatives, especially on agricultural contract position limits still applying and positions held to meet liquidity obligations. The slight deviation in the UK will give its market participants somewhat of a competitive advantage by being able to take higher risk positions.
The UK Chancellor, Rachel Reeves, continues to apply pressure on the FCA to prioritise growth. The FCA must therefore balance its approach to commodity derivatives regulation between maintaining the UK’s competitiveness in the global market while minimising disruption to market participants through divergence from EU rules.
Next Steps
The rules set out in PS25/1 will come into force on different dates, with the last such date being 6 July 2026. Rules enabling trading venues to receive and process applications for exemptions from position limits will commence from 3 March 2025. Hedging exemptions granted under the current regime will continue to apply until 5 July 2026. Lastly, transitional provisions relating to trading venues will commence on 3 March 2025 to allow notification to the FCA of various arrangements prior to implementation.
PS25/1 is available here.
Class Certification Granted – California Website Tracking Lawsuit Reminds Businesses about Notice Risks
A California federal district court recently granted class certification in a lawsuit against a financial services company. The case involves allegations that the company’s website used third-party technology to track users’ activities without their consent, violating the California Invasion of Privacy Act (CIPA). Specifically, the plaintiffs allege that the company along with its third-party marketing software platform, intercepted and recorded visitors’ interactions with the website, creating “session replays” which are effectively video recordings of the users’ real-time interaction with the website forms. The technology at issue in the suit is routinely utilized by website operators to provide a record of a user’s interactions with a website, in particular web forms and marketing consents.
The plaintiffs sought class certification for individuals who visited the company’s website, provided personal information, and for whom a certificate associated with their website visit was generated within a roughly year time frame. The company argued that users’ consent must be determined on an individual and not class-wide, basis. The company asserted that implied consent could have come from multiple different sources including its privacy policies and third-party materials provided notice of data interception and thus should be viewed as consent. Some of the sources the company pointed to as notice included third-party articles on the issue.
The district court found those arguments insufficient and held that common questions of law and fact predominated as to all users. Specifically, the court found whether any of the sources provided notice of the challenged conduct in the first place to be a common issue. Further, the court found that it could later refine the class definition to the extent a user might have viewed a particular source that provided sufficient notice. The court also determined plaintiffs would be able to identify class members utilizing the company’s database, including cross-referencing contact and location information provided by users.
While class certification is not a decision on the merits and it is not determinative whether the company failed to provide notice or otherwise violated CIPA, it is a significant step in the litigation process. If certification is denied, the potential damages and settlement value are significantly lower. However, if plaintiffs make it over the class certification hurdle, the potential damages and settlement value of the case increase substantially.
This case is a reminder to businesses to review their current website practices and implement updates or changes to address issues such as notice (regarding tracking technologies in use) and consent (whether express or implied) before collecting user data. It is also important when using third-party tracking technologies, to audit if vendors comply with privacy laws and have data protection measures in place.
Project Financing and Funding of Nuclear Power in the US
The past several decades have seen minimal greenfield nuclear plant development in the U.S. Units 3 and 4 of the Vogtle power plant in Greensboro, Ga., came online in 2023 and 2024, respectively, representing the first new projects in nearly a decade. Since 1990, the only other project placed in service was Watts Bar Unit 2 outside Knoxville, Tenn., which is owned and operated by the Tennessee Valley Authority (TVA). Financing is one of the principal challenges that needs to be overcome for nuclear energy to realize its full promise and potential.
Financing Traditional Nuclear Projects: Cash (Flow) Is King
Non-recourse or limited-recourse financing for nuclear energy projects has been difficult to obtain. Traditionally developed nuclear generating assets are among the most expensive infrastructure projects. Typically in the range of approximately 1 gigawatt (GW) per unit, they are principally characterized by their technical and regulatory complexity.
Long and often-delayed permitting and construction lead to cost overruns, creating a highly unpredictable cash flow that may not be realized for 20+ years. Given the scale and capital investments involved in developing and constructing nuclear power plants, as well as the lack of greenfield development in the U.S. over the past three decades, there are few (if any) engineering and construction firms currently able to deliver projects on a lump-sum, turnkey basis.
A further complication to attracting private sector financing arises from the deregulated structure of power markets in many regions across the U.S. Debt financiers will typically look to predictability of future cashflows as a primary measure of assessing risk with any power project. For nuclear facilities in liberalized wholesale markets, this will often be difficult due to energy price fluctuations and the frequent absence of dedicated offtake terms.
Although nuclear power plants can participate in forward capacity auctions, these are generally conducted three years in advance with a limited capacity commitment period. Due to the aforementioned construction timelines, nuclear project developers are rarely in a position to bid on future capacity auctions prior to the commencement of construction.
The nature of funding required to build large-scale traditional nuclear plants severely limits – if not precludes – private investment . Governmental support has been provided in a number of different contexts. The Inflation Reduction Act (IRA) introduced a new zero-emissions nuclear production tax credit, which provided a credit of up to 1.5 cents (inflation adjusted) for projects that meet prevailing wage requirements.1 Further, the IRA’s transferability sections have allowed project sponsors the ability to unlock greater revenue streams.2 In addition to the tax credits, the IRA allocated $700 million in funding for the development of high-assay low-enriched uranium (HALEU), while the Infrastructure Investment and Jobs Act (IIJA) allocated funding for the development of modular and advanced nuclear reactors. A more direct form of project-level governmental support comes in the form of direct lending or loan guarantees. For instance, the development of Vogtle Units 3 and 4 received a $12 billion loan guarantee from the Department of Energy.
Permitting Reform Can Help
Ultimately, a stable and favorable regulatory regime would lower the discount rate and hence the required rate of return for nuclear power projects. The Trump administration has signaled its intention to promote the nuclear industry through a number of early executive actions, though legislation would likely be needed to create meaningful changes in this regard.
Notwithstanding this apparent support for nuclear energy, federal agencies have been ordered to pause the disbursement of funds appropriated under the IRA and the IIJA for at least 90 days, creating some uncertainty as to the status of funding for nuclear energy projects (as well as a broad range of clean energy projects) appropriated thereunder. Permitting reform and further funding to encourage greater development of nuclear projects receives strong bipartisan support, but is subject to delays if made part of a larger political compromise.
Permitting reform and further funding to encourage greater development of nuclear projects receives strong bipartisan support, but is subject to delays if made part of a larger political compromise.
Small Modular Reactors, Lower Hurdles to Financing and Deployment
In order to sidestep some of the technical challenges that have traditionally resulted in delays and cost-overruns, the nuclear industry has moved towards the adoption of small modular reactors (SMRs) as a means to lower delivery costs, and in turn, reduce financing hurdles. Based on the International Atomic Energy Agency’s definition, SMRs include units of up to 300 megawatts (MW) of generating capacity. There are numerous technologies currently competing under the umbrella SMR classification, but in general, these technologies allow generating assets to be largely fabricated off-site on a standardized basis, potentially reducing manufacturing costs and regulatory uncertainties, and hastening deployment of new technologies.
SMR financing is rapidly evolving. Since there are currently no operational SMR projects in the U.S., the first generation of projects to come online will require “first-of-a-kind” (FOAK) financing. This can be challenging for a number of reasons, as it will require financiers to accept the elevated risks associated with a commercially unproven technology. Government can and does derisk initial equity financing through loan guarantees and/or grants. In fact, we saw evidence of such this in 2021’s Bipartisan Infrastructure Law, in which the US Department of Energy announced $900 million in funding to support SMR deployment. Earlier this month, the TVA and American Electric Power (AEP) led an $800 million application with partners including Bechtel, BWX Technologies, Duke Energy to pursue advanced reactor projects. The substance of the proposals is to add SMRs at existing generating sites including TVA’s Clinch River site and Indiana Michigan Power’s Spencer County site. It is unclear if the Trump Administration’s funding freezes and priority changes will jeopardize disbursements from this legislation, but general support for the nuclear industry appears to continue.
Since there are currently no operational SMR projects in the U.S., the first generation of projects to come online will require “first-of-a-kind” (FOAK) financing.
Even without governmental support, innovative financing structures will be available to assist in the deployment of SMR projects. A number of companies developing SMR designs are doing so together with corporate customers that plan to deploy these reactors as sole-source providers for facilities such as AI data centers. With a dedicated power purchase agreement with a creditworthy offtaker, many SMR projects will be considered bankable notwithstanding the novelty of the technology being deployed.
Conclusion
Although nuclear energy is widely seen as playing a key role in grid expansion and decarbonization initiatives, there are a number of obstacles which render financing challenging. Strong political support alongside appropriately tailored policy tools can help unlock the private capital needed to deploy nuclear energy at scale. The arrival of SMR technology will produce initial challenges with FOAK financing, but in time more predictable returns will attract the financing to permit a more widescale adoption of nuclear energy in countless use cases.
Knowledgeable and experienced legal counsel can assist with the proper structuring and risk allocation in transaction documents to help unlock financing and drive projects forward. Given the enthusiasm for the role of nuclear in supporting energy expansion, however, there is room for optimism about the opportunities for greenfield nuclear projects in the coming decades.
1 26 U.S.C. § 45U.2 26 U.S.C. § 6417.
SEC Launches Crypto Task Force Website to Bring Clarity to Crypto Regulation
The U.S. Securities and Exchange Commission (SEC) has launched a ‘Crypto Task Force’ page on its website, outlining the agency’s crypto regulatory agenda under the agency’s new leadership. This initiative follows the exit of former SEC Chair Gary Gensler under President Trump’s administration and signals a move away from the SEC’s previous enforcement-driven stance on cryptocurrency.
A New Approach to Crypto Regulation
The task force, led by Commissioner Hester Peirce, aims to address long-standing regulatory confusion that has plagued the crypto industry in recent memory. Under prior leadership, the SEC frequently pursued enforcement actions without providing clear guidelines, leaving crypto projects uncertain about compliance. Peirce has been a vocal critic of this approach, arguing that the SEC’s inconsistent treatment of crypto assets has stifled innovation and forced companies to operate in a legal gray area—or leave the U.S. altogether.
The task force’s primary initiatives will include:
Defining which crypto assets qualify as securities. The SEC aims to establish clear criteria to determine which digital assets fall under securities laws, a move intended to resolve the legal uncertainty that has led to numerous court battles.
Providing temporary relief for token issuers. The agency aims to create a framework to allow token projects to provide updated disclosures instead of facing immediate enforcement after issuance, offering issuers a clearer pathway to compliance.
Exploring the possibility of registered token offerings. The SEC is considering adjustments to existing fundraising frameworks, such as Regulation A and crowdfunding rules, to make it easier for crypto startups to raise capital while maintaining compliance.
Developing guidelines for crypto custody, lending, and staking programs. Clear regulations will help issuers and institutional investors navigate the legal complexities of holding, staking and managing crypto assets.
Creating transparent criteria for crypto ETFs. The task force plans to dispel uncertainty around the approval process for crypto-backed ETFs by providing specific requirements for approval.
To encourage industry participation, the public can now submit feedback through the task force’s website, which will be post to the SEC’s website unless marked as confidential. Developers, investors, and other stakeholders can request meetings and contribute ideas to help shape the regulatory framework. The SEC also clarified that this platform is not for whistleblower complaints, which must still go through formal channels.
Balancing Regulation and Innovation
A key challenge for the task force will be balancing investor protection with industry growth. While the SEC aims to provide legal clarity, it has also made clear that it will not be giving crypto projects a free pass. Commissioner Peirce highlighted this balancing act: “We want a destination where builders can experiment without fear, but where fraudsters have no place to hide.”
To prevent regulatory overreach, the task force plans to work closely with Congress, the FDIC, the CFTC, and international regulators to ensure that crypto laws are consistent and do not overlap unnecessarily. With many crypto projects operating internationally, one possible solution Commissioner Peirce addressed is the creation of cross-border regulatory sandboxes, to allow crypto projects to test their models in a controlled environment without immediate legal repercussions. Should the Crypto Task Force execute on its promises, this would make the United States the first nation to provide a holistic framework for the oversight of the cryptocurrency industry.
After years of uncertainty, the SEC is finally taking steps toward a practical, industry-informed approach to crypto regulation. While there is still a long way to go, crypto oversight under the SEC now seems to have a clear direction—one that aims to strike a balance between innovation and compliance.
Listen to this post
The Department of Labor (DOL) Adopts Self-Correction for Common Retirement Plan Fiduciary Breaches
For the first time since the DOL adopted its Voluntary Fiduciary Correction Program (VFC Program) in 2002, retirement plan sponsors will be able to utilize self–correction as an efficient means to correct their most frequent compliance failures – late transmittals of participant retirement plan contributions and retirement plan loan repayments.
The DOL finalized an update to its VFC Program adding the Self-Correction Component (SCC) for these fiduciary failures and, additionally, finalized an amendment to an existing prohibited transaction exemption (PTE) that provides excise tax relief for transactions that have been self-corrected.
The SCC feature and excise tax relief become effective on March 17, 2025.
The VFC Program –Section 409 of the Employee Retirement Income Security Act of 1974, as amended (ERISA), provides that retirement plan fiduciaries who breach the responsibilities, obligations or duties imposed on them may be personally liable for any plan losses resulting from such breach, and may be required to restore any profits to the plan that may have been made through the use of the plan’s assets.
The VFC Program aims to encourage plan sponsors to voluntarily correct breaches of certain fiduciary obligations under ERISA in return for relief from civil enforcement actions and, in some cases, penalties for breaches. To participate, plan sponsors must fully correct errors in accordance with procedures specified in the VFC Program and file an application with the DOL. The application submission requires a description of the breach and the corrective action taken, documentary proof of the corrective action and other specified information.
The VFC Program application process can be quite onerous and, in some cases, is akin to a DOL audit. As a result, some plan sponsors have been reluctant to use it and, instead, have corrected fiduciary breaches on their own.
Self-Correction Component –The new SCC option permits plan sponsors to correct eligible transactions without filing a VFC Program application. Moreover, when a plan sponsor utilizes the SCC, the updated VFC Program waives the existing requirement that plan sponsors notify plan participants and other interested persons of prohibited transactions, as well as the steps taken to correct them.
The SCC option, however, does require the self-corrector to electronically submit a SCC Notice using the new online DOL VFC Program web tool that includes the following information:
Self-corrector’s name and address;
Plan name;
Plan sponsor’s Employment Identification Number;
Principal amount;
Amount of lost earnings and the date paid to the plan;
Loss date; and
Number of participants affected by the correction.
After filing this notice, the plan sponsor will receive an email acknowledgment from DOL, but will not receive the “no action” letter that typically is received upon DOL’s approval of VFC Program application. The plan administrator is required to retain a “penalties of perjury” certification, and other documentation related to the correction. The “penalty of perjury” certificate must state that the plan is not under investigation and acknowledge receipt and review of the SCC notice. A plan fiduciary is required to sign and date the “penalties of perjury” certificate.
In order to be eligible for self-correction:
The lost earnings resulting from the delinquent contributions cannot exceed US$1,000;
Delinquent payments, including lost earnings, must be remitted to the plan within 180 days of the date payments are withheld from participants’ paychecks or received by the employer;
Neither the plan nor the self-corrector may be under investigation; and
Penalties, late fees and other charges related to the delinquent contributions must be paid.
Excise tax relief –In conjunction with the VFC Program update, the DOL amended PTE 2002-51 to expand excise tax relief to prohibited transactions eligible for self-correction under the updated VFC Program. The amendment provides relief from the 15 percent excise tax that DOL otherwise imposed when participant contributions and loan repayments are not timely remitted to a 401(k) plan. Relief is available if the plan receives an acknowledgment of self-correction from DOL and complies with other requirements of the VFC Program. Instead of paying the excise tax, the plan sponsor must contribute the amount equal to the excise tax to the self-corrected plan.
Excise tax relief will be available regardless of whether the plan has utilized the VFC Program or PTE 2002-51 in the past. Prior to this amendment, PTE 2002-51 generally was not available to plans that had utilized the VFC Program or the PTE for a similar type of transaction within the previous three years.
Additional Items to Note
The VFC Program update clarifies the existing transactions eligible for correction, expands the scope of certain transactions currently eligible for correction and simplifies certain administrative and procedural requirements for VFC Program participation and corrections. Notably, correction through the VFC Program does not relieve plans from reporting late participant contributions on Form 5500 or 5500-SF. Neither the update to the VFC Program nor the PTE amendment changes this reporting requirement.
UK Sanctions Update: New OFSI Reporting Requirements for High Value Dealers and Art Market Participants
Late in 2024, the UK’s Office of Financial Sanctions Implementation (“OFSI”), the agency within His Majesty’s Treasury that is charged with the implementation of financial sanctions in the UK, introduced new sanction measures aimed generally at augmenting the operation and enforcement of UK financial sanctions and targeted specifically at High Value Dealers (“HVDs”) and Art Market Participants (“AMPs”).
These new measures come into force in May 2025—just two months from now—making time very much of the essence.
To Whom do the New Sanctions Measures Apply?
The new measures extend the existing statutory definition of “Relevant Firms” to include HVDs and AMPs.
HVDs are defined as firms or sole traders whose business is trading in goods and who make or receive payments of at least EUR 10,000, whether executed in one transaction or a series of linked transactions. HVDs typically sell luxury goods, high-end vehicles, and jewelry, and encompass anyone manufacturing, selling and/or supplying any articles made from gold, silver, platinum, palladium, or precious stones or pearls. Auctioneers, who facilitate the sale and purchase of these items, are considered HVDs.
AMPs include firms or sole traders whose business is trading in, or acting as an intermediary in the sale and purchase of, works of art, where the transaction value or the value of a series of linked transactions is EUR 10,000 or more.
What are the Key Requirements under the New Sanctions Measures?
The effect of extending the definition of “Relevant Firms” to include HVDs and AMPs is to subject them to a range of mandatory reporting requirements.
Specifically, starting May 14, 2025, HVDs and AMPs will be required to inform OFSI “as soon as practicable” if they know or have reasonable cause to suspect that a person:
is a “designated person” (i.e., an individual or entity subject to financial sanctions imposed by the UK government); or
has violated UK sanctions regulations.
With respect to the UK’s Russia sanctions regime (the Russia Regulations), HVDs and AMPs also will have to inform OFSI as soon as reasonably practicable if they know or have reasonable cause to suspect that they hold or control, in any jurisdiction, funds or economic resources for a designated person.
What must Reporting to OFSI Include?
When reporting to OFSI, HVDs and AMPs must include:
the information or other matter on which the knowledge or suspicion is based; and
any information the HVD or AMP holds that may identify the relevant person or designated person.
If a person or firm knows or has reasonable cause to suspect that a person is a “designated person” and that person is also a client, then details of the nature and amount of any funds or economic resources held for that client must also be provided.
What are the Consequences of Non-Compliance?
Violating UK financial sanctions, including by failing to report, is serious. OFSI may impose a civil penalty of up to GBP 1 million or 50% of the total value of each violation, whichever is higher, on a strict liability basis.
Additionally, OFSI may refer cases to law enforcement agencies for investigation and potential prosecution, and anyone convicted of violating UK financial sanctions is liable on conviction to imprisonment for up to seven years and/or a fine.
Additional Considerations
Recent Guidance issued by OFSI[1] makes clear that high value and luxury goods are extremely susceptible to misuse by malign actors, particularly those seeking to circumvent UK financial sanctions. The susceptibility is due in part to the following factors:
the art market’s penchant for anonymity, including the common use of shell companies and intermediaries;
the relative ease with which many of these goods are concealed and/or transported internationally;
the subjectivity of their value, meaning prices and payment amounts can be easily manipulated; and
the relatively unregulated nature of international markets for some high value goods.
Given the severe criminal, civil and reputation harm that flow from sanctions violations, it is imperative for HVDs and AMPs to carefully assess their business operations and implement robust compliance programs prior to May 14, 2025. In particular, HVDs and AMPs would be well-served by:
conducting risk assessmentsto evaluate exposure to common sanctions evasive practices;
developing, implementing, and adhering strictly to written compliance policies, procedures, processes, and standards of conduct;
conducting appropriate due diligence on customers, including ownership and control structures, and all participants in trades and related transactions;
providing updated compliance trainingto relevant personnel; and
conducting regular audits, including periodic external audits,to ensure that compliance programs remain effective.
[1] UK Government, Financial Sanctions Guidance for High Value Dealers & Art Market Participants, (November 14, 2024).
Valuing Real Estate Assets in Bankruptcy: Ethical Considerations and Practical Insights
Real estate bankruptcies present intricate legal and ethical challenges, particularly concerning asset valuation. Accurate valuations are pivotal as they influence negotiations, creditor recoveries, and court proceedings. Ensuring that all parties—attorneys, lenders, property owners, and appraisers—adhere to ethical standards is crucial for maintaining transparency, fairness, and compliance within the bankruptcy process.
The Importance of Valuation in Real Estate Bankruptcy
David Levy, Managing Director for Keen-Summit Capital Partners and Summit Investment Management, notes that valuations play a pivotal role in bankruptcy cases, influencing everything from cash collateral motions to asset sales and plan confirmation. Whether dealing with declining or appreciating property values, parties must navigate competing interests and ethical obligations. Ethics in real estate bankruptcy encompasses adherence to professional obligations, legal requirements, and moral principles to ensure integrity in all dealings. Ethical lapses can lead to significant legal consequences, reputational damage, and financial losses.
Key Ethical Rules Relevant To Real Estate Bankruptcy
Robert Richards, chair of Dentons’ Global Restructuring, Insolvency and Bankruptcy practice group, emphasizes that attorneys and valuation professionals must adhere to the American Bar Association (ABA) Model Rules throughout the valuation process. Several ABA Model Rules are pertinent when navigating real estate bankruptcy cases, including:
Rule 1.3 (Diligence): Attorneys must act with reasonable diligence and promptness in representing their clients, ensuring that cases progress efficiently and clients’ interests are adequately pursued. This includes the proper investigation and verification of valuation reports.
Rule 3.3 (Candor Toward the Tribunal): Lawyers are required to ensure that all statements to the court are truthful and complete, avoiding material omissions that could mislead the tribunal. In bankruptcy valuations, attorneys are obligated to provide truthful information and avoid misrepresenting asset values.
Rule 3.4 (Fairness to Opposing Parties and Counsel): Attorneys must not unlawfully obstruct another party’s access to evidence or alter, destroy, or conceal material with potential evidentiary value. This requirement includes ensuring transparency and fairness when presenting valuation data in negotiations.
Rule 4.1 (Truthfulness in Statements to Others): In the course of representing a client, a lawyer shall not knowingly make a false statement of material fact or law to a third person.
Valuation Challenges in Bankruptcy Proceedings
Valuation plays a critical role in real estate bankruptcy cases, affecting negotiations, creditor recoveries, and court proceedings. A proper valuation framework helps determine whether secured creditors are adequately protected, ensures that distressed assets are sold at fair market value, and establishes creditor claims appropriately.
Common Valuation Methods
Several methods are used to determine real estate asset values in bankruptcy. Mark Silverman, a partner at Troutman Pepper Locke, highlights the two most common valuation approaches used in bankruptcy cases:
Appraisals: A professional opinion of value based on market trends, property conditions, and comparable sales.
Broker Opinion of Value (BOV): A more market-driven estimate from real estate brokers who understand local conditions.
Valuations should be supported by thorough documentation and clear methodologies to avoid challenges and ensure credibility.
Ethical Considerations in Valuation Practices
Real estate bankruptcies can present various ethical dilemmas related to valuation. Withholding material facts or misrepresenting valuations can lead to legal and reputational consequences. Overstating or understating property values to influence negotiations or court decisions can violate ethical guidelines and legal regulations. Professionals must also be cautious when representing multiple parties with potentially conflicting interests, ensuring that their duties remain aligned with ethical standards.
Transparency in Asset Valuation
Transparency is a fundamental principle in real estate bankruptcy proceedings. All stakeholders, including creditors, courts, and potential buyers, rely on accurate and complete information to make informed decisions. Ethical obligations require full disclosure of all material facts, including pending offers, financial conditions, and market trends. A lack of transparency can lead to mistrust, legal complications, and potential accusations of fraud.
Attorneys and financial advisors must ensure that their clients provide truthful and comprehensive disclosures. This includes being candid about property conditions, occupancy rates, and market comparables. Ethical rules such as ABA Model Rule 3.3 require attorneys to disclose any material information that may impact the court’s decision-making process. Failure to do so can result in sanctions and reputational damage.
Managing Conflicts of Interest
Avoiding conflicts of interest is a prevalent concern in real estate bankruptcy cases, particularly when professionals have relationships with multiple stakeholders. For example, an attorney representing a property owner may have financial ties to other business interests of the client, which could compromise their ability to provide objective advice.
Ethical guidelines emphasize the need for attorneys to avoid representing conflicting interests without full disclosure and informed consent. When conflicts arise, attorneys and financial advisors must take steps to address them appropriately. This may involve withdrawing from representation, seeking independent valuations, or ensuring that their recommendations align with the best interests of creditors and other stakeholders.
Manipulation of Valuation Data
Manipulating property valuation data is an ethical pitfall that can have severe legal and financial consequences. Stakeholders may be tempted to overstate property values to secure more favorable loan terms or misrepresent financial conditions to minimize creditor recoveries. Such practices violate ethical obligations and can lead to litigation or regulatory scrutiny.
Common tactics of valuation manipulation include using inappropriate comparables, omitting key expenses, and inflating projected income. Ethical compliance requires professionals to use reliable valuation methodologies, such as third-party appraisals, BOVs, and comparable sales analysis. ABA Model Rule 4.1 prohibits the making of false or misleading statements, emphasizing the need for honesty in all financial representations.
Regulatory Developments Impacting Valuation Practices
Recent regulatory developments have introduced additional considerations for ethical valuation practices:
Automated Valuation Models (AVMs): On June 24, 2024, six federal agencies finalized a rule to create safeguards for automated valuation models in the real estate industry. The rule requires companies that utilize AVMs to implement quality control standards to ensure data accuracy, protect against data manipulation, and prevent discriminatory impacts.
Addressing Discrimination in Appraisals: The Federal Financial Institutions Examination Council (FFIEC) has emphasized the importance of mitigating risks arising from potential discrimination or bias in real estate appraisals. Examiners are encouraged to evaluate appraisal practices to ensure compliance with consumer protection laws and promote credible valuations.
Best Practices for Ethical Compliance in Bankruptcy Valuation
Matt Christensen of Johnson May notes that adhering to best practices can ensure ethical and effective valuation processes. To navigate valuation challenges effectively, professionals involved in real estate bankruptcies should adhere to the following best practices:
Maintain Transparency: Ensure all stakeholders, including creditors and the court, have access to accurate and complete information.
Engage Independent Valuations: Avoid conflicts of interest by using reputable third-party appraisers or brokers.
Document Communications: Keep records of all discussions and disclosures to prevent disputes over what was shared.
Adhere to Fiduciary Responsibilities: Focus on acting in the best interests of creditors when insolvency is a factor.
Understand the Legal Implications: Legal counsel should stay updated on ethical obligations and ensure compliance with jurisdiction-specific rules.
Conclusion
Ethical considerations in real estate bankruptcy, particularly regarding asset valuation, are critical to fair and effective resolution processes. Whether representing borrowers, lenders, or stakeholders, professionals must ensure they act with integrity, transparency, and adherence to established legal and ethical guidelines.
To learn more about this topic view Valuing Real Estate Assets. The quoted remarks referenced in this article were made either during this webinar or shortly thereafter during post-webinar interviews with the panelists. Readers may also be interested to read other articles about real estate-focused bankruptcy cases.
This article was originally published on DailyDAC.
©2025. DailyDAC TM. This article is subject to the disclaimers found here.
SEC’s Crypto Journey Continues
In a wide-ranging public statement entitled “The Journey Begins,” SEC Commissioner Hester Peirce previewed next steps for the SEC’s Crypto Task Force. As chair of the Crypto Task Force, Commissioner Peirce’s statement lays out a broad agenda for the SEC’s approach to cryptocurrency over the next four years.
The statement begins by criticizing the SEC’s past approach to crypto, noting:
it took us a long time to get into this mess, and it is going to take us some time to get out of it. The Commission has engaged with the crypto industry in one form or another for more than a decade. The first bitcoin exchange-traded product application hit our doorstep in 2013, and the Commission brought a fraud case that had a tangential crypto element that same year. In 2017, we issued the DAO Section 21(a) report, which reflected the first application of the Howey test in this context. Since then, there have been many enforcement actions, a number of no-action letters, some exemptive relief, endless talk about crypto in speeches and statements, lots of meetings with crypto entrepreneurs, many inter-agency and international crypto working groups, discussion of certain aspects of crypto in rulemaking proposals, consideration of crypto-related issues in reviews of registration statements and other filings, and approval of numerous SRO proposed rule changes to list crypto exchange-traded products.
Commissioner Peirce also sought to manage expectations about the timing and complexity of future SEC action:
Throughout this time, the Commission’s handling of crypto has been marked by legal imprecision and commercial impracticality. Consequently, many cases remain in litigation, many rules remain in the proposal stage, and many market participants remain in limbo. Determining how best to disentangle all these strands, including ongoing litigation, will take time. It will involve work across the whole agency and cooperation with other regulators. Please be patient. The Task Force wants to get to a good place, but we need to do so in an orderly, practical, and legally defensible way.
The statement hits libertarian notes, proclaiming, “In this country, people generally have a right to make decisions for themselves, but the counterpart to that wonderful American liberty is the equally wonderful American expectation that people must decide for themselves, not look to Mama Government to tell them what to do or not to do, nor to bail them out when they do something that turns out badly.” But Commissioner Peirce also warned that “SEC rules will not let you do whatever you want, whenever you want, however you want,” and that the SEC will not “tolerate liars, cheaters, and scammers.”
The heart of the statement lays out a 10-point, nonexclusive agenda for the SEC Crypto Task Force:
providing greater specificity as to which crypto assets are securities;
identifying areas both within and outside the SEC’s jurisdiction;
considering temporary regulatory relief for prior coin or token offerings;
modifying future paths for registering securities token offerings;
updating policies for special purpose broker-dealers transacting in crypto;
improving crypto custody options for investment advisers;
providing clarity around crypto lending and staking programs;
revisiting SEC policies regarding crypto exchange-traded products;
engaging with clearing agencies and transfer agents transacting in crypto; and
considering a cross-border sandbox for limited experimentation.
Commissioner Peirce’s statement concludes with instructions on how to engage with the Crypto Task Force, both in writing and in person.
Mexican Government Announces Incentives in Support of Nearshoring
On January 21, 2025, the Decree granting tax incentives in support of the national strategy known as “Plan Mexico,” to encourage new investments that promote dual training programs and innovation (Nearshoring Decree) was published in the Official Federal Gazette (DOF), with the primary goal of stimulating the relocation of companies and the reconfiguration of supply chains closer to the U.S. market, particularly in the manufacturing sector in Mexico. The Decree became effective on January 22, 2025.
The Nearshoring Decree extends incentives currently offered to foreign companies that relocate to Mexico and domestic companies with capacity to integrate into value chains (Decree published in the DOF on October 11, 2023 and its amendment published on December 24, 2024, which will no longer be in effect after the publication of the Nearshoring Decree) to allow all domestic or foreign companies, regardless of industrial sector, to benefit from these incentives.
The tax incentives provided by the Nearshoring Decree include:
Accelerated depreciation for new investments in fixed assets ranging from 41% to 91% (depreciation rates currently set by the Income Tax Law range from 3% to 35%). Higher percentages will apply to investments in high technology sectors and research and development.
New assets are defined as those used for the first time in Mexico.
Immediate deduction will not be available for furniture and office equipment, internal combustion vehicles, armored equipment, non-individually identifiable assets, or aircraft other than those used for agricultural spraying.
Fixed assets must be used for at least two years (except in cases of force majeure) and a specific record of the investment must be kept.
Additional deduction for expenses related to staff training (25% of the increase in expenses over the average of the last three fiscal years). A collaboration agreement with the Ministry of Public Education regarding organizational training is required.
Additional deduction for expenses associated with the promotion of inventions to obtain patents or initial certifications that enable integration into local/regional supply chains (25% of the increase in expenses over the average of the last three fiscal years).
The Decree also establishes an Evaluation Committee, composed of representatives from the Ministry of Finance and Public Credit and the Ministry of Economy, with the participation of the Regional Economic Development and Relocation Advisory Council, which will evaluate the investment projects and collaboration agreements submitted and, where applicable, issue the certificate of compliance required to apply for the tax incentives. The Evaluation Committee will determine the maximum amount of tax incentives that may be claimed by taxpayers for each fiscal year.
Taxpayers that have fixed tax credits, are in liquidation, have restricted use of digital stamps, or whose certificates to issue digital tax receipts have been cancelled, among others, will not be able to apply the incentives.
The total amount approved by the Committee will not exceed MX$30 billion during the validity of the Decree, of which MX$28.5 billion will be for investments in new fixed assets and the remaining MX$1.5 billion for deductions related to training and innovation expenses. A minimum of MX$1 billion will be allocated to micro, small, and medium enterprises (those with total revenues of up to MX$100 million in the previous year).
Accelerated depreciation will apply to fixed assets acquired until September 30, 2030, and the additional deduction for training and innovation expenses will apply until and including fiscal year 2030.
The economic support measures implemented by the Nearshoring Decree will promote investment and expansion in key sectors such as manufacturing, technology, automotive, electronics, and renewable energy, boosting economic growth in Mexico, especially in the northern regions and other areas close to the United States, where investment will be concentrated. This will create thousands of jobs in these key industrial sectors.
With this, Mexico could become a more competitive hub in Latin America for the manufacture of high-tech, automotive, and electronic products. This transformation could establish the country as a key strategic partner in global value chains.
This Decree will not only strengthen Mexico as a manufacturing destination, but will also contribute to a global reconfiguration of supply chains, with a greater focus on diversification and reduced dependence on regions such as Asia.
The main challenges for the Mexican government to ensure the nearshoring strategy is effective and sustainable in the long term will be to; (i) ensure adequate labor conditions; (ii) manage the pressure on existing infrastructure and resources, such as roads, ports, and energy supplies, that will result from increased investment and the creation of new facilities; and (iii) establish means to enable micro, small, and medium-sized domestic companies to access incentives and modern infrastructure to avoid being displaced by large corporations.
* * * * *
El Gobierno mexicano anuncia incentivos en apoyo del nearshoring
El 21 de enero de 2025, se publicó en el Diario Oficial de la Federación (DOF) el Decreto por el que se otorgan estímulos fiscales para apoyar la estrategia nacional denominada “Plan México”, para fomentar nuevas inversiones, que incentiven programas de capacitación dual e impulsen la innovación (Decreto “Nearshoring”), que tiene como objetivo principal estimular la relocalización de empresas y reconfiguración de cadenas de suministro más cercanas al mercado estadounidense, particularmente en la manufactura en México. El Decreto entró en vigor el 22 de enero de 2025.
A partir del Decreto Nearshoring se extienden los incentivos que actualmente son otorgados a las empresas extranjeras que se relocalizan en México y a empresas nacionales que tienen capacidad para integrarse a las cadenas de valor (Decreto publicado en el DOF el 11 de octubre de 2023 y su modificación publicada el 24 de diciembre de 2024, el cual dejará de estar vigente a partir de la publicación del Decreto Nearshoring), para que puedan acceder a ellos todo tipo de empresas nacionales o extranjeras, sin distinción de sectores industriales.
Los estímulos fiscales que otorga el Decreto Nearshoring, son:
Depreciación acelerada de inversión nueva en activo fijo (41% – 91%). Los porcentajes más altos se aplicarán a inversiones en sectores de alta tecnología, investigación y desarrollo. Es importante señalar que los porcentajes de depreciación que actualmente señala la Ley del Impuesto sobre la Renta van del 3 al 35%.
Se consideran bienes nuevos los que se utilizan por primera vez en México.
La deducción inmediata no será aplicable respecto de mobiliario y equipo de oficina, automóviles de combustión interna, equipo de blindaje, activo fijo no identificable individualmente, ni aviones que no sean para aerofumigación agrícola.
Los activos fijos deberán mantenerse en uso por mínimo dos años (salvo pérdidas por caso fortuito o fuerza mayor) y se deberá llevar un registro específico de las inversiones correspondientes.
Deducción adicional de gastos destinados a la capacitación de personal (25% sobre el incremento de gastos respecto del promedio de los 3 ejercicios anteriores). Se requiere contar con un convenio de colaboración con la Secretaría de Educación Pública en materia de educación dual.
Deducción adicional por gastos asociados a la promoción de invenciones para la obtención de patentes, o bien, de certificaciones iniciales que posibiliten la integración a cadenas de proveeduría local/regional (25% sobre el incremento de gastos respecto del promedio de los 3 ejercicios anteriores).
A través del Decreto, se crea también un Comité de Evaluación integrado por representantes de la Secretaría de Hacienda y Crédito Público y de la Secretaría de Economía, con la participación del Consejo Asesor de Desarrollo Económico Regional y Relocalización, que evaluará los proyectos de inversión y convenios de colaboración presentados y, en su caso, emitirá la constancia de cumplimiento requerida para aplicar los estímulos fiscales. El Comité de Evaluación determinará el monto máximo de estímulos fiscales que los contribuyentes podrán aplicar para cada ejercicio fiscal.
No podrán aplicar los estímulos los contribuyentes que tengan créditos fiscales firmes, se encuentren en ejercicio de liquidación, tengan restringido el uso de sellos digitales o cancelados sus certificados para expedir comprobantes fiscales digitales, entre otros.
El monto total que el Comité autorizará no excederá de 30 mil MDP durante la vigencia del Decreto, del cual 28 mil 500 MDP se destinarán a la inversión en bienes nuevos de activo fijo y los otros 1500 MDP a la deducción en gastos de capacitación e innovación. Como mínimo, 1000 MDP serán destinados a micro, pequeñas y medianas empresas (ingresos totales en el ejercicio anterior de hasta 100 MDP).
La depreciación acelerada será aplicable para bienes de activo fijo adquiridos hasta el 30 de septiembre de 2030 y la deducción adicional por gastos de capacitación e innovación, hasta, inclusive, el ejercicio fiscal 2030.
Las medidas de apoyo económico que se implementan a través del Decreto Nearshoring permitirán fomentar la inversión y la expansión de sectores clave como manufactura, tecnología, automotriz, electrónica y energías renovables, impulsando el crecimiento económico de México especialmente en las regiones del norte y otras áreas cercanas a los Estados Unidos, donde se concentrará la inversión. Esto generará miles de empleos en dichos sectores industriales clave.
Con ello, México podría convertirse en un hub más competitivo en América Latina para la manufactura de productos de alta tecnología, automotrices y electrónicos. Este cambio podría consolidarlo como un socio estratégico clave en las cadenas globales de valor.
Este Decreto no solo fortalecerá a México como destino de manufactura, sino que contribuirá a una reconfiguración global de las cadenas de suministro, con un mayor enfoque en la diversificación y la reducción de la dependencia de regiones como Asia.
Los grandes retos que tendrá el gobierno de México para que la estrategia de Nearshoring sea efectiva y sostenible a largo plazo, serán principalmente: (i) garantizar condiciones laborales dignas; (ii) gestionar adecuadamente la presión sobre la infraestructura y recursos existentes, como carreteras, puertos y suministros energéticos, que generará el aumento en la inversión y la creación de nuevas plantas; y (iii) establecer medios que permitan a las empresas nacionales de micro, pequeño y mediano tamaño, acceder a los incentivos e infraestructura moderna para no verse desplazadas por las grandes corporaciones.
Nuestra firma cuenta con el equipo y capacidades para asistir a nuestros clientes en el diseño e implementación de estrategias que les permitan aprovechar los estímulos fiscales otorgados a través del Decreto Nearshoring.
Corporate Transparency Act Recent Update
As previously reported, in early December, the District Court for the Northern District of Texas issued a nationwide injunction against the enforcement of the CTA [1]. The government quickly appealed. Just a few weeks later, on December 23, 2024, the Fifth Circuit Court of Appeals granted the government’s emergency motion to stay the nationwide injunction — effectively lifting the injunction and allowing the enforcement of the CTA to proceed. Given there was a January 1, 2025, deadline for millions of small business owners to file, FinCEN graciously decided to extend the filing deadline to January 13, 2025.
Then, just three days later, on December 26, 2024, in a short, one-page order, a different panel of judges from the same Fifth Circuit Court of Appeals reinstated the injunction, again placing the CTA and its enforcement provisions on hold. The government again quickly responded, petitioning the U.S. Supreme Court to lift the injunction. On January 23, 2025, the Supreme Court did precisely that — granting the government’s motion. The Supreme Court’s order, however, only applied to the injunction issued by the federal judge in Texas. Since a separate nationwide order issued by a different federal judge in Texas [2] was still in place, FinCEN posted a new update to its website one day later, stating:
“Reporting companies are not currently required to file beneficial ownership information with FinCEN despite the Supreme Court’s action in Texas Top Cop Shop. Reporting companies also are not subject to liability if they fail to file this information while the Smith order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports. [3] “
Opinions vary regarding whether reporting companies should file voluntarily. At the very least, reporting companies should be prepared to file quickly if and when the “red light” turns green once again. In the meantime, we continue to watch for any additional rulings. To stay up to date, please check our website regularly or contact a member of our Corporate Transparency Team for advice.
[1] Texas Top Cop Shop, Inc. v. McHenry
[2] Smith v. U.S. Department of the Treasury
[3] https://www.fincen.gov/boi (last accessed February 3, 2025)