This is a short post just to kick off this blog; I’ve had the domain for a year but (for various reasons) never got around to putting it together. Better late than never, right?
In the six months since crypto began taking over my life, I’ve noticed that the apparent untouchability of the blockchain by government has been interpreted by many – whether in the context of classical BTC transactions or 2.0 “smart contract” functionality – to mean that national legal systems can (and should) be disregarded, or even (in some cases) that blockchain-based technology will render legal systems obsolete.
Don’t quite get what I mean? Have a look at this correspondence – between the operator of MPex, a purported Bitcoin securities exchange, and a senior attorney of the U.S. Securities and Exchange Commission – as an example:*
“As a key step, the commissioners of the SEC are to at their earliest convenience adopt a resolution, to be jointly drafted at expert level, which is to include a) a plain statement of the SEC’s lack of jurisdiction with regards to Bitcoin, thus [aligning] itself with the position of the US FED and the US GAO ; b) a statement recognising MPEx’ regulatory authority over Bitcoin finance as a SRO ; c) an appointment of any one of the commissioners as authorised Bitcoin liaison, which would include the creation of a dedicated PGP key and a Web of Trust membership, which would be recognised as such by MPEx, and on the basis of which all further communication is to be conducted, as well as minimal technical provisions for the operation of this system ; as well as further points as the parties may deem expedient…
He said that. To the SEC. That’s pretty bold. He adds for the benefit of the reader:
“…Bitcoin is a sovereign. Accepting this matter of fact is a sine qua non prerequisite for playing. No exceptions.”
This is a theme I’ve seen repeated, again and again, by numerous individuals in the community over several months.
It’s also totally wrong.
To the extent cryptocurrency wants to be used to deal in real-world assets by real-world people, it will have to deal with real-world rules – and old-school sovereigns – of necessity. Also, if the crypto train is going to leave the station to any meaningful extent, cooperating with government – not fighting it – is going to lead to faster adoption, greater “disruption” (though I loathe that particular term) and the more rapid realisation of the technology’s benefits to consumers, as I pointed out in an article posted over at the Adam Smith Institute earlier this week.
How then, do we get applications – whether 1.0 or “2.0” smart contracts – to work within a legal framework? Easy: structuring, which is what this blog is going to be about from this day forward.
Thanks for reading. Should be a fun ride.
-PJB
Your arguments seem to be lacking. You state that embracing government must be done, but you don’t clearly state why, other than a perceived speed advantage. You also don’t state why Mircea’s approach can’t work, or even why it might be too slow. You are posturing, but are you on a cliff or a soapbox or what?
As I only set up the blog yesterday, the post was meant to be a short introduction to my view of blockchain regulation rather than as a standalone monograph.
Mircea’s approach was not cited as a personal criticism, but rather as an example: the view of blockchain-as-sovereign is something I’ve encountered with frequency in my discussions with individuals I’ve met or corresponded with who are currently writing smart contracts. The question of real-world liabilities arising in relation to these digital creations is not something a lot of them have considered because of the view that the blockchain exists somehow beyond traditional jurisdiction. This is a view with which, being a legal professional, I disagree.