September 23, 2019

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Conference Report - Blockchain and the Law Towards a Responsible Blockchain Sector

On June 14, Cardozo Law School in New York City held a conference entitled “Blockchain and the Law: Towards a Responsible Blockchain Sector.”  The conference was led by a panel consisting of current and former commissioners and staff members of the SEC and the CFTC including Rob Cohen, director of the SEC’s enforcement division.

Among topics discussed was SEC Director William Hinman’s recent speechin which he stated that Ethereum is not a security.  Panelists suggested this may indicate that the SEC would regard a token as being able to change its character over time, such that a token that was once a security can morph into one that is not a security.   This would have important implications for market practices, potentially including the utility of SAFTs.

In light of SEC Chairman Jay Clayton’s gatekeeper speech there was a panel consensus encouraging lawyers to seek consultation with the SEC staff through the fintech@sec.gov email address.  The panelists explained that such consultation could be a way to vet a client’s intentions since a fraudster likely would not want its lawyers talking with the SEC even on a no-names basis.

Cohen said that 90% of ICOs involve fraud and that this prevalence of boiler rooms and Ponzi schemes may have contributed to the SEC’s not being in a rush to push structural changes to securities laws to accommodate ICOs.  There was a spirited discussion of the need to address the regulatory status of intermediaries involved with securities tokens.   One audience member commented that smart contracts are being drafted in a vacuum because there is no certainty as to what practices would be considered adequate.  Panelists indicated the SEC may consider it too early to proceed with full notice-and-comment rulemaking on these issues but that it will probably rely on no-action letters to provide safe harbors from enforcement, similarly to how the SEC used the Wit Capital no-action letter to help move securities offerings into the internet age.

Copyright 2019 K & L Gates

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About this Author

Anthony R.G. Nolan, KL Gates, fixed income securities lawyer, structured finance attorney
Practice Area Leader

Anthony Nolan is a finance partner in the New York office and is a Practice Area Leader for the firm's global Finance practice. Mr. Nolan has a domestic and international practice that emphasizes lending transactions, fixed income securities, structured finance, structured products and derivatives. He often works at the intersection of finance and investment management, including trading and regulation of swaps and security-based swaps, loan trading, securities lending and repo as well as traditional borrowing and leverage transactions. 

Mr....

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Julien Barbey, corporate lawyer, KLGates
Associate

Julien Barbey is an associate in the firm’s New York office.

Professional Background

Prior to joining the firm, Mr. Barbey was a summer associate in the firm’s New York office in 2015. In addition, he was a legal intern for the United States Securities and Exchange Commission in 2014.

Additional Information

Mr. Barbey received a master’s degree in International Finance and Economic Policy from the School of International and Public Affairs at Columbia University where he worked on peacebuilding and conflict resolution in Colombia and the Democratic Republic of the Congo.

Primary Practice

  • Corporate/M&A

Education

  • J.D., Fordham University School of Law, 2016
  • M.A., Columbia University, 2013
  • B.A., Columbia University, 2009

Admissions

  • Bar of New York

Languages

  • French
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