Pub Date : 2019-06-10DOI: 10.1093/OSO/9780198842187.003.0005
S. Eich
Cryptocurrencies are frequently framed as future-oriented, technological innovations that decentralize money, thereby liberating it from centralized governance and the political tentacles of the state. This is misleading on several counts. First, electronic currencies cannot leave the politics of money behind even where they aim to disavow it. Instead, we can understand their impact as a political attempt to depoliticize money. Second, the dramatic price swings of cryptocurrencies challenge their self-fashioning as a new form of money and reveal them instead as speculative assets and securities in need of regulation. While the preferential tax and regulatory treatment of cryptocurrencies hinges on their nominal currency status, it is ironically precisely their success as speculative assets that has undermined these claims. Finally, far from heralding a radical break with the past, electronic currencies serve as a reminder of the unresolved global politics of money since the 1970s. To support these three interrelated theses this chapter places the rise of cryptocurrencies in the historical context of the international politics of money between the end of the Bretton Woods system and the response to the 2008 Financial Crisis.
{"title":"Old Utopias, New Tax Havens","authors":"S. Eich","doi":"10.1093/OSO/9780198842187.003.0005","DOIUrl":"https://doi.org/10.1093/OSO/9780198842187.003.0005","url":null,"abstract":"Cryptocurrencies are frequently framed as future-oriented, technological innovations that decentralize money, thereby liberating it from centralized governance and the political tentacles of the state. This is misleading on several counts. First, electronic currencies cannot leave the politics of money behind even where they aim to disavow it. Instead, we can understand their impact as a political attempt to depoliticize money. Second, the dramatic price swings of cryptocurrencies challenge their self-fashioning as a new form of money and reveal them instead as speculative assets and securities in need of regulation. While the preferential tax and regulatory treatment of cryptocurrencies hinges on their nominal currency status, it is ironically precisely their success as speculative assets that has undermined these claims. Finally, far from heralding a radical break with the past, electronic currencies serve as a reminder of the unresolved global politics of money since the 1970s. To support these three interrelated theses this chapter places the rise of cryptocurrencies in the historical context of the international politics of money between the end of the Bretton Woods system and the response to the 2008 Financial Crisis.","PeriodicalId":205528,"journal":{"name":"Regulating Blockchain","volume":"185 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-06-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122139943","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-06-10DOI: 10.1093/oso/9780198842187.003.0004
Angela Walch
This chapter addresses the myth of ‘decentralized governance’ of public blockchains, arguing that certain people who create, operate, or reshape them function much like fiduciaries of those who rely on these data structures. It compares the role of leading software developers and Frankel’s conception of a ‘fiduciary’ and finds much in common, as users place extreme trust in the developers to be both competent and loyal (i.e. to be free of conflicts of interest). The chapter frames the cost–benefit analysis necessary to evaluate whether it is wise to treat these parties as fiduciaries, and outlines key questions needed to flesh out the fiduciary categorization. For example, which software developers are influential enough to resemble fiduciaries? Are all users of a blockchain ‘entrustors’ of the fiduciaries who operate the blockchain, or only a subset of those who rely on the blockchain? The chapter concludes by considering the broader implications of treating software developers as fiduciaries, given the existing accountability paradigm that largely shields them from liability for the code they create.
{"title":"In Code(rs) We Trust","authors":"Angela Walch","doi":"10.1093/oso/9780198842187.003.0004","DOIUrl":"https://doi.org/10.1093/oso/9780198842187.003.0004","url":null,"abstract":"This chapter addresses the myth of ‘decentralized governance’ of public blockchains, arguing that certain people who create, operate, or reshape them function much like fiduciaries of those who rely on these data structures. It compares the role of leading software developers and Frankel’s conception of a ‘fiduciary’ and finds much in common, as users place extreme trust in the developers to be both competent and loyal (i.e. to be free of conflicts of interest). The chapter frames the cost–benefit analysis necessary to evaluate whether it is wise to treat these parties as fiduciaries, and outlines key questions needed to flesh out the fiduciary categorization. For example, which software developers are influential enough to resemble fiduciaries? Are all users of a blockchain ‘entrustors’ of the fiduciaries who operate the blockchain, or only a subset of those who rely on the blockchain? The chapter concludes by considering the broader implications of treating software developers as fiduciaries, given the existing accountability paradigm that largely shields them from liability for the code they create.","PeriodicalId":205528,"journal":{"name":"Regulating Blockchain","volume":"52 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-06-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126053977","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-06-10DOI: 10.1093/OSO/9780198842187.003.0006
Claus D. Zimmermann
The potential of digital money to replace state-issued fiat money as the predominant means of payment for retail goods combined with its ability to flow freely across international borders is increasingly attracting attention among central bankers, the media, and scholars. The concern is that central banks could lose control over the monetary aggregates regulating the money supply for conducting monetary policy. This chapter examines important regulatory challenges that arise from the increasing use of virtual currency systems. Stable monetary regimes are expected to provide a level of resilience against three types of monetary stability risks: (i) structural ‘deflation’; (ii) lacking flexibility to respond to temporary shocks to money demand; and (iii) failing to fulfil the traditional key function of lender of last resort. It is against these three types of risks that the sustainability of virtual currency systems can be assessed. The chapter concludes that, as they attract increasing attention and account for increasing volumes of financial flows, virtual currency schemes may ultimately have to become subject to increasingly tight regulation on a global level.
{"title":"Monetary Policy in the Digital Age","authors":"Claus D. Zimmermann","doi":"10.1093/OSO/9780198842187.003.0006","DOIUrl":"https://doi.org/10.1093/OSO/9780198842187.003.0006","url":null,"abstract":"The potential of digital money to replace state-issued fiat money as the predominant means of payment for retail goods combined with its ability to flow freely across international borders is increasingly attracting attention among central bankers, the media, and scholars. The concern is that central banks could lose control over the monetary aggregates regulating the money supply for conducting monetary policy. This chapter examines important regulatory challenges that arise from the increasing use of virtual currency systems. Stable monetary regimes are expected to provide a level of resilience against three types of monetary stability risks: (i) structural ‘deflation’; (ii) lacking flexibility to respond to temporary shocks to money demand; and (iii) failing to fulfil the traditional key function of lender of last resort. It is against these three types of risks that the sustainability of virtual currency systems can be assessed. The chapter concludes that, as they attract increasing attention and account for increasing volumes of financial flows, virtual currency schemes may ultimately have to become subject to increasingly tight regulation on a global level.","PeriodicalId":205528,"journal":{"name":"Regulating Blockchain","volume":"32 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-06-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128690616","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-06-10DOI: 10.1093/oso/9780198842187.003.0012
A. Seretakis
Distributed ledger technology, a variant of which is blockchain technology, represents one of the most important innovations of the FinTech revolution. Academics, policy-makers, and market participants are experimenting with the technology with the aim of enhancing the functioning of financial markets. Industry consortia are being formed by the biggest financial institutions in the world seeking to leverage the use of the technology, in order to improve the clearing and settlement process. Furthermore, central banks in advanced and developing economies are examining the potential of using the technology in market infrastructures operated by central banks and are even exploring the possibility of issuing digital base money. Nevertheless, the widespread adoption of distributed ledger technology as envisioned by its ardent supporters encounters considerable legal obstacles, including the numerous new regulations imposed on financial markets and market participants in the aftermath of the Global Financial Crisis. This chapter seeks to disentangle the myths from the realities of the so-called distributed ledger technology or blockchain revolution and discusses how the legal regime can act both as an impediment and a catalyst to the widespread adoption of the technology.
{"title":"Blockchain, Securities Markets, and Central Banking","authors":"A. Seretakis","doi":"10.1093/oso/9780198842187.003.0012","DOIUrl":"https://doi.org/10.1093/oso/9780198842187.003.0012","url":null,"abstract":"Distributed ledger technology, a variant of which is blockchain technology, represents one of the most important innovations of the FinTech revolution. Academics, policy-makers, and market participants are experimenting with the technology with the aim of enhancing the functioning of financial markets. Industry consortia are being formed by the biggest financial institutions in the world seeking to leverage the use of the technology, in order to improve the clearing and settlement process. Furthermore, central banks in advanced and developing economies are examining the potential of using the technology in market infrastructures operated by central banks and are even exploring the possibility of issuing digital base money. Nevertheless, the widespread adoption of distributed ledger technology as envisioned by its ardent supporters encounters considerable legal obstacles, including the numerous new regulations imposed on financial markets and market participants in the aftermath of the Global Financial Crisis. This chapter seeks to disentangle the myths from the realities of the so-called distributed ledger technology or blockchain revolution and discusses how the legal regime can act both as an impediment and a catalyst to the widespread adoption of the technology.","PeriodicalId":205528,"journal":{"name":"Regulating Blockchain","volume":"108 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-06-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122488694","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-06-10DOI: 10.1093/oso/9780198842187.003.0001
P. Hacker, I. Lianos, G. Dimitropoulos, S. Eich
This introductory chapter provides an overview of the main legal and policy implications of blockchain technology. It proceeds in four steps. First, the chapter traces the technical and legal evolution of blockchain applications since the early days of Bitcoin, highlighting in particular the political ambitions and tensions that have marked many of these projects from the start. Second, it shows how blockchain applications have created new calculative spaces of financial markets that seek to challenge existing forms of money. Third, it discusses the core points of friction with incumbent legal systems, with a particular focus on the regulability of decentralized systems in general and data protection concerns in particular. Fourth, the chapter provides an outline to the contributions to the volume, which span a wide array of topics at the intersection of blockchain, law, and politics.
{"title":"Regulating Blockchain","authors":"P. Hacker, I. Lianos, G. Dimitropoulos, S. Eich","doi":"10.1093/oso/9780198842187.003.0001","DOIUrl":"https://doi.org/10.1093/oso/9780198842187.003.0001","url":null,"abstract":"This introductory chapter provides an overview of the main legal and policy implications of blockchain technology. It proceeds in four steps. First, the chapter traces the technical and legal evolution of blockchain applications since the early days of Bitcoin, highlighting in particular the political ambitions and tensions that have marked many of these projects from the start. Second, it shows how blockchain applications have created new calculative spaces of financial markets that seek to challenge existing forms of money. Third, it discusses the core points of friction with incumbent legal systems, with a particular focus on the regulability of decentralized systems in general and data protection concerns in particular. Fourth, the chapter provides an outline to the contributions to the volume, which span a wide array of topics at the intersection of blockchain, law, and politics.","PeriodicalId":205528,"journal":{"name":"Regulating Blockchain","volume":"21 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-06-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121498186","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-06-10DOI: 10.1093/OSO/9780198842187.003.0010
J. Greenacre
Recent years has seen the growth of the ‘shadow payment system’. This system includes Bitcoin exchanges, PayPal, Alipay in China, and mobile money services in Africa. On current projections, this global ‘shadow payment system’ will perform an ever-greater portion of payments in most economies in the world. This chapter explores what legal tools can be used to protect users’ funds stored within the shadow payment system. It provides a framework for identifying risks to users’ funds, the range of relevant legal tools and their effectiveness, and uses this framework to make three claims. First, insolvency of an actor in the shadow payment system exposes users’ funds to two risks. One is loss of value, which means the potential write-down of funds when users are characterized as unsecured creditors. The other is illiquidity, meaning users face a delay in converting or transferring funds during bankruptcy proceedings. Second, there is little information about legal tools currently used in the shadow payment system and their effectiveness. There is also little guidance on the desirability of using ex post tools, such as deposit insurance and lender of last resort, to protect users’ funds. This is because the policy community is yet to identify the benefits and costs of different roles for the shadow payment system in an economy. Is it an investment asset, alternative retail funds transfer system, vital payment infrastructure on which the economy relies, or something else? Third, mobile money can provide insights into discussions about using legal tools to protect users’ funds. This is because over the past ten years, this shadow payment system has become subject to increasingly sophisticated legal and regulatory regimes. A key insight from mobile money is ex ante and ex post tools appear required to address loss of value and illiquidity risks. A similar package of reforms may be needed to build strong, stable shadow payment systems in Japan, the United States, and other developed countries. The chapter uses mobile money in Malawi as a case study for developing this point.
{"title":"Regulating the Shadow Payment System","authors":"J. Greenacre","doi":"10.1093/OSO/9780198842187.003.0010","DOIUrl":"https://doi.org/10.1093/OSO/9780198842187.003.0010","url":null,"abstract":"Recent years has seen the growth of the ‘shadow payment system’. This system includes Bitcoin exchanges, PayPal, Alipay in China, and mobile money services in Africa. On current projections, this global ‘shadow payment system’ will perform an ever-greater portion of payments in most economies in the world. This chapter explores what legal tools can be used to protect users’ funds stored within the shadow payment system. It provides a framework for identifying risks to users’ funds, the range of relevant legal tools and their effectiveness, and uses this framework to make three claims. First, insolvency of an actor in the shadow payment system exposes users’ funds to two risks. One is loss of value, which means the potential write-down of funds when users are characterized as unsecured creditors. The other is illiquidity, meaning users face a delay in converting or transferring funds during bankruptcy proceedings. Second, there is little information about legal tools currently used in the shadow payment system and their effectiveness. There is also little guidance on the desirability of using ex post tools, such as deposit insurance and lender of last resort, to protect users’ funds. This is because the policy community is yet to identify the benefits and costs of different roles for the shadow payment system in an economy. Is it an investment asset, alternative retail funds transfer system, vital payment infrastructure on which the economy relies, or something else? Third, mobile money can provide insights into discussions about using legal tools to protect users’ funds. This is because over the past ten years, this shadow payment system has become subject to increasingly sophisticated legal and regulatory regimes. A key insight from mobile money is ex ante and ex post tools appear required to address loss of value and illiquidity risks. A similar package of reforms may be needed to build strong, stable shadow payment systems in Japan, the United States, and other developed countries. The chapter uses mobile money in Malawi as a case study for developing this point.","PeriodicalId":205528,"journal":{"name":"Regulating Blockchain","volume":"23 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-06-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121952834","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-06-10DOI: 10.1093/oso/9780198842187.003.0016
Florian Möslein
Blockchain technology promises to perform tasks that have traditionally been assigned to the law and the realm of legal institutions. Smart contracts create agreements that are both automatable by computers and enforceable via the tamper-proof execution of computer codes. Based on such smart contracts, some providers of blockchain technologies offer ‘to act as a digital jurisdiction’. The promise seems to be that law of the relevant jurisdiction is entirely substituted by the rules codified in the blockchain. However, even if it has often been argued that the ‘Code Is Law’, the law is not—and arguably never will be—entirely redundant. Therefore, the challenge is to identify the boundaries of such digital jurisdictions by clarifying the relationship between law and code and to develop new principles for conflicts of laws or rather principles for the conflict of laws and codes.
{"title":"Conflicts of Laws and Codes","authors":"Florian Möslein","doi":"10.1093/oso/9780198842187.003.0016","DOIUrl":"https://doi.org/10.1093/oso/9780198842187.003.0016","url":null,"abstract":"Blockchain technology promises to perform tasks that have traditionally been assigned to the law and the realm of legal institutions. Smart contracts create agreements that are both automatable by computers and enforceable via the tamper-proof execution of computer codes. Based on such smart contracts, some providers of blockchain technologies offer ‘to act as a digital jurisdiction’. The promise seems to be that law of the relevant jurisdiction is entirely substituted by the rules codified in the blockchain. However, even if it has often been argued that the ‘Code Is Law’, the law is not—and arguably never will be—entirely redundant. Therefore, the challenge is to identify the boundaries of such digital jurisdictions by clarifying the relationship between law and code and to develop new principles for conflicts of laws or rather principles for the conflict of laws and codes.","PeriodicalId":205528,"journal":{"name":"Regulating Blockchain","volume":"18 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-06-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129825781","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-06-10DOI: 10.1093/oso/9780198842187.003.0008
Philip Hacker
Cryptocurrencies such as Bitcoin or Ethereum are gaining ground not only as alternative modes of payment but also as platforms for financial innovation, particularly through token sales or initial coin offerings (‘ICOs’). All of these ventures are based on decentralized, permissionless blockchain technology, distinguished by their openness to, and the formal equality of, participants. However, recent cryptocurrency crises have shown that these architectures lack robust governance frameworks and are therefore prone to patterns of re-centralization. They are informally dominated by coalitions of powerful players within the cryptocurrency ecosystem who may violate basic rules of the blockchain community without accountability or sanction. This chapter first suggests that cryptocurrency and token-based ecosystems can be fruitfully analysed as complex systems that have been studied for decades in complexity theory and have recently gained prominence in financial regulation, too. It applies these insights to three key case studies: the Bitcoin Hard Fork of 2013; the Ethereum hard fork of 2016, following the DAO hack; and the ongoing Bitcoin scaling debate. Second, the chapter argues that complexity-induced uncertainty can be reduced, and elements of stability and order strengthened, by adapting a corporate governance framework to blockchain-based organizations: cryptocurrencies, and decentralized applications built on top of them via token sales. The resulting ‘comply-or-explain’ approach combines transparency and accountability with the necessary flexibility that allows blockchain developers to continue to experiment for the sake of innovation. Eventually, however, the coordination of these activities may necessitate the establishment of a self-regulatory institution.
{"title":"Corporate Governance for Complex Cryptocurrencies?","authors":"Philip Hacker","doi":"10.1093/oso/9780198842187.003.0008","DOIUrl":"https://doi.org/10.1093/oso/9780198842187.003.0008","url":null,"abstract":"Cryptocurrencies such as Bitcoin or Ethereum are gaining ground not only as alternative modes of payment but also as platforms for financial innovation, particularly through token sales or initial coin offerings (‘ICOs’). All of these ventures are based on decentralized, permissionless blockchain technology, distinguished by their openness to, and the formal equality of, participants. However, recent cryptocurrency crises have shown that these architectures lack robust governance frameworks and are therefore prone to patterns of re-centralization. They are informally dominated by coalitions of powerful players within the cryptocurrency ecosystem who may violate basic rules of the blockchain community without accountability or sanction. This chapter first suggests that cryptocurrency and token-based ecosystems can be fruitfully analysed as complex systems that have been studied for decades in complexity theory and have recently gained prominence in financial regulation, too. It applies these insights to three key case studies: the Bitcoin Hard Fork of 2013; the Ethereum hard fork of 2016, following the DAO hack; and the ongoing Bitcoin scaling debate. Second, the chapter argues that complexity-induced uncertainty can be reduced, and elements of stability and order strengthened, by adapting a corporate governance framework to blockchain-based organizations: cryptocurrencies, and decentralized applications built on top of them via token sales. The resulting ‘comply-or-explain’ approach combines transparency and accountability with the necessary flexibility that allows blockchain developers to continue to experiment for the sake of innovation. Eventually, however, the coordination of these activities may necessitate the establishment of a self-regulatory institution.","PeriodicalId":205528,"journal":{"name":"Regulating Blockchain","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-06-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126059674","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-06-10DOI: 10.1093/OSO/9780198842187.003.0009
Rohan Grey
This chapter explores the future of banking in a digital fiat currency (‘DFC’) regime, defined as a monetary regime in which retail and wholesale consumers have direct access to public digital checking and payments services, independent of the existing bank-centric depository system. I argue that in such a regime, existing banks will continue to perform the valuable social function of underwriting loans and evaluating collateral, even as their checking and payments processing functions will be rendered obsolete. Such a system would improve payments system resiliency, while addressing the safe asset shortage issues associated with insurance caps on bank deposit accounts. At the same time, a DFC regime would necessarily clarify the public nature of the existing credit system, wherein commercial banks are (inherently) entrusted to underwrite loans and subjectively evaluate collateral. Thus, digital fiat currency technology represents more than a mere improvement in payment system efficiency—it has the potential to transform the banking industry, simplify financial regulation, and recast our collective understanding of how money and banking work in the modern economy.
{"title":"Banking in a Digital Fiat Currency Regime","authors":"Rohan Grey","doi":"10.1093/OSO/9780198842187.003.0009","DOIUrl":"https://doi.org/10.1093/OSO/9780198842187.003.0009","url":null,"abstract":"This chapter explores the future of banking in a digital fiat currency (‘DFC’) regime, defined as a monetary regime in which retail and wholesale consumers have direct access to public digital checking and payments services, independent of the existing bank-centric depository system. I argue that in such a regime, existing banks will continue to perform the valuable social function of underwriting loans and evaluating collateral, even as their checking and payments processing functions will be rendered obsolete. Such a system would improve payments system resiliency, while addressing the safe asset shortage issues associated with insurance caps on bank deposit accounts. At the same time, a DFC regime would necessarily clarify the public nature of the existing credit system, wherein commercial banks are (inherently) entrusted to underwrite loans and subjectively evaluate collateral. Thus, digital fiat currency technology represents more than a mere improvement in payment system efficiency—it has the potential to transform the banking industry, simplify financial regulation, and recast our collective understanding of how money and banking work in the modern economy.","PeriodicalId":205528,"journal":{"name":"Regulating Blockchain","volume":"42 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-06-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133849161","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-06-10DOI: 10.1093/OSO/9780198842187.003.0014
Houman B. Shadab
This chapter provides an overview of how US securities regulation applies to the sale of cryptographic tokens using a distributed ledger, so-called initial coin offerings. Token sale transactions that meet the definition of ‘investment contract’ qualify as regulated securities transactions following the seminal 1946 court decision in the Securities Exchange Commission’s lawsuit against the W. J. Howey company. Currently, there exists substantial legal uncertainty regarding the regulatory classification of token sales involving utility tokens that provide their holders with non-financial, software-based functionality. As implied in a June 2018 speech by a high-ranking SEC official, sales of tokens may initially qualify as regulated securities transactions, yet later fail to qualify as regulated investment contracts if the tokens’ underlying network becomes sufficiently decentralized. Distributed ledger technology is disrupting the nature and operation of early-stage fundraising and access to software services and enabling the sale of digital tokens that operate as a cryptocurrency or provide access to a software service through the use of a blockchain or distributed ledger. The sale of such tokens, so-called initial coin offerings (‘ICOs’), is often in exchange for cryptocurrencies, such as Ethereum or Bitcoin (however, tokens could be sold in exchange for fiat currency). From January to May 2018, globally US$13.7 billion in tokens were sold by 537 companies or projects, an amount greater than all previous time periods combined. This chapter discusses under what circumstances US securities law applies to the sale of such tokens.
本章概述了美国证券监管如何适用于使用分布式账本(即所谓的首次代币发行)销售加密代币。符合“投资合同”定义的代币销售交易符合1946年证券交易委员会对W. J. Howey公司诉讼的开创性法院判决后的受监管证券交易资格。目前，关于代币销售的监管分类存在很大的法律不确定性，这些代币涉及为其持有人提供非金融、基于软件的功能的实用代币。正如美国证券交易委员会一位高级官员在2018年6月的讲话中所暗示的那样，代币的销售最初可能符合受监管的证券交易资格，但如果代币的底层网络变得足够分散，那么后来就不符合受监管的投资合同资格。分布式账本技术正在扰乱早期筹款和获取软件服务的性质和运作，并允许销售作为加密货币运行的数字代币，或通过使用区块链或分布式账本提供对软件服务的访问。此类代币的销售，即所谓的首次代币发行(ICOs)，通常是为了换取加密货币，如以太坊或比特币(然而，代币可以出售以换取法定货币)。从2018年1月到5月，全球537家公司或项目销售了137亿美元的代币，超过了之前所有时期的总和。本章讨论在何种情况下美国证券法适用于此类代币的销售。
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