Powers On … Why aren’t there more law schools teaching blockchain, DeFi, and NFT? – Cointelegraph Magazine
Blockchain technology is transformative for both our financial system and our business enterprises, as well as for the improvement of the human condition. More and more unbanked citizens abroad and here in the United States may now have the ability to transfer and receive funds from loved ones with speed, cost-efficiency and anonymity, if needed, from oppressive regimes and governments. and unstable economies. Traditional financial systems that were not available for a long time in underserved communities in various parts of Africa, Asia and Latin America must now recognize the power and efficiency of blockchain.
Lights up … is a monthly opinion column by Marc Powers, who has spent much of his 40-year legal career working on complex securities-related cases in the United States after a stint at the SEC. He is now an Assistant Professor at Florida International University College of Law, where he teaches a course on âBlockchain, Crypto and Regulatory Considerationsâ.
In less than two years, decentralized finance, or DeFi, has emerged. These communities can borrow and exchange funds in minutes for business or personal expenses. DeFi has grown up from an ecosystem of less than $ 1 billion at the start of 2020 to one with more than $ 250 billion dollars blocked value today. Interest in non-fungible tokens, or NFTs, has also exploded. These collectibles and other forms of NFT captured more than $ 10 billion in sales volume in the third quarter, up from $ 1.2 billion six months earlier.
Importantly, these blockchain use cases have legal and regulatory considerations. In particular, the United States Securities and Exchange Commission has made it clear that most forms of tokens should be considered “securities” and therefore subject to both SEC jurisdiction and the regulatory frameworks of United States federal laws. on securities.
In a recent article by The international journal of blockchain law, new SEC commissioner Caroline Crenshaw notes:
“Many DeFi offerings and products closely resemble traditional financial market products and functions. [â¦] Market participants who raise capital from investors or provide regulated services or functions to investors generally assume legal obligations.”
In other words, some aspect of DeFi likely involves the jurisdiction of several federal authorities, including the Department of Justice, the Financial Crimes Enforcement Network, the Internal Revenue Service, the Commodity Futures Trading Commission, and the SEC. In the NFT space, there is no doubt that various intellectual property rights are involved, such as copyright and trademark laws, as well as possible securities laws.
The need for tech-trained lawyers
It is clear that there is a growing need for lawyers at home and abroad to understand these possible legal issues and jurisdictions. It is, or should be, obvious that the best lawyers are those who can advise their clients based on a thorough understanding of the industry in which their clients operate. To advise clients involved in the DeFi space, wouldn’t you want a lawyer with technological knowledge to understand blockchain and the legal issues surrounding it? And maybe someone with a background or background in finance or accounting, rather than someone who studied philosophy or chemistry in college? As the many uses of NFTs explode, shouldn’t your lawyer have a good grasp of the intellectual property laws and artistic rights associated with the NFT project?
I think lawyers should, and that’s part of the reason I now teach both blockchain law and FinTech law at Florida International University College of Law in Miami after practicing the law in law firms and the SEC for 40 years. As businesses start or expand into the use of digital assets, they’ll need some ‘rules of the road’ advice because I think most business people want to do what they want. it is necessary and to follow the established laws. For that, they should be able to look to the next generation of lawyers – those currently in law school – for the answers, or at least for the right advice. Yet shockingly, only about two dozen of the more than 200 law schools here in America teach a course dedicated only to blockchain or only to financial technology, the last time I checked. That’s only 10% of all law schools! This needs to change, and quickly.
Earlier this year, I wrote an article about concerns I and others have about China’s efforts to the digital yuan replacing the US dollar as the world’s reserve currency, stating that the US needs to embrace the idea of ââa central bank digital currency (CBDC) and its development more quickly. The same goes with our new generation of lawyers. We need to educate them on new technologies and use cases of blockchain, artificial intelligence, data analytics, and augmented and virtual reality, among others. This will help them in a vital way to better represent customers. The last great technology was the Internet, which the United States dominated in its development, but that was 25 to 30 years ago. The leadership and dominance of the United States is not present with blockchain technology. Lawyers can help advance this goal, with a good understanding of both technology and the laws that affect it, by helping to shape or reshape the laws that apply and should apply to them.
The intersection of technology and American law
Let’s take a brief look at two legal cases demonstrating how NFT activities have come under the crosshairs of US law. In a lawsuit filed Nov. 16 in federal court in Los Angeles, Miramax sues director Quentin Tarantino, who had collaborated on various films, for breach of contract, copyright and trademark infringement, and unfair competition. Tarantino reportedly prepared to sell seven unreleased and unused scenes from his pulp Fiction film script in December. Miramax claims that this violates its rights to the film in various operational agreements, and Tarantino apparently believes that these proposed NFTs are his for sale under the “rights reserved” provisions of his contracts with Miramax. A Miramax cease and desist letter to Tarantino is apparently ignored by him. It will be interesting to see what happens next month.
In a lawsuit deposit in May, in New York State Supreme Court, Dapper Labs – developer of the Flow blockchain and contributor to the National Basketball Association for the sale of NBA Top Shot Moments – was sued in a class action lawsuit . The ground for the complaint is that the Flow blockchain tokens, which power and mark NFTs, are âsecuritiesâ. Also at the center of the trial is the NBA Top Shot âMarketplaceâ itself, located on its website, where you can buy and sell these âMomentsâ. Thus, it is alleged that the sale and exchange of tokens involves the sale of unregistered securities in violation of Section 12 (a) (1) of the Securities Act of 1933. It should be noted that the legal proceedings have been filed in the state, not in the federal government. , court and that the NBA itself was not named in action. This may be because the NBA was not the “issuer” of the titles and the plaintiff’s lawyer prefers state courts, where a judge may be more inclined to let the case proceed. and not to impose sanctions on them.
These cases illustrate my point of needing lawyers who understand these technologies and their legal implications. So, let’s tackle the training of our future lawyers for the future, as the future is now!
Marc Powers is currently an Assistant Professor at Florida International University College of Law, where he teaches âBlockchain, Cryptography, and Regulatory Considerationsâ and âFintech Lawâ. He recently retired from an Am Law 100 law firm, where he built both his national securities litigation and regulatory enforcement team and his fund industry practice. speculative. Marc started his legal career in the Enforcement division of the SEC. During his 40 years of practicing law, he has been involved in representations including the Bernie Madoff Ponzi scheme, a recent presidential pardon, and the Martha Stewart insider trading trial.
The opinions expressed are those of the author alone and do not necessarily reflect the views of Cointelegraph or the Florida International University College of Law or its affiliates. This article is for general information purposes and is not intended to be and should not be construed as legal or investment advice.