Banking and Finance Law Commons^™

Regularity Clarity At A Cost: The Risks To Everyday Investors If Project Crypto Continues Without Guardrails, Maia Chess

The University of Cincinnati Intellectual Property and Computer Law Journal

No abstract provided.

"Tuah Much To Handle": Why The Current Oversight On Cryptocurrency Is Insufficient, Adam Gross

University of Cincinnati Law Review

No abstract provided.

Revolutionizing The Cross-Border Payment System, Muhui Shi

Michigan Technology Law Review

When you bought your coffee this morning, you probably didn’t notice that many cross-border payments were hidden in the process of shipping beans in Ethiopia to the barista in your neighborhood. Comprising more than ten percent of what U.S. consumers spend, cross-border payments are an essential part of U.S. dollar dominance and commercial competitiveness. Yet, the outdated cross-border payment system—shrinking constantly in reach and struggling with structural changes—is demanding a complete upgrade.

What is the best path forward? Cryptocurrencies? E-money? Stablecoins? Central bank digital currencies (CBDCs)? In this article, I answer the question by uncovering the core needs of the …

The New Legal Tender Debate: Surveying State-Level Attempts To Regulate Central Bank Digital Currencies, Jacob Gerszten

Michigan Technology Law Review

This Note explores the growing wave of state-level legislation aimed at regulating Central Bank Digital Currencies (CBDCs). CBDCs, digital forms of central bank-issued money, have sparked intense political debates between proponents who see them as the logical next development in monetary technology and critics who perceive them as threats to privacy and financial system stability. Although a widely available CBDC appears unlikely without Congressional authorization, sixteen states have enacted laws designed to preempt its development, with more statutes likely to follow. These state statutes employ various legal mechanisms, including redefining terms in the Uniform Commercial Code, prohibiting CBDC-related payments to …

Digital Currency In Legal Limbo, From Uncertainty To Precedent In Tanzania: Yellow Card (T) Ltd Vs. Nyamwero Michael Nyamwero (Hc: Commercial Case No. 12171 Of 2024), Jackson Simango Magoge

SAIPAR Case Review

The abstract below was generated using artificial intelligence. It has not been endorsed by the author.

This article analyzes Yellow Card (T) Ltd v. Nyamwero Michael Nyamwero (HC Commercial Case No. 12171 of 2024), a landmark Tanzanian case addressing the legal status of cryptocurrency transactions in a jurisdiction lacking a formal regulatory framework. The dispute arose from the alleged misappropriation of funds by a former company director and his subsequent breach of a settlement agreement requiring repayment. The court held in favor of the plaintiff, concluding that although cryptocurrency activities remain unregulated in Tanzania, they are not inherently illegal. Accordingly, …

Crypto In The Courtroom: A Legislative Framework For Managing Crypto Assets In Bankruptcy, Katelyn E. Barker

University of Miami Law Review

The rapid rise and subsequent collapse of the cryptocurrency market exposed a critical shortcoming of bankruptcy law: the absence of clear guidelines for the treatment of crypto assets. The Bankruptcy Code—which predates the invention of crypto—fails to account for the unique complexities of crypto assets. Although several crypto bills have been introduced, they fall short of adequately confronting the complex and evolving challenges of crypto bankruptcies. The lack of guidance has forced courts to make consequential decisions with no clear direction, leading to inconsistent outcomes in areas such as crypto asset ownership, valuation, and customer protections.

This Note examines bankruptcy …

Crypto Regulation In The Time Of Trump, Lawrence J. Trautman

Michigan Technology Law Review

Donald Trump’s election as president during November 2024 results in perhaps the most dramatic philosophical change in approach to governmental regulation in over ninety years. The Great Depression of the 1930s created a need for regulatory reform and resulted in the advent of such new regulatory frameworks as the U.S. Securities and Exchange Commission (SEC). It has been the purpose of the SEC to create and nurture efficient securities markets enabling vibrant capital formation while preventing fraud upon the investing public. At issue is the contrast between the regulatory regime in place since 1933-34 and the Trump Administration’s desire to …

Shadow Banking And Securities Law, Gabriel Rauterberg, Jeffery Y. Zhang

Faculty Scholarship

Shadow banking may be the single greatest challenge facing financial regulation. Financial institutions that function like banks, but fall outside the scope of banking regulation — aptly termed “shadow banks” — were at the heart of the Global Financial Crisis and most episodes of serious financial stress since then. Scholars have largely focused on one response to this problem: extending traditional banking regulation to shadow banks. Yet more than fifteen years after the crisis, major regulatory efforts along this route have stalled.

In this Article, we explore the uneasy case for greater regulation of shadow banking through a different route …

Transformative Impact Of Ai And Digital Technologies On The Fintech Industry: A Comprehensive Review, Soudeh Pazouki, Behdad Jamshidi, Armia Jalali, Arya Tafreshi

Finance Faculty Publications

This paper examines the impact of artificial intelligence (AI) and digital technologies on the financial technology (FinTech) industry and demonstrates how AI- enabled strategies are increasing the ability of businesses not only to grow, but also to better serve their customers through operational efficiencies. But as immersive as the technological advancements may be, they present challenges in connection with increasingly complicated licensing regulations and a constantly evolving technological landscape. We examine the way AI and algorithms are streamlining workflows, enhancing productivity and expanding access to financial resources for traditionally under – served populations. The paper also discusses the macroeconomic implications …

Tech-Savvy Fraud Investigators In An Age Of Digital Deception, Alan Saquella

Publications

The recent court conviction of cryptocurrency exchange founder Sam Bankman-Fried on charges of fraud and conspiracy related to the collapse of FTX has heightened the critical need for the next generation of fraud investigators to possess advanced technical skills. This high-profile case serves as a main indicator in the fight against white-collar crime and emphasizes the glaring reality that traditional investigative methods are no longer sufficient to fight modern-day financial bad behavior. As we witness an increase in white-collar crime on a global scale, the pressure for a new generation of fraud investigators, fortified with an advanced skill set, has …

Crypto Losses, Xuan-Thao Nguyen, Jeffrey A. Maine

Articles

The crypto industry has been hit hard with various market forces and scams, leaving investors with trillion-dollar losses in recent years. The appropriate tax treatment of such losses has yet to be fully examined, as there is scant guidance and a dearth of academic literature on the subject. This Article attempts to fill this gap by applying general tax principles to crypto losses and making several recommendations to improve the clarity and consistency of tax results. It explores various theories of crypto loss “realization” (including theft, abandonment, and worthlessness), highlighting where additional guidance is needed. And it considers appropriate legislative …

How Bitcoin Price Reacts To United States Government Public Legislation Releases, Walter Johnson

Honors Theses

Since its inception on January 3, 2009, Bitcoin and other cryptocurrencies have grown in price and popularity. As cryptocurrencies become more well-known to the public, regulators realize that these virtual currencies need to be monitored to some extent. Governments are beginning to intervene, causing controversy among cryptocurrency users regarding whether regulation is beneficial to the industry. For Bitcoin specifically, some believe the lack of government control is a primary benefit of the technology, whereas others believe Bitcoin cannot reach its full potential without government regulation. This research seeks to discover how Bitcoin owners have reacted to news of increased United …

In The Midst Of Bankruptcy: How Cryptocurrency's Classification Affects Creditors Who Were Once Customers, Mia Qu

Washington Law Review

In 2022, Congress proposed the Digital Commodities Consumer Protection Act to amend the Commodity Exchange Act and define a new type of commodity: digital commodity. The definition of digital commodity encompasses cryptocurrency and provides the Commodity Futures Trading Commission with jurisdiction over digital asset transactions. This definition of digital commodity has two important implications. First, it signals the lawmakers’ tendency to generalize cryptocurrency as a commodity. Second, it brings complications into how creditors—especially individual crypto account holders—can recover in the recent bankruptcy cases involving prominent crypto companies. This Comment contains four components. First, it provides a brief explanation of cryptocurrency …

From Crypto Wild West To Regulated Frontier: Unleashing The Potential Of Blockchain Technology, Pawan Jain

West Virginia Law Review

The emergence of blockchain technology has transformed the financial landscape in many ways. From creating new cryptocurrencies to facilitating decentralized exchanges and smart contracts, blockchain has the potential to disrupt traditional financial institutions and reshape the way we conduct business. However, the adoption of blockchain technology has also raised concerns about its potential risks and challenges, such as its susceptibility to fraud, market manipulation, and money laundering. These concerns have led to calls for regulating blockchain technology to mitigate these risks and ensure the integrity and stability of financial markets. Recent collapses in the crypto market caused by the bankruptcy …

Regulating Crypto Intermediaries, Eric D. Chason

Marquette Law Review

Early 2024 produced a dramatic rebound in cryptocurrency markets as Bitcoin hit an all-time high price in March 2024. This surge was fueled in large part by judicial and regulatory action. After years of denials and a high-profile defeat in court, the U.S. Securities and Exchange Commission (SEC) finally approved the first exchange-traded funds (ETFs) for Bitcoin in January 2024. Many believe that these approvals will lead to a greater shift of investment funds into crypto. Crypto regulation is not, however, ready for this shift. While ETFs have clear treatment under current law, other institutions lack the same clarity or …

Reconciling Disjunct Cryptocurrency Securities Enforcement With Purchaser Expectations, Jacob E. Simmons

Seattle University Law Review

The Southern District of New York’s July 2023 decision in SEC v. Ripple Labs, Inc. has been touted as a monumental win for cryptocurrency purchasers and related businesses. The Ripple court held that, except institutional investor transactions, all sales of Ripple’s XRP token were not investment contracts, a class of security subject to federal securities law. The court’s ruling meant that Ripple could not be held liable for the unregistered trading of XRP beyond its sales to institutional investors. Ripple adds new insights to a pervasive policymaking dilemma addressed in this Note: is the Securities and Exchange Commission’s (SEC) regulatory …

Restructuring Undefined Assets: Valuation Of Stablecoins And Their Impact On The Bankruptcy Process, Olivia Woodmansee

American University Business Law Review

Difficulties with defining cryptocurrency have plagued federal agencies and courts since crypto’s creation. With the emergence of “crypto winter” in 2022 that saw many crypto-related ventures fail, bankruptcy courts have been challenged to address numerous novel legal issues surrounding crypto-assets. When looking to the Bankruptcy Code fails to provide answers, courts must look to definitions, agency regulations, and an analysis of cryptocurrency’s position in the market to determine its classification. This can quickly become muddled with the voluminous and seemingly conflicting sources that exist. One such issue emerges when courts attempt to determine how to classify a particular cryptocurrency: is …

Bank Runs During Crypto Winter, Gary B. Gorton, Jeffery Yufeng Zhang

Articles

“Crypto Winter” refers to a systemic event that occurred in the cryptocurrency ecosystem—what we call “crypto space”—in 2022. Crypto space was wracked by plummeting crypto prices, the troubles of a large crypto hedge fund, and runs on many crypto lending platforms. Several large crypto firms went bankrupt. Collectively, everyday people lost billions of dollars. And crypto investors are still feeling the aftershocks.

We begin with two observations: First, despite mass marketing campaigns to the contrary, crypto lending platforms recreated and replicated traditional banking. They were vulnerable to runs because, like all banks, they borrowed short and lent long. This is …

Investment Daos And Crowdfunding: A Solution To Securities Law Challenges, Katherine Stromin

University of San Francisco Law Review

No abstract provided.

Law’S Detrimental Reliance On Intermediaries, Carla L. Reyes

Faculty Journal Articles and Book Chapters

Emerging technology is law’s magic mirror. Even as law seeks to cabin the effects of emerging technology in society, when we hold emerging technology up to law, emerging technology often reflects flaws or gaps in legal constructs. Of course, rather than recognizing those flaws or gaps, law retorts back “mirror, mirror, on the wall, who is the fairest of them all?,” demanding that all other disciplines and constructs bow before law’s mighty, near-perfect reach. Often, no matter how strongly emerging technology demands that law bend, legal evolution only occurs after regulatory failures harm individuals on a massive scale. One emerging …

Taming The Digital Wild West: The Need To Fully Regulate The Crypto Market, Shawn Stevenson

Lewis & Clark Law Review

Despite past doubts from sophisticated investors, cryptocurrencies have fully emerged from the underground and become a hot topic in mainstream financial discussions. At its peak, the global crypto market possessed a market cap of nearly $3 trillion, with the vast amount of that value created in less than two years. But this rapid growth has also come with extreme volatility; now more than a year out from that peak, the global crypto market has shrunk to under $1 trillion and has been riddled by high-profile bankruptcies. On top of this extreme volatility, the largely unregulated crypto market has become an …

Celebrating Markham’S Approach To Financial History: Getting At The Macro One Deal At A Time, José Gabilondo

FIU Law Review

Professor Markham's financial history does an excellent job of reviewing and analyzing financial history for the period from the Great Recession to the COVID pandemic. His granular approach to financial history conveys macro-trends by focusing on the most defining transactions and episodes from this period.

A Global Crypto Code Of Conduct: Crafting An Internationally Centralized Regulatory Body For A Decentralized Asset, Mary Kavaloski

Vanderbilt Journal of Transnational Law

The advent of Bitcoin in 2009 presented a previously unfathomable possibility for the future of currency and monetary transactions. Now, cryptocurrency is ubiquitous; it is increasingly seizing media headlines, novel swathes of investors, institutional bank involvement, and most importantly of all, the attention of government regulators. Yet governments around the globe have failed to adequately keep up with the pace of cryptocurrency's evolution, particularly because of their lack of expertise in this unprecedented area. This Note discusses how cryptocurrency's truly global footprint warrants a partnership between national regulators and industry actors at the international level. Specifically, by exploring the approaches …

After Ftx: Can The Original Bitcoin Use Case Be Saved?, Mark Burge

Faculty Scholarship

Bitcoin and the other cryptocurrencies spawned by the innovation of blockchain programming have exploded in prominence, both in gains of massive market value and in dramatic market losses, the latter most notably seen in connection with the failure of the FTX cryptocurrency exchange in November 2022. After years of investment and speculation, however, something crucial has faded: the original use case for Bitcoin as a system of payment. Can cryptocurrency-as-a-payment-system be saved, or are day traders and speculators the actual cryptocurrency future? This article suggests that cryptocurrency has been hobbled by a lack of foundational commercial and consumer-protection law that …

Taming Wildcat Stablecoins, Gary B. Gorton, Jeffery Y. Zhang

Articles

Cryptocurrencies, including stablecoins, are all the rage. Investors are exploring ways to profit off of them. Governments are considering ways to regulate them. While the technology underlying cryptocurrencies is new, the economics is centuries old. Oftentimes, lawmakers are so focused on understanding a new technological innovation that they fail to ask what exactly is being created.

In this case, the new technology has recreated circulating private money in the form of stablecoins, which are similar to the banknotes that circulated in many countries during the nineteenth century. The implication is that stablecoin issuers are unregulated banks. Based on lessons learned …

Stopping Runs In The Digital Era, Luís C. Calderón Gómez

Articles

Bank runs, and the financial crises they catalyze and amplify, are incredibly costly-to individuals, families, society, and the economy writ large. Banking regulation has, for the most part, protected us from traditional bank runs for the last ninety years. However, as we saw in the devastating 2008 financial crisis, bank runs can still occur in lightly regulated or opaque segments of the financial sector.

The recent crypto market downturn dramatically forewarned regulators of the potential and significant risks that novel assets could pose to our financial system's stability. In particular, a novel, systemically important asset (stablecoins) revealed its vulnerability to …

U.S. Cryptocurrency Regulation: A Slowly Evolving State Of Affairs, Aaron Poynton

Notre Dame Journal on Emerging Technologies

After nearly a decade and a half since the creation of the first cryptocurrency, crypto regulation in the United States is fragmented, with different measures taken at the federal and state levels, and even within and among agencies. This sluggish speed is not necessarily a surprise as government regulation has always chased rapid advancements in technology and associated consumer and market behavior changes. However, this is a precarious position for the United States--and the world--as the U.S. is a leader in the global financial community, the high concentration of crypto-based wealth, and economies’ increasingly interconnected and interdependent nature. This working …

Fair Warnings From Ofac’S Settlements With Cryptocurrency Service Providers: Compliance Should Include Lifetime-Of-The-Relationship, In-Process Geolocational Checks, Sarah Jane Hughes

Articles by Maurer Faculty

In 2022, the Office of Foreign Assets Control (OFAC) announced numerous settlements with cryptocurrency exchanges. These settlements serve as “fair warnings” to all cryptocurrency service providers who are “U.S. persons” or who offer services to U.S. persons. The term “U.S. persons” is defined in 31 C.F.R. §560.314 as “any United States citizen, permanent resident alien, entity organized under the laws of the United States or any jurisdiction within the United States (including foreign branches), or any person in the United States.”

This article focuses on these “fair warnings” as they have accumulated from prior settlements and from OFAC’s published guidance …

Regulatory Sandboxes Enable Pragmatic Blockchain Regulation, Joshua Durham

Washington Journal of Law, Technology & Arts

Since blockchain technology supports digitally-native money, the centralized chokepoints that governments have traditionally targeted to regulate commerce no longer apply to our (digital) property. However, competent regulation furthers basic public policy goals and should enable responsible innovation of this promising technology. This Article discusses pragmatic policies that enable responsible innovation by cultivating regulatory expertise required to write enforceable rules. Responsible innovation is necessary because unlike the early internet, where programmers could manipulate simple colors and text on webpages, these same individuals can now create financial services applications that manipulate actual money—we are faced with an inescapable reality that more is …

Airdropping Justice: The Constitutionality Of Service Of Process Via Non-Fungible Token, Jenifer Jackson

Catholic University Journal of Law and Technology

No abstract provided.