Sunday, March 22, 2015

ICYMI: Tweets From the Week (Mar. 22, 2015)

March 22, 2015 in Stefan J. Padfield | Permalink | Comments (0)

Sunday, March 15, 2015

ICYMI: Tweets From the Week (Mar. 15, 2015)

March 15, 2015 in Stefan J. Padfield | Permalink | Comments (0)

Sunday, March 8, 2015

ICYMI: Tweets From the Week (Mar. 8, 2015)

March 8, 2015 in Stefan J. Padfield | Permalink | Comments (0)

Sunday, March 1, 2015

SOMETHING OLD, BORROWED AND BLUE: NEW YORK STILL NOT WEDDED TO BITCOIN REGULATIONS

The following comes to us fromJ. Scott Colesanti and Mandy Li Weiner:

    To a degree large or moderate, New York shall soon be at the vanguard of Bitcoin regulation. Since last July, observers have been asked to witness the shotgun marriage of the coin of no realm and a daunting state licensing measure; to date, no vows have been taken.

    The initial proposal from the Department of Financial Services was truly bold and far-reaching. Eschewing a classification of Bitcoin itself, the Department took aim at parties doing business with State residents by issuing, buying/selling, converting or storing the notorious cryptocurrency (and other, similar virtual currencies). Such entities and operators would have been required to register for the popularly dubbed "Bitlicense" at an indeterminate cost.

The requirements attending the proposed Bitlicense were rich and varied. Traditional State consumer protection provisions focused on customer complaints and record keeping. More novel provisions seemingly borrowed from securities law authorities on business continuity planning and anti-money laundering programs, and from sister State warnings regarding cryptocurrencies as investments. Consequentially, New York's broad, multi-layered protocol would have closed the door of entry to an appreciable number of businesses and startups, as well as related enterprises.

Not surprisingly, last Fall, there emerged on the Internet (albeit in piecemeal fashion) a consistent chorus of domestic, interstate, and international objections. That commentary, from parties including conversion sites and start-up companies, voiced concerns ranging from infringement of free speech to niche resentment at measures designed for financial intermediaries. Meanwhile, support for the initial proposal in the form of public comment letters was hard to locate. And, among federal authorities, only FinCEN has to date directly addressed the question of regulating the ersatz currency.

    Still a Shotgun Marriage

Complicating matters is the continuing bad press attached to Bitcoin. Another round of mishaps at conversion exchanges in the past year highlighted issues ranging from questionable marketing to cybersecurity. Other States evidence both the carrot and the stick in the inevitable march towards rules governing the persistent cash alternative. California is considering a measure to coronate the online currency with legal status. Conversely, Missouri voiced its concerns via a June 2014 enforcement action that faulted a company for inadequate disclosures about virtual currencies in general. Concurrently, Congress is entertaining Bills that would shield Bitcoin exchangers from State regulation altogether. The one consistent truth is that supporters of the cryptocurrency seem to have established a daily Internet presence. Here, again, New York has seized the opportunity for regulatory arbitrage: In January, a spokesperson from DFS felt compelled to correct the statement by exchanger/storage repository Coinbase that it had been the first licensed Bitcoin exchange in a plethora of states including New York (no licenses have as yet been issued).

Interestingly, DFS Superintendant Lawsky himself has acknowledged that "The [proposed] rules also generally mirror the types of requirements that other banks, financial institutions, and money transmitters have to live by – with some alterations owing to the unique nature of virtual currencies." Yet the tension among interests appears to be growing, and New York officials no doubt find their efforts pausing to balance the State's heightened interest in protecting consumers (and extinguishing untrustworthy companies) while permitting industry creativity and innovation to flourish. Accordingly, the revised DFS regulation continues to grapple with the dual aims of a stringent standard and enough wiggle room to account for dynamic regulatory and entrepreneurial fields.

    The Main Course

Thus, the revised legislation retains many of the original provisions, but it also attempts to appease more parties. For example, Bitlicensees are held to slightly less record-keeping and anti-money laundering protocols.

The price for the Bitlicense has been mercifully capped at $5,000. And the definitional section now makes equally clear that software development and "merchant" payment activities will often be exempt. But the grandest largess takes the form of a 2-year conditional license (granted at the "sole discretion" of the Superintendant), a variation expressly designed for "an applicant that does not satisfy all of the regulatory requirements upon licensing."

Additionally, third parties have benefitted from the revisions: The revised regulations clarify that certain software developers, "miners" (i.e., creators of Bitcoin), those offering customer loyalty programs, rewards (such as airline vouchers) and gift cards are not required to obtain a Bitlicense.

To be sure, the 2015 changes to the 2014 proposal exemplify a newfound DFS responsiveness to the concern of the crossroads of the technology and finance that is virtual currency. However, pure capitalists should note: Even in amended form, the proposal contains substantial costs attending requirements of cash reserves, quarterly reporting, the employ of cybersecurity employees, business continuity planning, transaction records and consumer disclosures. Further, some new obligations have been added – most notably, the requirement that the surety trust account for customers be maintained with a "qualified custodian" (i.e., a banking entity approved by the DFS). The next round of comments should reveal whether the Department's revised approach has achieved meaningful supervision of the industry without concurrently extinguishing some of the characteristics that make virtual currency attractive in the first place.

The revised regulations, which are available at http://www.dfs.ny.gov/legal/regulations/rev_bitlicense_reg_framework.htm, are presently subject to a 30-day comment period. The union of registration and innovation will likely not be decided until late 2015. By borrowing from expansive notions found in securities law and long arm statutes, the seminal State law with the decidedly federal twist will, of course, garner national attention. With objections to strict regulation ranging from Congress to IT developers, wedding guests from both sides of the aisle are still advised to hold onto their receipts.

Mandy Li Weiner, Hofstra University School of Law Class of 2017, is a Business Law Honors Concentration Fellow.

Professor J. Scott Colesanti, a former industry regulator and arbitrator, has taught Securities Regulation at Hofstra since 2002. His 2014 study of the potential application of the securities laws to Bitcoin exchanges is available on SSRN.

March 1, 2015 in Stefan J. Padfield | Permalink | Comments (0)

Sunday, February 22, 2015

ICYMI: Tweets From the Week (Feb. 22, 2015)

February 22, 2015 in Stefan J. Padfield | Permalink | Comments (0)

Sunday, February 15, 2015

ICYMI: Tweets From the Week (Feb. 15, 2015)

February 15, 2015 in Stefan J. Padfield | Permalink | Comments (0)

Sunday, February 8, 2015

ICYMI: Tweets From the Week (Feb. 8, 2015)

February 8, 2015 in Stefan J. Padfield | Permalink | Comments (0)

Sunday, February 1, 2015

ICYMI: Tweets From the Week (Feb. 1, 2015)

February 1, 2015 in Stefan J. Padfield | Permalink | Comments (0)

Sunday, January 25, 2015

ICYMI: Tweets From the Week (Jan. 25, 2015)

January 25, 2015 in Stefan J. Padfield | Permalink | Comments (0)

Sunday, January 18, 2015

ICYMI: Tweets From the Week (Jan. 18, 2015)

January 18, 2015 in Stefan J. Padfield | Permalink | Comments (0)

Sunday, January 11, 2015

ICYMI: Tweets From the Week (Jan. 11, 2015)

January 11, 2015 in Stefan J. Padfield | Permalink | Comments (0)

Thursday, January 8, 2015

15th annual workshop on Conducting Empirical Legal Scholarship

The following comes to us from Lee Epstein, the Ethan A.H. Shepley Distinguished University Professor at Washington University in St. Louis. (I should note that I attended this conference a few years ago and, while I ended up taking my scholarship in a different direction, I can highly recommend the workshop to anyone interested in doing empirical legal scholarship.)

The 15th annual workshop on Conducting Empirical Legal Scholarship, co-taught by Lee Epstein and Andrew D. Martin, will run from June 15-June 17 at Washington University in St. Louis. The workshop is for law school faculty, lawyers, political science faculty, and graduate students interested in learning about empirical research and how to evaluate empirical work. It provides the formal training necessary to design, conduct, and assess empirical studies, and to use statistical software (Stata) to analyze and manage data.

Participants need no background or knowledge of statistics to enroll in the workshop. Registration is here. For more information, please contact Lee Epstein.

January 8, 2015 in Conferences, Stefan J. Padfield | Permalink | Comments (0)

Sunday, January 4, 2015

ICYMI: Tweets From the Week (Jan. 4, 2015)

January 4, 2015 in Stefan J. Padfield | Permalink | Comments (0)

Friday, January 2, 2015

Last-Minute AALS Planning

To the extent you will be attending the Association of American Law Schools Annual Meeting in DC, here are a couple of panel recommendations that come with the added benefit of meeting a BLPB blogger in person:

1. Keeping it Current: Animal Law Examples Across the Curriculum (01/03/2015, 5:15-6:30 pm)

Moderator: Katherine M. Hessler, Lewis and Clark
Speaker: Susan J. Hankin, Maryland
Speaker: Joan M. Heminway, Tennessee
Speaker: Courtney G. Lee, McGeorge
Speaker: Kristen A. Stilt, Harvard

2. The Role of Corporate Personality Theory in Regulating Corporations (1/5/2015, 2:00-3:00 pm)

Moderator: Stefan Padfield, Akron
Speaker: Margaret Blair, Vanderbilt
Speaker: Elizabeth Pollman, Loyola
Speaker: Lisa Fairfax, George Washington
Speaker: David Yosifon, Santa Clara

PS--For more information on the day-long program of the AALS Section on Socio-Economics on Monday, Jan. 5, as well as the day-long Annual Meeting of the Society of Socio-Economists on Tuesday, Jan. 6, go here.

January 2, 2015 in Business Associations, Conferences, Corporate Governance, Corporate Personality, Corporations, Joan Heminway, Stefan J. Padfield | Permalink | Comments (0)

Sunday, December 28, 2014

ICYMI: Tweets From the Week (Dec. 28, 2014)

December 28, 2014 in Stefan J. Padfield | Permalink | Comments (0)

Sunday, December 21, 2014

ICYMI: Tweets From the Week (Dec. 21, 2014)

December 21, 2014 in Stefan J. Padfield | Permalink | Comments (0)

Sunday, December 14, 2014

ICYMI: Tweets From the Week (Dec. 14, 2014)

December 14, 2014 in Stefan J. Padfield | Permalink | Comments (0)

Sunday, December 7, 2014

ICYMI: Tweets From the Week (Dec. 7, 2014)

December 7, 2014 in Stefan J. Padfield | Permalink | Comments (0)

Sunday, November 30, 2014

ICYMI: Tweets From the Week (Nov. 30, 2014)

November 30, 2014 in Stefan J. Padfield | Permalink | Comments (0)

Sunday, November 23, 2014

ICYMI: Tweets From the Week (Nov. 23, 2014)

November 23, 2014 in Stefan J. Padfield | Permalink | Comments (0)