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

29 Pages Posted: 5 Aug 2018 Last revised: 8 May 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: May 4, 2019

Abstract

The distributed ledger technology, also known as Blockchain, is gaining traction globally. Riding on the magnanimous promises of the Blockchain secure validation mechanism and decentralized mass collaboration, cryptocurrencies are the newest asset class being introduced to investors worldwide, and are being used by companies to raise capital to further their development of the advancement of Blockchain technology 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 explore the potential for Blockchain to exacerbate the already decentralized economy. We examine ICO structures, and how this crowd-funding mechanism has the promise for economic innovation. We review the Security and Exchange Commission’s initial statements 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 argue for the 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 (May 4, 2019). Tilburg Law School Research Paper 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 (Contact Author)

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

Schulich School of Business ( email )

North York, Ontario
Canada
6476424945 (Phone)

Register to save articles to
your library

Register

Paper statistics

Downloads
304
rank
97,522
Abstract Views
1,340
PlumX Metrics