Regulation of the Crypto-Economy: Managing Risks, Challenges, and Regulatory Uncertainty

Journal of Risk and Financial Management, Forthcoming

33 Pages Posted: 5 Aug 2018 Last revised: 12 Jul 2019

See all articles by Douglas J. Cumming

Douglas J. Cumming

Florida Atlantic University

Sofia Johan

Florida Atlantic University - Finance; Tilburg Law and Economics Center (TILEC)

Anshum Pant

Schulich School of Business

Date Written: January 1, 2019

Abstract

Distributed ledger technology, also known as Blockchain, is gaining traction globally. Blockchain offers a secure validation mechanism and decentralized mass collaboration. Cryptocurrencies make use of this technology as a new asset class for investors worldwide. Cryptocurrencies are being used by companies to raise capital via Initial Coin Offerings (ICOs). The substantial inflow of unregulated capital into a transactional and transnational industry has aroused interest from not just investors, but also national securities and monetary regulatory agencies. In this paper, we review the Security and Exchange Commission’s initial statements and subsequent pronouncements on ICO’s to illustrate the potential problems with applying a dated legal framework to an ever-evolving ecosystem. Recognizing the inability of enforcement within existing regulatory frameworks, we discuss the importance of regulation of the crypto asset class and internal collaboration between government agencies and developers in the establishment of an ecosystem which integrates investor protection and investment.

Keywords: Fintech, Cryptocurrency, ICO, Legal, Securities Law, Cybersecurity, Taxation, Capital Markets, Economics, Securitization, Regulation, Legal, Frameworks, Crowdfunding, Virtual Currency, Bitcoin, Ether, Secondary Markets, Capital Markets, Initial Coin Offerings, Initial Public Offerings, Blockchain

Suggested Citation

Cumming, Douglas J. and Johan, Sofia A. and Pant, Anshum, Regulation of the Crypto-Economy: Managing Risks, Challenges, and Regulatory Uncertainty (January 1, 2019). Journal of Risk and Financial Management, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3214995 or http://dx.doi.org/10.2139/ssrn.3214995

Douglas J. Cumming

Florida Atlantic University ( email )

777 Glades Rd
Boca Raton, FL 33431
United States

HOME PAGE: http://booksite.elsevier.com/9780124095373/

Sofia A. Johan

Florida Atlantic University - Finance ( email )

777 Glades Rd
Boca Raton, FL 33431
United States

Tilburg Law and Economics Center (TILEC) ( email )

Warandelaan 2
Tilburg, 5000 LE
Netherlands

Anshum Pant (Contact Author)

Schulich School of Business ( email )

North York, Ontario
Canada
6476424945 (Phone)

Register to save articles to
your library

Register

Paper statistics

Downloads
320
Abstract Views
1,421
rank
93,049
PlumX Metrics