Law Commons^™

Emerging Technology's Language Wars: Cryptocurrency, Carla L. Reyes

William & Mary Law Review

Work at the intersection of blockchain technology and law suffers from a distinct linguistic disadvantage. As a highly interdisciplinary area of inquiry, legal researchers, lawmakers, researchers in the technical sciences, and the public all talk past each other, using the same words, but as different terms of art. Evidence of these language wars largely derives from anecdote. To better assess the nature and scope of the problem, this Article uses corpus linguistics to reveal the inherent value conflicts embedded in definitional differences and debates related to developing regulation in one specific area of the blockchain technology ecosystem: cryptocurrency. Using cryptocurrency …

Making Virtual Things, Joshua A.T. Fairfield

William & Mary Law Review

People value virtual things—such as NFTs—because such assets trigger and satisfy deep-seated narratives of property and ownership. The cause of the recent series of failures to regulate virtual assets, and the resulting crashes, has been a failure to take seriously the ways people perceive and use the assets. Current legal frameworks fail to support buyers’ and users’ expectations of ownership in virtual things they purchase.

Making virtual things is a matter of social construction of value. Virtual things, like real-world things, have value because a community values them for a purpose. It therefore makes no sense to discount how and …

Digital Asset Regulation: Peering Into The Past, Peering Into The Future, Kevin Werbach

William & Mary Law Review

Blockchain is often compared to the internet as a disruptive technology that will realign economic structures across the world. This analogy extends to law and regulation. Similar to internet-based services, digital assets raise a host of challenges for policymakers. They also pose general questions regarding the desirability and practicality of regulating decentralized systems. Such debates play out against a backdrop of concerns that regulatory action will chill innovation or push market activity to more tolerant jurisdictions. The story of internet policy in the late 1990s and early 2000s therefore provides important lessons for policymakers today when confronting digital assets. Two …

Blockchain Real Estate And Nfts, Juliet M. Moringiello, Christopher K. Odinet

William & Mary Law Review

Non-fungible tokens (popularly known as NFTs) and blockchains are frequently promoted as the solution to a multitude of property ownership problems. The promise of an immutable blockchain is often touted as a mechanism to resolve disputes over intangible rights, notably intellectual property rights, and even to facilitate quicker and easier real estate transactions.

In this Symposium Article, we question the use of distributed ledger technologies as a method of facilitating and verifying the transfer of physical assets. As our example of an existing transfer method, we use real property law, which is characterized by centuries-old common law rules regarding fractionalized …

Implied Organizations And Technological Governance, Shawn Bayern

William & Mary Law Review

Common law historically adapted creatively and gracefully to the emergence of new types of organizations. Today, statutory forms of organizations predominate. But statutory organizational forms may be ill-suited to govern the novel, loosely coupled, and rapidly changing organizations that can arise through distributed technological mechanisms. This Article suggests that the common law of implied organizations can be a fertile ground for legal responses to technological organizations and indeed may be important not just for regulating such organizations but for giving them important legal capabilities.

Defi: Shadow Banking 2.0?, Hilary J. Allen

William & Mary Law Review

The growth of so-called “shadow banking” was a significant contributor to the financial crisis of 2008, which had huge social costs that we still grapple with today. Our financial regulatory system still has not fully figured out how to address the risks of the derivatives, securitizations, and money market mutual funds that comprised Shadow Banking 1.0, but we are already facing the prospect of Shadow Banking 2.0 in the form of decentralized finance, or “DeFi.” DeFi’s proponents speak of a future where sending money is as easy as sending a photograph—but money is not the same as a photograph. The …

Blockchains As Infrastructure And Semicommons, James Grimmelmann, A. Jason Windawi

William & Mary Law Review

Blockchains are not self-executing machines. They are resource systems designed by people, maintained by people, and governed by people. Their technical protocols help to solve some difficult problems in shared resource management, but behind those protocols there are always communities of people struggling with familiar challenges in governing their provision and use of common infrastructure.

In this Article, we describe blockchains as shared, distributed transactional ledgers using two frameworks from commons theory. Brett Frischmann’s theory of infrastructure provides an external view, showing how blockchains provide useful, generic infrastructure for recording transactions and why that infrastructure is most naturally made available …

Regulating Crypto, On And Off The Chain, Eric D. Chason

William & Mary Law Review

Cryptocurrency had its most turbulent year in 2022. The collapse of TerraUSD ushered in a broad market decline, and the FTX debacle brought new publicity and scrutiny to crypto’s woes. Both events will likely spark new regulation and legislation.

Policymakers and regulators should regulate market structures like exchanges. While many cryptocurrencies are extremely transparent and require little if any additional disclosures, others are plagued by serious informational asymmetries. An exchange might allow participants to trade Bitcoin, and regulators need to protect investors who rely on such exchanges. Investors may face informational asymmetries regarding the operation and safety of the exchange. …

How The Blockchain Undermined Digital Ownership, Aaron Perzanowski

Articles

The shift from a market built around the sale of tangible goods to one premised on the licensing of digital content and services has done significant and lasting damage to the notion of individual ownership. The emergence of blockchain technology, while certainly not necessary to reverse these trends, promised an opportunity to attract investment and demonstrate consumer demand for marketplaces that recognize meaningful digital ownership. Simultaneously, it offered an avenue for alleviating worries about hypothetical widespread reproduction and unchecked distribution of copyrighted works. Instead, many of the most visible blockchain projects in recent years—the proliferation of new cryptocurrencies and the …

The Failure Of Market Efficiency, William Magnuson

Faculty Scholarship

Recent years have witnessed the near total triumph of market efficiency as a regulatory goal. Policymakers regularly proclaim their devotion to ensuring efficient capital markets. Courts use market efficiency as a guiding light for crafting legal doctrine. And scholars have explored in great depth the mechanisms of market efficiency and the role of law in promoting it. There is strong evidence that, at least on some metrics, our capital markets are indeed more efficient than they have ever been. But the pursuit of efficiency has come at a cost. By focusing our attention narrowly on economic efficiency concerns—such as competition, …