Border Problems II: Mapping the Third Border
30 Pages Posted: 6 Dec 2018 Last revised: 7 Dec 2018
Date Written: January 1, 2018
In the last 20 years, the Internet has become the site of economically and legally relevant objects, events, and actions. It has also become the source of potential risks to the financial system. Building on one of the authors’ prior work on ‘border problems’ in financial regulation, in this contribution we concretise what is meant by ‘regulated activities’ and ‘regulated entities’ by reference to the logic of deontic modes implicit in the concept of regulation (in the most common, narrow sense of being prohibited without a positive permission, and being permitted on terms including ongoing supervision). We also explore the way that technology makes new forms of action possible, which the law must then regulate, whether through the application of existing norms or the promulgation of new ones. We then move to examine what is meant (and assumed) by ‘territorial jurisdiction’, a difficult concept that is often used but not always properly understood. This provides an entry point into a conceptual exploration of a third border, that between the ‘real world’ (which we take to mean conventional social, legal, and economic reality) and ‘cyberspace’ as a domain of human interaction that is facilitated and conditioned by digital communications systems. Accepting the metaphor of place-ness implicit within the notion of cyberspace, we offer some ontological observations on the nature of both the ‘real world’ and ‘cyberspace’ with an eye towards locating, raising, and policing the boundary. Surveying the greatly divergent approaches currently taken to borders in cyberspace, including ‘Californian techno-liberalism’ and ‘Chinese digital authoritarianism’, we advocate a ‘third way’ which accords both states and other stakeholders (including private actors) a role in the governance of cyberspace. However, based on our understanding of financial stability and systemic risk, we argue that conventional sovereign states have a unique and irreplaceable role that must be reflected in the emerging law of Internet jurisdiction. We conclude with a few more concrete observations on what all this could mean for financial regulation in the coming decade.
Keywords: border problems, financial regulation, cyberspace, territorial jurisdiction
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