Banking and Finance Law Commons^™

Exploring The Assetisation And Financialisation Of Non-Fungible Tokens: Opportunities And Regulatory Implications, Iris H. Y. Chiu, J.G. Allen

Research Collection Yong Pung How School Of Law

This article explores the emerging phenomenon of use cases for Non-fungible Tokens (NFTs) in novel forms of crypto-finance, a stage we call “NFT financialisation”, that can be developed from stages of consumption and commoditisation of NFTs, which are increasingly observed. Despite the emerging contests regarding property rights conferred by NFTs, the needs for commoditisation and financialisation in NFT markets would likely shape the delineation and framing of such rights in order for users to exploit the asset potential of NFTs. We argue that an institutional response is timely and beneficial for NFT financialisation. Financial regulatory governance can provide the institutions …

Decentralized Finance: Implications Of The So-Called Disintermediation Of Financial Services, Nydia Remolina Leon

Research Collection Yong Pung How School Of Law

Decentralized Finance, known as DeFi, refers to the use of blockchain and digital assets or crypto-assets for the provision of financial services. Under this concept, services such as loans, insurance, crypto-asset exchanges, among others, are offered, are structured based on crypto-assets and through technologically decentralized applications. This chapter discusses the concept of DeFi and how it challenges the traditional market infrastructures of the financial sector, demystifying the idea of absolute decentralization, generally mentioned in the crypto-asset arena, from the perspective of decision-makers and governors of these decentralized applications. Subsequently, the chapter analyses the opportunities and challenges of DeFi for consumers, …

State Crypto Regulation: Competing Priorities Shaping Different Outcomes, John T. Bender

Seattle Journal of Technology, Environmental & Innovation Law

“Cryptomania” is approaching fever pitch. Public officials, practitioners, and investors alike are becoming convinced that what began as a thought experiment has given rise to a full-fledged movement that is here to stay. This movement could potentially transform the modern financial system as we know it.

Today, crypto assets and related platforms are increasingly being adopted to store, secure, and transmit massive amounts of monetary value worldwide. Enforcement agencies like the Securities and Exchange Commission and the Commodity Futures and Trading Commission have ventured into the fray by employing existing legal regimes to regulate in this new frontier. At the …

Fintech And Anti-Money Laundering Regulation: Implementing An International Regulatory Hierarchy Premised On Financial Innovation, Nicholas A Roide

Texas A&M Law Review

Innovations in financial technology (“fintech”) have rippling effects across global markets. Fintech firms utilizing virtual assets and disintermediating blockchain technology continue to rapidly grow in strength and number. As systemic risk mounts due to the inter-jurisdictional nature of fintech, antimony laundering (“AML”) regulators must search for an international answer to maintain global financial stability and protect consumers against illicit activities. A variety of solutions have appeared within local AML regulatory frameworks. These frameworks tend to function as a hierarchy with three ordered objectives: market integrity, rule clarity, and innovation. However, frameworks often place too much emphasis on market integrity and …

How The Subprime Mortgage Crisis Sparked New Legislation And Changed The Way Millennials Purchase Real Estate, Troy T. Kramer

The Journal of Business, Entrepreneurship & the Law

This article will explore the Generation Y's approach to the real estate market and analyze how the Subprime Mortgage Crisis stunted Millennials’ economic development. It also analyzes what ways legislation has changed and government has influenced the economy since 2008 to prevent another free fall of the global economy and to protect consumers from predatory lending practices and under-regulation of the financial sector. Further, this article will analyze how Millennials differ from previous generations in their method of purchasing homes and investing in real estate—with a specific eye towards advances in technology. This article also gives advice to first-time homebuyers …

Third Party Moral Hazard And The Problem Of Insurance Externalities, Gideon Parchomovsky, Peter Siegelman

All Faculty Scholarship

Insurance can lead to loss or claim-creation not just by insureds themselves, but also by uninsured third parties. These externalities—which we term “third party moral hazard”—arise because insurance creates opportunities both to extract rents and to recover for otherwise unrecoverable losses. Using examples from health, automobile, kidnap, and liability insurance, we demonstrate that the phenomenon is widespread and important, and that the downsides of insurance are greater than previously believed. We explain the economic, social and psychological reasons for this phenomenon, and propose policy responses. Contract-based methods that are traditionally used to control first-party moral hazard can be welfare-reducing in …

Chief Loophole Officer Or Chief Legal Officer: Inside Lehman Brothers—A Film Case Study About Corporate And Legal Ethics, Garrick Apollon

St. Mary's Journal on Legal Malpractice & Ethics

This Article discusses the continuing legal education (CLE) visual advocacy documentary-style program, which Garrick Apollon (author of this Article) researched and developed. The case study for this CLE documentary-style program is the film Inside Lehman Brothers—a documentary film by Jennifer Deschamps which chronicles the story of the Lehman whistleblowers. The film presents Mathew Lee, former senior vice president overseeing Lehman’s global balance sheet; Oliver Budde, former in-house counsel (associate general counsel) of the Lehman Brothers; and the racialized female mid-tier manager whistleblowers, who all paid a steep price in the 2008 American subprime mortgage crisis, while many of the …

Direct Liability And Veil-Piercing: When One Door Closes, Another Opens, King Fung Tsang, Katie Ng

Fordham Journal of Corporate & Financial Law

Piercing the corporate veil has been substantially limited in English law since Prest v. Petrodel. This contraction coincides with the development of the direct liability doctrine which attaches liability directly on the parent company. The authors argue that the shift from using piercing the corporate veil to direct liability is a positive development as it gives English courts a better tool to combat the abuse of separate legal personality. However, compared the English doctrines with their counterparts under the U.S. laws, it is argued that the much broader U.S. piercing doctrine makes the expansion of direct liability doctrine unnecessary in …

Governing Fintech 4.0: Bigtech, Platform Finance, And Sustainable Development, Douglas Arner, Ross Buckley, Kuzi Charamba, Artem Sergeev, Dirk Zetzsche

Fordham Journal of Corporate & Financial Law

Over the past 150 years, finance has evolved into one of the world’s most globalized, digitized, and regulated industries. Digitalization has transformed finance, but also enabled new entrants over the past decade in the form of technology companies, especially FinTechs and BigTechs. As a highly digitalized industry, incumbents and new entrants alike are increasingly pursuing similar approaches and models, focusing on the economies of scope and scale typical of finance and the network effects typical of data. Predictably, this has resulted in the emergence of large digital finance platforms. We argue that the combination of digitalization, new entrants (especially BigTechs), …

Peeking Into The House Of Cards: Money Laundering, Luxury Real Estate, And The Necessity Of Data Verification For The Corporate Transparency Act’S Beneficial Ownership Registry, S. Alexandra Bieler

Fordham Journal of Corporate & Financial Law

It is estimated that $800 billion to $2 trillion are laundered globally every year, funding the schemes of bad actors and terrorists alike. These astronomical sums are moved around the world without detection; this is in large part due to the ease with which anonymous shell companies, typically limited liability companies (LLCs), can be created, particularly in the United States. America is one of the most egregious enablers of this practice because most states require little to no information about the person ultimately controlling the entity, known as the “beneficial owner.” Working through an LLC, bad actors often turn to …

The Cryptic Nature Of Crypto Digital Assets Regulations: The Ripple Lawsuit And Why The Industry Needs Regulatory Clarity, Jacqueline Hennelly

Fordham Journal of Corporate & Financial Law

The tension and associated time lag between technology and regulation has been well documented. Paradigmatic of this phenomenon is the global evolution of blockchain technology and digital assets. Digital assets in the blockchain allow users to transact directly without financial intermediaries. However, the regulatory guidelines for the assets, their issuance, and the subsequent transactions are unclear. The Securities and Exchange Commission (SEC) has filed an action to apply its existing regulations and the judicial interpretations to Ripple’s issuance of XRP, its token, and Ripple’s control over subsequent user transactions of XRP. This Note uses SEC v. Ripple as a case …

Delaware’S Dominance, Wyoming’S Dare: New Challenge, Same Outcome?, Pierluigi Matera

Fordham Journal of Corporate & Financial Law

Despite increasing criticism, Delaware’s dominance in corporate law has not experienced a significant decline: as of today, 67.8 percent of Fortune 500 companies are still incorporated in its jurisdiction. Nevada is known as Delaware’s most important competitor, with an aggressive strategy that has overridden the efforts of any other jurisdiction. Yet, its success has been limited to a specific market segment: small firms with low institutional shareholding and high insider ownership.

Scholars suggest several explanations for both the rise and the staying power of Delaware. These explanations are essentially subsumed under the credible commitment theory and the network theory. According …

Esg Ratings: A Blind Spot For U.S. Securities Regulation, Alexander Coley

Northwestern Journal of International Law & Business

Providers of “Environmental, Social, and Governance” (ESG) ratings have emerged as prominent informational intermediaries in the sustainable finance ecosystem. The key players are familiar names such as Moody’s, Morningstar, MSCI and S&P. In recent years, investors, financial markets observers and academics have raised serious doubts about the value and integrity of ESG ratings, pointing to lack of reliability and comparability and risks of conflicts of interest and abuse, including the potential for “greenwashing.”

ESG ratings are now in the crosshairs of financial regulators, particularly, in Europe. However, the regulatory discourse has failed to contend with risks arising from the use …

Learning To Manipulate A Financial Benchmark, Megan Shearer, Gabriel V. Rauterberg, Michael P. Wellman

Law & Economics Working Papers

Financial benchmarks estimate market values or reference rates used in a wide variety of contexts, but are often calculated from data generated by parties who have incentives to manipulate these benchmarks. Since the London Interbank Offered Rate (LIBOR) scandal in 2011, market participants, scholars, and regulators have scrutinized financial benchmarks and the ability of traders to manipulate them.

We study the impact on market welfare of manipulating transaction-based benchmarks in a simulated market environment. Our market consists of a single benchmark manipulator with external holdings dependent on the benchmark, and numerous background traders unaffected by the benchmark. We explore two …

10 Things Judges Should Know About Cryptocurrency, Lee Reiners

Faculty Scholarship

No abstract provided.

Secured Transactions Law Reform In Japan: Japan Business Credit Project Assessment Of Interviews And Tentative Policy Proposals, Megumi Hara, Kumiko Koens, Charles W. Mooney Jr.

All Faculty Scholarship

This article summarizes key findings from the Japan Business Credit Project (JBCP), which involved more than 30 semi-structured interviews conducted in Japan from 2016 through 2018. It was inspired by important and previously unexplored questions concerning secured financing of movables (business equipment and inventory) and claims (receivables)—“asset-based lending” or “ABL.” Why is the use of ABL in Japan so limited? What are the principal obstacles and disincentives to the use of ABL in Japan? The interviews were primarily with staff of banks, but also included those of government officials and regulators, academics, and law practitioners. The article proposes reforms of …