Regulatory Issues Need More Clarity in 2020

Many of us see nearly limitless possibilities for cryptocurrencies and other blockchain applications, but that future will not come to pass if stakeholders do not continue to pay close attention to the developing global legal and regulatory frameworks.

In 2019 there was some progress on this front for U.S. blockchain companies - among other things, the SEC finally issued its framework for token issuers - but the year did not bring as much clarity as many hoped.

To help address that uncertainty, I organized the inaugural Fordham Law Blockchain Regulatory Symposium in partnership with another Fordham Law alum Joyce Lai, an attorney at ConsenSys.

The event took place in November but we conceived it back in April when we had both wondered why New York City did not have a dedicated academic blockchain regulatory event? There were certainly enough grey areas and complex issues to devote a full day to the current legal landscape and how it might be reimagined - because if we want the industry to move forward responsibly and quickly, we need to create opportunities for constructive dialogue between the private and public sectors.

As a law student, whether you end up at a big or boutique firm or working in government or clerking for a judge, you are going to be confronted by these issues because blockchain regulation touches on so many different areas of the law: i.e. property, contracts, securities, intellectual property, antitrust.

As we put together a roster of speakers, it was a bit of a surprise to discover how many major law firms, on both the securities and fintech sides, are already deeply engaged in blockchain issues.

People are always asking when blockchain will become more institutionalized, but much work is being done behind the scenes to pave the way for transitions on both the legal and regulatory fronts.

A more novel panel looked at corporate governance as it relates to shareholder voting and the blockchain, focusing in particular on the challenges, both practical and regulatory, public companies face in implementing blockchain solutions to improve the current system.

Central to the conversation was what role financial market infrastructures would play in blockchain-based securities record-keeping practices? How would moving from a three-day settlement affect liquidity? What are the tensions blockchain creates between investors - particularly activist investors - and companies that are interested in knowing more completely who their shareholders are? Blockchain technology is enabling public companies and financial institutions to reimagine a different landscape, which includes custody of digital security assets and instantaneous settlement.

As we head into 2020, there remain numerous regulatory issues that need to be clarified and coordinated for the blockchain industry to continue to innovate in the U.S. For one thing, we will need to navigate the implementation of the travel rule for cryptocurrencies and see how numerous regulatory agencies - SEC, CFTC, FINCEN - will act independently and collectively to provide guidance and new rule or policy making.