UNB Law’s Viscount Bennett lecturer talks crypto-currency regulation
Author: Ed Bowes
Posted on Feb 12, 2020
Category: Faculty , Students , Research
Dr. Allan C. Hutchinson, professor of law at York University’s Osgoode Hall Law School, delivered the forty-first edition of the Viscount Bennett Memorial Lecture on January 30. Nearly 100 were in attendance as Hutchinson explored the regulatory challenges of cryptocurrency in his talk, The New Crypto World: Governance on The Margins.
What is cryptocurrency?
Dr. Hutchinson describes cryptocurrency as a borderless, decentralized/distributed digital currency. It is self-regulating through a set of protocols that form the underlying blockchain technology. It is pseudo-anonymous as the network shows transparency through its universal ledger—this same universal ledger ensures that transactions are permanent and unalterable. Dr. Hutchinson categorizes the five major players of cryptocurrency as users, developers/programmers, miners, permissioned networks, and exchanges/banks.
How can you regulate something whose foundation is in opposition to regulation?
According to Dr. Hutchinson, it is cryptocurrency’s decentralized/distributed nature that poses the greatest challenge to the financial services sector, state-backed fiat currency, and to the regulatory authority and reach of the law. Cryptocurrency warrants a regulatory approach that can maintain its original appeal—decentralized control—while protecting not only crypto-users but the broader society.
A major regulatory challenge lies in the difficulty of defining cryptocurrency. Is it property? Currency? Commodity? Security? Sui generis? For Dr. Hutchinson, crypto cannot be shoehorned into a preexisting regulatory system. Regulation must recognize that the crypto world is truly a new worldand a regulatory framework must be developed with this in mind.
Who do we regulate?
Dr. Hutchinson draws a comparison between the crypto/blockchain code-developers and corporate directors, finding parallels in fiduciary duty. The code developers, Dr. Hutchinson suggests, have a duty to protect the best interests of the crypto-users and, thus, make a tenable target for regulation. Dr. Hutchinson goes on to point out, however, that convincing these individuals to accept their fiduciary role will not be without its difficulties.Code-developers shy away from being professionally liable for obvious reasons. But, with ingenuity and constraint, a regime can be introduced that does not over-expose them.
Cryptocurrency will undoubtedly continue to dominate the headlines as familiarity and adoption continue to grow. The Faculty of Law thanks Dr. Hutchinson for delivering an entertaining and highly informative talk.
If you would like to read more about cryptocurrency regulation, keep an eye out for Dr. Hutchinson’s submission Breaking the Code: Cryptocurrency and Programming Proposal in Volume 71 of the UNB Law Journal.