When Jurisdiction Rules Meet Blockchain: Can the Old Bottle Contain the New Wine?
Stanford Journal of Blockchain Law & Policy (forthcoming, 2023)
17 Pages Posted: 10 Feb 2022 Last revised: 26 Sep 2022
Date Written: January 1, 2022
The distributed nature of blockchain poses challenges to the existing legal system, notably the jurisdiction rules addressing court jurisdiction and governing laws. The In re Tezos case, a securities law dispute brought in the District Court of Northern District of California of the United States, was the case facing this particular challenge. In this paper, I conduct a case study of the In re Tezos case to illustrate how the distributed nature of blockchain impacts the determination of court jurisdiction and governing law in the securities regulation context. I argue that while the internet has already complicated those effect-based jurisdiction rules, blockchain further complicated those conduct-based jurisdiction rules. With this understanding, I offer several principles for addressing the jurisdiction issues in cases involving blockchain-based securities. Specifically, I propose an effect-based jurisdiction rule limited by a de minimis exception to mitigate blockchain’s impact, enhance legal certainty, and promote international coordination.
Keywords: blockchain, jurisdiction, securities regulation, initial coin offering, ICO, In re Tezos, Morrison transaction test, conduct test, effect test
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