Monday, January 14, 2019
My frequent academic partner and friend John Anderson and I organized and moderated a discussion session on insider trading in the blockchain transactional environment at this year’s AALS annual meeting. The session, entitled “Insider Trading and Cryptoassests: The Future of Regulation in the Blockchain Era,” featured teacher-scholar participants from academic backgrounds in white collar crime, corporate law, securities regulation, intellectual property, cyberlaw, and ethics/compliance. The program description is as follows:
As the cryptoasset ecosystem shows signs of emerging from its “Wild West” phase, insider trading has become a principal concern for trading platforms, investors, and regulators. Insider trading cases concerning cryptoassets present challenges, however, because the legal understanding of both cryptoassets and the markets in which they are generated, bought, and sold has been significantly outpaced by their development, expansion, and innovation. In the United States, market professionals, the Securities and Exchange Commission (SEC), the Commodities Futures Trading Commission (CFTC), and others debate whether virtual currencies are securities, contracts, currencies, commodities, or something else. Both the SEC and CFTC assert jurisdiction over cryptoassets, but (at this writing) neither has precisely defined the scope or nature of its purported regulatory oversight. This commercial and regulatory uncertainty leaves a number of questions about insider trading in cryptoassets unanswered. This Discussion Group considers these and other related concerns regarding insider trading in cryptoassets.
The short papers submitted by the participants and the related commentary reflected the diverse areas of expertise of the participants and were engaging and thoughtful. Constructive audience participation also was a highlight of the program.
We focused the discussion initially on whether, and if so how, insider trading in cryptoassets currently is regulated. We also discussed whether regulation of that activity should be undertaken. Then, assuming regulation, we considered whether existing regulatory tools could and should be used. Finally, as part of that discussion, we began to assess who and exactly what should be regulated. The dialogue was energizing, even if inconclusive.
Marcia Narine Weldon has written here at the BLPB at various times in the past six months on blockchain technology and its intersection with business and business law, including here, here, and here. In the first of those linked posts, she advises us that we ignore the blockchain at our peril. I agree.
But I also want to note that whether you believe that the blockchain is an awesome and promising new technology or a pernicious computer-based contrivance, its interactions with business law provide us all with opportunity: the chance to use our expertise to identify and resolve new legal and regulatory issues. As I learned from my experience in studying the regulatory context of crowdfunding in its early days, once the innovation train has left the station and is rolling down the tracks, it compels study and benefits from open, enlightened debate. Business lawyers are uniquely qualified to provide the necessary examination, dialogue, and guidance. Let's get to it!