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Blockchain and Cryptocurrencies: A Cross-Border Conundrum

January 28, 2019

Michael L. Spafford, Daren F. Stanaway, and Sabin Chung

In an October 17, 2018 speech, Commodity Futures Trading Commission (“CFTC”) Chairman J. Christopher Giancarlo suggested that the CFTC transform its current “ad-hoc cross-border regime” of swaps regulation into a “holistic risk-based framework that furthers the cause of swaps market reform.” This would require the CFTC to exercise “regulatory deference” to foreign regulators, and Chairman Giancarlo thus committed to “establishing a CFTC cross-border framework that is risk-based and offers deference to comparable non-U.S. regulations.” Like swaps, cryptocurrencies and blockchain technologies are inherently global in nature and subject to potentially divergent regulation by authorities in multiple jurisdictions. These innovations traverse a number of different sectors—from consumer protection and cybersecurity to financial services, investment services, and insurance—thereby further complicating efforts to maintain consistent, coordinated cross-border policies. Notwithstanding the new frontiers and opportunities that these technologies afford, they also bring a host of new challenges for government regulators. Chairman Giancarlo’s call to dramatically overhaul the CFTC’s approach to cross-border swaps regulation and exercise cooperation with, and deference to, foreign regulators (at least insofar as they have enacted comparable regulatory regimes) thus resonates with respect to cryptocurrencies and blockchain as well.

This article was originally presented at the 2019 ABA Derivatives & Futures Law Committee Winter Meeting

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Michael L. Spafford

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