Eric Hess (@hess_legal) is Founder & Managing Counsel at Hess Legal Counsel, a cybersecurity SaaS platform and consulting company, and hosts The Encrypted Economy podcast.

In this episode, we’ll be exploring his recent paper Bridging Policy and Practice: A Pragmatic Approach to Decentralized Finance, Risk, and Regulation. For Part 1, a history of securities regulation in the US, see our prior episode #122.

Show highlights:

[1:30] Surprising insight about securities regulation

[4:30] 2022 White House executive order

[11:30] The real reason(s) why crypto projects can register with the SEC

[17:00] Why the same risk, same rules philosophy is wrong

[26:30] Solutions to problems posed by blockchain

[36:00] What Eric has changed his mind on

& much more.

Disclaimer: Jacob Robinson and his guests are not your lawyer. Nothing herein or mentioned on the Law of Code podcast should be construed as legal advice. The material published is intended for informational, educational, and entertainment purposes only. Please seek the advice of counsel, and do not apply any of the generalized material to your individual facts or circumstances without speaking to an attorney.

Primavera De Filippi is a Director of Research at the National Center of Scientific Research (CNRS) in Paris, Faculty Associate at the Berkman Klein Center for Internet & Society at Harvard University, and Visiting Fellow at the Robert Schuman Centre for Advanced Studies at the European University Institute.

Her research focuses on the legal challenges and opportunities of blockchain technology and artificial intelligence, with specific focus on governance and trust. Primavera is the author of the book “Blockchain and the Law,” published in 2018 by Harvard University Press (co-authored with Aaron Wright).

Show highlights:

[1:00] Genesis block

[3:00] Copyright law in the digital world

[15:00] Metabirkin case

[20:00] Code as law

[30:00] Moral values

[34:00] Blockchains and the Law

[39:00] Blockchain-based life forms (Plantoids)

& much more.

Jeffrey T. Dinwoodie is a partner at Cravath, Swaine & Moore, and a member of the firm’s Financial Institutions Group. He has served in senior roles at the SEC and the U.S. Treasury Department, including as Chief Counsel to SEC Chairman Jay Clayton and, earlier, as Chairman Clayton’s Trading and Markets Counsel.

Disclaimer: Jacob Robinson and his guests are not your lawyer. Nothing herein or mentioned on the Law of Code podcast should be construed as legal advice. The material published is intended for informational, educational, and entertainment purposes only. Please seek the advice of counsel, and do not apply any of the generalized material to your individual facts or circumstances without speaking to an attorney.

Rebecca Rettig, Michael Mosier and Katja Gilman published their paper, Genuine DeFi as Critical Infrastructure: A Conceptual Framework for Combating Illicit Finance Activity in Decentralized Finance and a summary two-pager. This paper proposes a framework (see Section III) to effectively detect, deter and prevent illicit financial activity in DeFi, while preserving the technology as permissionless, neutral infrastructure.

This podcast is an audio version of the paper, along with key takeaways and points made within it.

[1:40] Overview of the paper

[9:00] Current AML and CTF regime in America

[18:00] Sanctions

[23:00] DeFi and illicit finance

[26:00] Framework for the future of DeFi

On August 4, 2023, Coinbase filed a brief in support of its motion to dismiss the SEC's lawsuit. This podcast provides an audio version of the brief, along with key takeaways and points made within it.

Show highlights:

[1:00] Preliminary Statement

[6:30] Background on the SEC's charges

[11:30] Coinbase's argument for dismissal

[13:00] Because the complaint alleges no contractual undertaking beyond the point of sale, no investment contract is pleaded

[22:00] The SEC misreads Howey in asserting that a scheme without a contractual undertaking will suffice

[29:00] Recent cases do not support the SEC's efforts to use scheme as an escape hatch from statutory text

[33:00] The SEC's effort to portray a simple asset sale as a security is an unprecedented stretch

[41:00] Any future value that token purchasers on Coinbase and through Prime may hope to reap is not in the profit, income or assets of the issuers business

[42:00] The Major Questions Doctrine compels rejection of the SEC's construction of investment contract

[49:00] Coinbase is entitled to judgment on the claim that it acts as an unregistered broker through Wallet

[50:00] Coinbase is entitled to judgment on the claim that its staking services constitute unregistered securities

Joshua B. Sterling is a Partner at Jones Day where he represents financial services, energy, fintech, agriculture and other companies in matters before the CFTC, the SEC, and other financial regulators. A former senior regulator, Josh was previously the Director of the CFTC’s Market Participants Division. In that role, he oversaw the 3,300 financial firms worldwide registered with the CFTC to participate in the global derivatives markets. 

Show highlights:

[1:00] Josh's introduction to Bitcoin

[5:00] BitMEX case

[11:00] 2008 financial crisis

[16:00] Finance and Web3

[20:00] Role of CFTC in crypto

[25:00] Role of the SEC

[29:00] How to improve the SEC's results

& much more.

We also discuss the book The Price of Time: The Real Story of Interest.

Disclaimer: Jacob Robinson and his guests are not your lawyer. Nothing herein or mentioned on the Law of Code podcast should be construed as legal advice. The material published is intended for informational, educational, and entertainment purposes only. Please seek the advice of counsel, and do not apply any of the generalized material to your individual facts or circumstances without speaking to an attorney.

Elliott Z. Stein (@NYCStein) is a Senior Litigation Analyst at Bloomberg Intelligence. He previously worked in private practice on structured finance/capital markets litigation, white-collar crime and related capital markets matters.

Show highlights:

[1:30] Attending Coinbase hearing on Jan 17

[6:00] Why Elliott expects Coinbase to win

[12:00] Judge Failla's concern with the SEC's position

[16:00] SEC's strongest arguments

[18:00] When to expect a decision

[20:00] Supreme Court narrowing Howey

[23:00] What surprised Elliott about the Coinbase strategy

[27:00] Ripple case

[31:00] Elliott's career

& much more.

Show links:

Disclaimer: Jacob Robinson and his guests are not your lawyer. Nothing herein or mentioned on the Law of Code podcast should be construed as legal advice. The material published is intended for informational, educational, and entertainment purposes only. Please seek the advice of counsel, and do not apply any of the generalized material to your individual facts or circumstances without speaking to an attorney.

Eric Hess (@hess_legal) is Founder & Managing Counsel at Hess Legal Counsel, a cybersecurity SaaS platform and consulting company, and hosts The Encrypted Economy podcast. Eric has over twenty years of experience acting as senior in-house counsel, general counsel or senior management for exchanges, broker dealers, and financial services technology providers.

In this episode, we’ll be exploring his recent paper Bridging Policy and Practice: A Pragmatic Approach to Decentralized Finance, Risk, and Regulation.

Disclaimer: Jacob Robinson and his guests are not your lawyer. Nothing herein or mentioned on the Law of Code podcast should be construed as legal advice. The material published is intended for informational, educational, and entertainment purposes only. Please seek the advice of counsel, and do not apply any of the generalized material to your individual facts or circumstances without speaking to an attorney.

Evan Zinaman (@zin_esq) is the Founder & Principal at Trailbreak, a boutique transactional firm providing tech-fluent corporate, regulatory, product and IP counsel and strategic advice to startups, builders and investors throughout the crypto space. Evan also serves as special crypto counsel to clients of Reed Smith, advising as part of an industry-spanning, global blockchain group that he helped found.

In this episode, we discuss Evan’s paper, “Where the Rubber Meets the Road: A MEV-Aware, Functionalist Review of OFAC Risk ‘on the Base Layer’”.

Disclaimer: Jacob Robinson and his guests are not your lawyer. Nothing herein or mentioned on the Law of Code podcast should be construed as legal advice. The material published is intended for informational, educational, and entertainment purposes only. Please seek the advice of counsel, and do not apply any of the generalized material to your individual facts or circumstances without speaking to an attorney.

Rodrigo Seira (@RSSH273) is Special Counsel at Paradigm. Prior to joining Paradigm, he was outside counsel to crypto investors and entrepreneurs at Cooley LLP.

Brendan Malone (@brendanpmalone) is a Policy Manager at Paradigm. Prior to joining Paradigm, Brendan worked at the Federal Reserve where he focused on policy issues for financial market infrastructures.

Rodrigo and Brendan launched the Paradigm Policy Lab. The goal of the Lab is to be a gathering place for academics, policy experts, lawyers, and technologists to study how to address the biggest policy challenges in crypto. In this conversation, they share the origin story, goals and projects underway at the Lab.

Rodrigo mentions this book: Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages is an academic book by Carlota Perez.

Disclaimer: Jacob Robinson and his guests are not your lawyer. Nothing herein or mentioned on the Law of Code podcast should be construed as legal advice. The material published is intended for informational, educational, and entertainment purposes only. Please seek the advice of counsel, and do not apply any of the generalized material to your individual facts or circumstances without speaking to an attorney.