On July 7, 2022, the US Department of Treasury (USDT) published a fact-sheet on the regulation of digital assets (aka crypto-assets) in which it emphasized the need for global cooperation. However, this fact-sheet is only a drop in an ocean of mostly uncoordinated crypto-regulation initiatives, both domestically (eg presidential executive order, a bi-partisan bill submitted to Congress, and diligent SEC enforcement) and abroad (eg final steps toward a harmonized regulation in the EU and several declarations by individual countries). The current wave of crypto-regulation announcements aims to ..read more

In our article, we provide a deeper analysis of how proposed regulation in the blockchain space affects the code- and confidence-based architectures which so far have underlain decentralized financial services (DeFi). We start from the fact that traditional financial institutions and novel blockchain-based DeFi rely on fundamentally different sources of trust and confidence. The former rely on heavy regulation, trusted intermediaries, clear rules (and restrictions) on market competition, and long standing informal expectations on what banks and other financial intermediaries are supposed to d ..read more

Finance is one of the most digitalized sectors of the economy. The processes of digitization – transforming analogical information into digital form – and datafication – converting any aspect of life into data that can be analysed – profoundly reshaped the financial industry. Since the invention of paper in China (2000 years ago) until the late 1970s, finance was an industry based on paper: paper ledgers, paper certificates, paper money (in addition to coins). With the devolvement and progressive diffusion of computers, finance evolved into a digital industry, where financial instruments (suc ..read more

The concept of settlement finality sits at the heart of any type of commercial transaction, whether the transaction is in physical or electronic form or is mediated by fiat currencies or cryptocurrencies. Transaction finality refers to the exact moment in time when proprietary interests in the object or medium of transaction pass from one party to his counterparty, and the obligations of the parties to a transaction are discharged in an unconditional and irrevocable manner, ie, in a way that cannot be retroactively reversed even by the subsequent legal defenses or actions against the counterp ..read more

The emergence of the complete digitization of the financial services value chain has gathered pace with the advent of the Covid-19 pandemic. It is mainly premised on automation of the investment process through the use of algorithmic tools and remote delivery of services via integrated platforms and apps. During the same period, we have witnessed the emergence of decentralised finance, cryptocurrencies aside, and the increased use of blockchain technology. Together, these developments promise radical changes in market structure and microstructure.        &nb ..read more

Following the recommendations suggested by the Ibero-American Institute for Law and Finance, Ecuador implemented the most ambitious corporate law reforms observed in Latin America in the past decades. The Ecuadorian Parliament enacted the Corporate Modernization Act, intended to modernize its regulatory framework in several ways. Among other innovative reforms, the new legislation allows the use of electronic devices (including blockchain technology) to create and maintain corporate records. According to the Ecuadorian Modernization Act, Ecuadorian companies will be able to record their accou ..read more

Blockchain applications to decentralise finance (DeFi) are quickly developing and are gaining more and more traction in practice as well as in policy and academic debates. One of the most far-reaching applications of this sort are Decentralised Autonomous Organisations (DAOs) whose aim is to decentralise entrepreneurial decision-making through smart contracts, creating a new form of business organisation. Many only know DAOs because of the hack that happened in 2016 to ‘The DAO project’, a smart contract running on Ethereum that should have functioned as a venture capitalist. If the DAO had n ..read more

Technological developments such as blockchain and Artificial Intelligence (AI) are not only disrupting the way we transact on markets and conclude contracts. They are also fundamentally changing the processes and modes of law enforcement and dispute resolution. In doing so, they accelerate trends that were already visible before the advent of these technologies, especially the trend towards alternative forms of dispute resolution compared to the traditional model of litigating disputes before the courts.  In a recent paper we identify and analyze key developments and regulatory ..read more

Since its inception, the blockchain has been surrounded by an anti-legalistic whiff. Satoshi Nakamoto, the pseudonymous inventor of Bitcoin, hailed its ‘unstructured simplicity’. Even to this day, apostles of distributed ledger technology (DLT) strongly resist the idea that the innovation would need regulation, arguing that it was designed precisely to avoid a central deciding authority. This did however not stop courts and legislators around the world becoming increasingly concerned about DLT. They are no longer just focusing on the evident dangers of cryptocurrencies for public interests, s ..read more

When one thinks about financial systems, what comes to mind? Perhaps financial institutions like banks, central banks, insurance companies, asset managers, and hedge funds? Perhaps financial markets, issuers and investors, public market trading on centralized exchanges with central counterparties and bilateral ‘over-the-counter’ private market trading? The global financial crisis of 2007/2008 revealed that such institutional, bank-based lending and market-based securities financial systems are easily destabilized, driven by large, centralized, opaque and overly-interconnected financial interm ..read more