Regulation Of Crypto Assets

This thought-provoking book challenges the way we think about regulating cryptoassets. Bringing a timely new perspective, Syren Johnstone critiques the application of a financial regulation narrative to cryptoassets, questioning the assumptions on which it is based and whether regulations developed in the 20th century remain fit to apply to a technology emerging in the 21st.

The rapid growth of crypto assets has raised questions about the appropriate regulatory perimeter and the ability of the existing regulatory architecture to adapt to changing conditions. Effective regulation of financial services promotes long- term economic stability and minimizes the social costs and negative externalities from financial instability. The same underlying principles for regulation should apply to nascent products and services based on innovative technologies, notwithstanding design challenges.

This book examines the legal and regulatory aspects of cryptocurrency and blockchain and the emerging practical issues that these issues involve. The analysis covers a range of advanced economies across the world, in America, Europe and Asia. The book describes, explains and analyses the nature of cryptocurrencies and the blockchain systems they are constructed on in these major world economies and considers relevant law and regulation and their shortcomings. It will be of use and interest to academics, lawyers, regulators and anyone involved with cryptocurrencies and blockchain.

Crypto-Finance, Law and Regulation investigates whether crypto-finance will cause a paradigm shift in regulation from a centralised model to a model based on distributed consensus. This book explores the emergence of a decentralised and disintermediated crypto-market and investigates the way in which it can transform the financial markets. It examines three components of the financial market – technology, finance, and the law – and shows how their interrelationship dictates the structure of a crypto-market. It focuses on regulators’ enforcement policies and their jurisdiction over crypto-finance operators and participants. The book also discusses the latest developments in crypto-finance, and the advantages and disadvantages of crypto-currency as an alternative payment product. It also investigates how such a decentralised crypto-finance system can provide access to finance, promote a shared economy, and allow access to justice. By exploring the law, regulation and governance of crypto-finance from a national, regional and global viewpoint, the book provides a fascinating and comprehensive overview of this important topic and will appeal to students, scholars and practitioners interested in regulation, finance and the law.

This key textbook examines the financial growth and success of digital assets in the contemporary economy. As digital assets and other blockchain applications mature, and regulatory authorities work hard to keep pace, three leading attorneys in the field invite students to consider the legal frameworks pertinent to regulating this new method of exchange. In this, the first textbook of its kind, the authors explore the growth of smart contracts, the application of securities laws to token sales, the regulation of virtual currency businesses, the taxation of digital assets and the intersection of digital assets and criminal law.

Cryptoassets represent one of the most high profile financial products in the world, and fastest growing financial products in history. From Bitcoin, Etherium and Ripple's XRP-so called "utility tokens" used to access financial services-to initial coin offerings that in 2017 rivalled venture capital in money raised for startups, with an estimated $5.6 billion (USD) raised worldwide across 435 ICOs. All the while, technologists have hailed the underlying blockchain technology for these assets as potentially game changing applications for financial payments and record-keeping. At the same time, cryptoassets have produced considerable controversy. Many have turned out to be lacklustre investments for investors. Others, especially ICOs, have also attracted noticeable fraud, failing firms, and alarming lapses in information-sharing with investors. Consequently, many commentators around the world have pressed that ICO tokens be considered securities, and that concomitant registration and disclosure requirements attach to their sales to the public. This volume assembles an impressive group of scholars, businesspersons and regulators to collectively write on cryptoassets. This volume represents perspectives from across the regulatory ecosystem, and includes technologists, venture capitalists, scholars, and practitioners in securities law and central banking.

This incisive and thought-provoking book examines the regulation of cryptocurrency trading by state and federal financial services regulators, in order to understand why these statutes proved to be ineffective in regulating this new asset class. Furthermore, it analyzes and evaluates pending proposals in Congress for more effective cryptocurrency regulation.

The rise of crypto-assets and crypto-assets corporate finance transactions – like Initial Coin Offerings, Security Token Offerings, Initial Exchange Offerings, and respective variants – are disrupting the way companies raise funds. At the same time the sudden rise of crypto finance transactions has created unprecedented challenges for regulators, financial market authorities, corporate finance lawyers and professionals. Crypto-assets corporate finance transactions are essentially borderless, global and interconnected. Their borderless nature was the core inspiration of this work. This book, indeed, is an attempt to address to a comparative and functional analysis of crypto-assets corporate finance transactions. I believe it’s neutral, international, functional and short. It’s neutral because while it’s true that the variety of crypto-assets necessitates a case-by-case analysis, it’s unquestionable that some types and hybrid forms of crypto-assets fall within existing securities laws and regulations. Securities offerings, however, are highly regulated in most developed jurisdictions, while, by contrast, the rapid rise of these crypto-assets corporate finance transactions is very likely nothing else than a mere market response to overregulation. It has to be noted that: (i) regulations should be technologically neutral, and in order to become so, address the actors and not the products themselves; (ii) far too often (non-accredited, non-qualified, non-sophisticated) investors are denied the opportunity to invest in new and promising technologies and in new companies — all which undermine productive capital formation and economic growth; (iii) crypto finance transactions are part of a self-contained system and this unique context requires to carefully weigh competing goals – protecting investors (that can lead to a larger and healthier crypto finance environment) while promoting capital raising and economic liberty. This is why these crypto-assets should be treated as a new type of asset whose use – currently falling within existing regulations – should be governed by new and ad hoc regulations, above all in the securities field, in order not to disregard their unique operational and technological features. Existing securities rules and best practices are frequently nonsensical or even counterproductive in the context of many crypto finance transactions. Regulation is certainly necessary to allow crypto-assets and crypto- assets corporate finance transactions to achieve their potential, but the regulatory system should have an appropriate balance and a high degree of clarity. I believe, however, optimal regulatory structures will emerge and converge over time. The final part of the book, then, sketches some proposals for regulators – based on a weighted approach – that, if adopted, would enhance legal certainty and seek to balance support for innovation and investor protection. It’s international because it contains summary information on the securities law regimes in Australia, Brazil, Canada, China, EU / EAA (Austria, France, Germany, Ireland, Italy, Luxemburg, Netherlands, Norway, United Kingdom), Hong Kong, India, Israel, Japan, Nigeria, Russia, Saudi Arabia, Singapore, South Africa, South Korea, Switzerland, United Arab Emirates, United States, including the principal prospectus exemptions and private placements rules in each jurisdiction. Securities offerings are highly regulated and significant civil and criminal penalties can be incurred as a result of offerings which are not authorized by the relevant authorities or compliant with the applicable securities regime. There are good reasons why similar measures have arisen in the wider corporate world over time – to ensure a sustainable ecosystem with resources directed at better quality projects, to ensure that bad actors are (to the extent possible) eliminated, and to ensure that legal and professional risks are mitigated by a better balance between the interests of all stakeholders. This is why crypto-assets corporate finance transactions falling within existing securities laws and regulations can’t be conducted assuming the law doesn’t exist – in the meantime specific regulations arise. Also, while the lack of widely accepted global standards has led to a great deal of regulatory arbitrage, as crypto-assets issuers shop for jurisdictions with the lightest touch (or no touch), I believe they should not attempt to flee from regulation. By contrast, they should talk with financial market authorities. It’s functional because with regard to crypto-assets with real intrinsic usage (non- speculative crypto-assets) this book discusses how a proactive self-regulation, ethical human behaviors, rigorous due diligence, improved governance, disclosure, investors protection and accountability measures could be applied to lead to better quality Initial Coin Offerings, a more sustainable fundraising environment for all the parties involved and mitigate risks due to regulatory uncertainty. At the same I propose (and encourage the adoption of) a Corporate Crypto Conduct Code for businesses in this space. It’s short because my project in writing this book is to give a quick framework for understanding the most important securities law regimes. This book is not intended to be an exhaustive guide to the regulation of crypto-assets corporate finance transaction globally or in any of the included jurisdictions. Instead, for each jurisdiction, I have endeavored to provide a sufficient overview for the reader to understand the current legal and regulatory environment. I hope that it remains short enough to attract the readers I would like to reach: (i) my colleagues in international business and corporate law and related legal fields (who can start from these frameworks to make a more detailed analysis of the securities laws in the core jurisdictions summarized in this book); (ii) regulators and lawmakers (with the hope they will find this book a helpful guide to develop new strategies, policies and regulations); (iii) crypto-assets issuers (with the hope they understand the importance of being compliant with the law – even if and when, on the spot, it seems economically irrational – and the reasons why the current measures have arisen in the wider corporate world over time).