Blockchain technology is transformative to our financial system and business enterprises, as well as to improve the human condition. More and more citizens without bank accounts in the United States and abroad are now able to transfer and receive funds from their loved ones in a fast, cost-effective, and anonymous manner when necessary from oppressive regimes and governments and unstable economies. Traditional financial systems that have long been unavailable in underserved communities across Africa, Asia, and Latin America must now recognize the power and efficiency of blockchain.
Turn on the power… It is the monthly opinion column of Marc Powers. For most of his 40-year legal career, he has dealt with complex securities-related cases after working with the US Securities and Exchange Commission. He is now an adjunct professor at the Florida International University School of Law, where he teaches a course on “Blockchain, Encryption, and Regulatory Considerations.”
In less than two years, decentralized finance (DeFi) has sprung up. These communities can borrow and exchange funds for their business or personal expenses within minutes. DeFi has Grown up From an ecosystem of less than US$1 billion in early 2020 to an ecosystem of more than US$250 Billion lock Today’s value. Interest in non-fungible tokens or NFTs has also surged. Sales of these collectibles and other forms of NFT exceeded $10 billion in the third quarter, up from $1.2 billion six months ago.
Importantly, these blockchain use cases have legal and regulatory considerations. In particular, the US Securities and Exchange Commission clearly stated that most forms of tokens should be regarded as “securities” and therefore are subject to both the jurisdiction of the SEC and the regulatory framework of the US Federal Securities Law.
In a recent article International Blockchain Law Journal, Caroline Crenshaw, the newest member of the SEC, pointed out:
“Many DeFi products and products are very similar to those in traditional financial markets. […] Market participants who raise funds from investors or provide regulated services or functions to investors usually bear legal obligations.”
In other words, certain aspects of DeFi may involve the jurisdiction of multiple federal authorities, including the Department of Justice, the Financial Crimes Enforcement Network, the Internal Revenue Service, the Commodity Futures Trading Commission, and the SEC. In the field of NFT, there is no doubt that various intellectual property rights are involved, such as copyright and trademark laws, and possibly securities laws.
Need a technically educated lawyer
Obviously, lawyers at home and abroad increasingly need to understand these possible legal issues and jurisdictions. Obviously, or should be obvious, the best lawyers are those who can advise clients based on their in-depth knowledge of the client’s business area. To provide advice to clients involved in the DeFi field, don’t you want to let a technically literate lawyer understand blockchain and its related legal issues? Maybe someone who is educated or experienced in finance or accounting, rather than someone who studies philosophy or chemistry in college? With the proliferation of many uses of NFTs, shouldn’t your lawyers handle the intellectual property laws and artistic rights related to the proposed NFT well?
I believe that lawyers should do this. This is part of the reason why I am now teaching blockchain law and fintech law at the Florida International University School of Law in Miami after 40 years of practicing in law firms and the US Securities and Exchange Commission. As businesses start or grow to use digital assets, they will need guidance on “rules of the road” because I believe most businessmen want to do the right thing and comply with established laws. To this end, they should be able to seek answers from the next generation of lawyers-lawyers currently studying in law school-or at least seek the right guidance. However, what is shocking is that last time I checked, among the more than 200 law schools in the United States, only about two dozen law schools teach a course specifically for blockchain or specifically for financial technology. This is only 10% of all law schools! This must change quickly.
Earlier this year, I wrote a column about my and other people’s concerns about China’s efforts to achieve Digital element Replacing the U.S. dollar as the world’s reserve currency indicates that the United States must more quickly accept the idea and development of the central bank digital currency (CBDC). The same is true for our new batch of lawyers. We must educate them on new technologies and use cases such as blockchain, artificial intelligence, data analysis, augmented reality and virtual reality. This will greatly help them better represent their customers. The last great technology is the Internet, and the United States dominated its development-but that was 25 to 30 years ago. Blockchain technology does not have the leadership and dominance of the United States. Lawyers can help advance this goal, have a good understanding of the technologies and laws that affect it, and help shape or reshape the laws that apply to it.
The intersection of technology and U.S. law
Let us briefly look at two legal cases to show how NFT activities enter the crosshairs of American law. In a lawsuit filed in Los Angeles Federal Court on November 16, Miramax sues director Quentin TarantinoWorked with many movies due to breach of contract, copyright and trademark infringement, and unfair competition. Allegedly, Tarantino has been preparing to sell his seven previously unpublished and unused scenes. pulp Fiction Movie script for December. Miramax claimed in various operating agreements that this violated its rights to the film. Tarantino apparently believed that these proposed NFTs were sold under the “reserved rights” clause in the contract with Miramax. A stop order from Miramax to Tarantino was obviously ignored by him. It will be interesting to see what happens next month.
In litigation Archive In the New York State Supreme Court in May, Dapper Labs, the developer of the Flow blockchain and a partner of the National Basketball Association for selling NBA’s best shooting moments, was sued in a class action lawsuit. The main content of the complaint is that the tokens on the Flow blockchain that provide support and branding for NFTs are “securities.” Also at the center of the litigation is the NBA Top Shot “market” itself, located on its website, where you can buy and sell these “moments.” Therefore, the sale and exchange of tokens allegedly involved the sale of unregistered securities that violated Section 12(a)(1) of the Securities Act of 1933. It is worth noting that the legal proceedings were initiated in the state rather than the federal state, and the court and the NBA themselves did not name names in the action. This may be explained by the fact that the NBA is not an “issuer” of securities, and the plaintiff’s lawyers prefer state courts, where judges may be more inclined to allow the case to proceed rather than subject them to sanctions.
These cases illustrate that I need to understand the views of lawyers who understand these technologies and their legal implications. So, let us start training our future lawyers for the future, just like now!
Mark Bowles He is currently an adjunct professor at the Florida International University School of Law, teaching “Blockchain, Encryption and Regulatory Considerations” and “Fintech Law”. He recently retired from the Am Law 100 law firm, where he established a national securities litigation and regulatory enforcement practice team and hedge fund industry practice. Marc started his legal career in the law enforcement department of the SEC. During his 40-year legal career, he participated in lawsuits including the Bernie Madoff Ponzi scheme, the recent presidential pardon, and the Martha Stewart insider trading trial.
The views expressed are those of the author and do not necessarily reflect the views of Cointelegraph or the Florida International University School of Law or its affiliates. This article is for general reference only and should not and should not be regarded as legal or investment advice.