How to Move from Local to Global Regulation of Crypto-Assets

On July 7, 2022, the U.S. Department of Treasury (USDT) published a fact-sheet on the regulation of digital assets(a.k.a. crypto-assets) in which it emphasized the need for global cooperation. However, this fact-sheet is only a drop in an ocean of mostly uncoordinated crypto-regulation initiatives, both domestically (e.g., presidential executive order, a bi-partisan bill submitted to Congress, and diligent SEC enforcement) and abroad (e.g., final steps toward a harmonized regulation in the EU and several declarations by individual countries).

The current wave of crypto-regulation announcements aims to eliminate the confusion that has dominated the cryptomarket since its emergence. In … Read more

When Biden Met Crypto: Thoughts on the President’s Executive Order

On March 9, 2022, President Biden signed an executive order (“the Order”) requiring federal agencies to submit reports on how cryptocurrencies relate to various issues, including money laundering, investor protection, international cooperation, central bank digital currencies (“CBDC”), and systemic risk. Here, we offer some perspective and suggestions on those issues.

First, consider money laundering. Typically, anti-money-laundering regulation aims to block money received from crime or terrorism from flowing into traditional financial institutions. Cryptocurrencies create concerns because they can be purchased (more or less) anonymously and without intermediaries. That raises two questions: (1) who should regulation target in the absence of … Read more

How the Covid-19 Pandemic Affected the Cryptocurrency Market

In our recent paper, we conducted an empirical analysis to test how the outbreak of the Covid-19 pandemic affected the market for cryptocurrencies (“cryptomarket”). One year into the pandemic, this market seems to have boomed. For instance, when the pandemic erupted, Bitcoin – the world’s first cryptocurrency – could be purchased for about $7,300. Today, the very same token costs more than $46,800 – a staggering 640 percent rise. Other leading cryptocurrencies (e.g. Ether), showed similar (or even greater) increases. However, this upward trend is not necessarily obvious from a theoretical standpoint, as there are several forces that might drive … Read more

Why Some Covid-19 Mitigation Strategies Fail

As the Covid-19 pandemic continues to disrupt the global economy, regulators are struggling to find cost-effective mitigation strategies. The goal of such strategies should be simple: Reduce the spread of the virus, while causing the least amount of damage to people’s everyday lives, including economic activity. Yet, the diverse measures taken by governments only seem to have limited success in achieving that goal. Given that current estimates of the economic damage are tens of trillions of dollars, figuring out why some Covid-19 mitigation strategies still fail should be a top priority. In a new paper, we attempt to do exactly … Read more

What Law and Economics Has to Say About Property Rights in Cryptocurrencies

Technological advancements of recent years have given birth to a strange and interesting creature: cryptocurrencies like Bitcoin, Ether, and Facebook’s upcoming Libra. Many of the advantages offered by these tokens stem from their underlying technology – a decentralized ledger, which automatically records any transfer of tokens between individuals, without any involvement from a centralized authority. Transfers can only occur when token holders use their “private key” (comparable to a username and password) to match the token’s “public key” (comparable to an account number), and once they are completed, all transactions are grouped in immutable inter-connected blocks (yielding the technology’s common … Read more