Regulatory Interests in Establishing Cryptocurrencies
Clinic: Georgetown University Law, Spring 2019
Beneficiary: BitMal Organization
Executive Summary *
Read the full report here
This Report presents research relevant to social enterprises interested in issuing and exchanging socially oriented cryptocurrencies about the international legal framework surrounding their activities. It approaches this goal through the lens of the Organization (See Section 4 for a detailed description). The Report focuses on the evolving regulatory frameworks of the US, Switzerland, and EU as guides to understanding the international regulation of cryptocurrencies. These three jurisdictions were selected for specific reasons. The US is one of the largest and wealthiest markets in the world with a well-developed legal regime, but it is becoming more and more active in regulating cryptocurrencies. Switzerland has a cryptocurrency friendly regime and also ranks high in terms of ease of doing business. Finally, the EU was chosen because it would be helpful for the Beneficiary to have an overarching understanding of the implications of establishing a presence in any given EU country. Because this Report is meant to assist organizations at a nascent stage of development as they move towards formal establishment, it also includes information that does not relate solely to cryptocurrencies (such as forms of incorporation). The Report does not provide a step-by-step procedural analysis of the law. Rather, it explains the law in a way that will guide the Organization’s understanding of the legal implications associated with the structure and functions of its business.
Several questions are pivotal to the successful establishment of a socially oriented cryptocurrency platform, such as that contemplated by the Organization. These questions serve as the guiding focus of this Report: (1) What is the ideal corporate form for such an enterprise?; (2) Depending upon the corporate form and the goals of the enterprise, what types of funding are available under the law, and is securities law triggered?; (3) What are the implications for an enterprise of this nature under evolving anti-money laundering rules?; Finally, while not particular to establishing a blockchain-based social enterprise, the Organization also specifically requested information regarding (4) What form of intellectual property protection might be best suited to this type of enterprise?
How to Use this Report – A way forward
This Report is meant to be used as a guide for groups such as the Organization as they begin to make decisions that will be consequential to their success in establishing a socially oriented cryptocurrency platform. While the entirety of the information contained in the Report may appear overwhelming, it is meant to guide decision-making in the following way. First, the Executive Summary summarizes important information in the Report to provide an understanding of the full scope of potential legal interests. As the Organization begins to make concrete decisions regarding its funding sources and corporate form, it can refer to these sections in the body of the Report specifically relevant to the decisions it is trying to make. While it is likely that more research may need to be performed to reach a final decision, the information in the body of this Report is intended to serve as a starting place to gain a global understanding of the legal consequences of certain decisions.
Outline of the Report