The Blockchain Industry: Legal and Regulatory Challenges



hi everyone welcome and thank you all for joining us for day two of the blockchain FinTech and the law conference my name is Alice Tran – Wilson and I'm the vice president of the Harvard Law School blockchain and FinTech initiative I was a financial services lawyer back in Sydney Australia and blockchain is what really drew me into the tech law space and studying an LLM degree at Harvard so today I am very excited to introduce you to our panel who are going to be exploring blockchain regulatory and legal issues so without further ado joining us today first of all we have Geoff Angermann Geoff is a partner at Gunderson Detmer his practice focuses on the representation of private and publicly held emerging growth companies Geoff specializes in all areas of corporate securities and partnership law with his work spanning the entire corporate lifecycle Geoff is also an active participant in the venture law community and he currently co-chairs the venture capital and emerging companies Committee of the Boston Bar Association Geoff holds a JD from Harvard Law School and a BA in American Studies from the Evergreen State College our next panelist today is Christina spilly acos christina is a regulatory counsel at crypto finance company circle where she works on banking securities and state licensing matters related to circles products Christina has been at circle for nearly five years starting as a legal and compliance intern during law school and continuing as regulatory counsel prior to Circle Christina worked at the Massachusetts Attorney General's Office Civil Rights Division as well as the Massachusetts state treasurer's office of debt management department and the offices of two US state senators in Massachusetts she holds a JD from Boston College Law School and a BA in political science and French from Boston College X panelist is Michael Welsh Michael is an associate at Cooley his practice focuses on securities enforcement matters complex civil litigation and governmental investigations he has extensive experience representing crypto currency exchanges investors and blockchain developers under investigation by the SEC the CFTC the Department of Justice and other federal and state authorities Michael holds a JD laude from Boston College Law School and a BA from Bowden College and our final panelist today is nimitz oni Nimet is co-founder and CEO of votes Inc and elections platform that uses biometrics cryptography and blockchain technology to enable voting via smartphones and tablets Nimitz background is in mobile security and development and he holds a master's from Carnegie Mellon in computer science Electrical Engineering and business management finally our moderator for today is dr. dr. pip Ryan pip is a barrister and senior lecturer in the Faculty of Law at the University of Technology Sydney in july 2019 she will join the College of Law at the Australian National University in Canberra pip is on the editorial board of Stanford's Journal of blockchain law and policy and a chair of the Standards Committee so the standards Australia blockchain technical committees working group for smart contracts her research currently explores the automation of trust the accountability of algorithms and the creeping tendency of regulators in developed economies to blame professionals service providers and financial institutions for the sins of their customers and nefarious strangers pip recently co-authored blockchain transforming your business and our world and her forthcoming title is trust and distrust in digital economies pip holds an LLB from the University of Technology Sydney a BA a Masters of Education and a PhD in law from the University Sydney so thank you again everyone for joining us today and I'll turn it over to Pierre Thank You Alice like all ghor barristers I'm removing the water from the bar tables so when you go to the bar don't have water on the bar table you're all forgiven for now and the second thing I just wanted to do was just let you know that when you've got your friendly witnesses assuming these are all my clients and you want to examine them in chief you start with some questions that are really an intimidating so don't ever say to your client when they're in the witness box what your name is Michael Smith isn't it the answer is what it the question is what is your name you get them to speak so rapid-fire I'm going to pass the microphone down and the questions are going to be as follows they've got to answer all four and then leave the microphone with Nimet please we're going to start with New York or London and then what are you reading at the moment are you talking or listening and what is your favorite mobile app so I'm handing over to Jeff then Christina then Mike and then nimis go new york stack of contracts for venture capital firms putting money into blockchain companies talking no one no one pays me to listen if they're gonna pay whatever I can run on my blackberry my ancient old decrepit London I lived in London for a year I love London I'm reading yeah probably lots of regulations but a book about it's called weapons of mass destruction by Cathy O'Neil about algorithms yes very good listening and I'll uh I should save Polonia axe but also la 360 London definitely blood meridian by Cormac McCarthy definitely talker go Twitter honestly New York meditations of Marcus Aurelius listening probably Apple news I would say as someone who is sort of in a unique position because I'd say probably down in the ditches right now to be honest there is uh there was the 2017 where things were overly hyped up I think that made it a lot harder for ideas and companies who are trying to do more legitimate things than just do an IC o—- so I think that hurt the industry a lot and possibly set it back by at least five years in my humble opinion I would say now the positive impact of that is that real use cases are coming up and a lot of the the fake or the less useful stuff is probably gonna fall by the wayside I agree I think one of the issues I would add to that is the regulatory uncertainty which is kind of causing reputable projects and good use cases to kind of not be able to move forward I think the ICC in particular has taken steps to give guidance but there's still a lot of questions to be asked that kind of leads projects that in reputable teams to not really be sure what to do and then fall back on conservative approaches which sometimes affects the vision of the project yeah I think there the organic statute basically comes down to that they're protecting retail investors and avoid scams in that sort of way I think at the same time in all statements they make and kind of their mission driven by the idea of not trying to stifle innovation and so I think they're trying to balance those two I think the guidance that they gave recently I applaud them for taking that step but still it leaves open a lot of questions that don't allow projects to move forward and on the corporate finance side where they're supposed to be giving more guidance when it comes to what projects should be doing there is a there's concern and reservations and delays which are leading projects to kind of take their own steps and then kind of ask for forgiveness after the fact which is I can creating this issue of ongoing regulatory uncertainty I think one step that we've already taken to get there is kind of the end of the ico boom and falling off that hype cycle and I think moving towards productivity the big step will probably be for regulators to entertain a certain amount of uncertainty in their sort of mission you know like Mike said investor protection is the most important thing for them in terms of the mission of their statutes but I think you know allowing businesses and individuals who are building things who don't have the money to comply with these onerous regulations that's gonna be really what allows at least in the u.s. you know new businesses and new inventions to get off the ground and I think we're seeing that those inventions go elsewhere to other jurisdictions that are friendlier if if if the US isn't going to be open to that I think yeah I think it's it's definitely a personal preference how much you think the SEC should exercise oversight but I do think that what they're doing is shooting for kind of eliminating fraud instead of sort of reasonably curtailing it and and allowing a certain healthy amount of business to occur where fraud might be a byproduct of that that occurs in regular products like you might buy a software license and the software doesn't work and so that doesn't mean that it's a security necessarily so I think that kind of the the desire to eliminate fraud and eliminate scams is really what's coming out from their recent actions and instead of allowing innovation to occur it's it's been too limiting and so that should be just set aside as a concern or as an aim because if you think about fraud within the banking system and illegal downloading of music but they're on either ends of a very very big spectrum of just day-to-day fraud that just happens all the time and yet we don't eliminate the music industry or the banking industry do you do you feel as though there's some special sensitivity that's arisen in relation to crypto and innovation that is being treated a little too heavy-handed Lee perhaps yeah I disagree actually I think that fraud I mean like any business has people have pointed out as the fraud can be a component of anything that occurs I think that the SEC is in particular position on crypto is that you actually sort of the sort of exception eats the whole right if you take the position that in people who are investing in crypto don't need any of the sort of standard investor protections that's just you've completely just breached the floodgates to any sort of regulatory regime that says hey we want people to be given some level of information some level of disclosure regarding the things that they're involved in so I don't think and I and so if you look at what happened with the ICO boom it was clear that this is a sort of it was functionally enabled that you had fraud that was sort of severely enabled by the way that the system operated and the way that people could simply if they it sort of proved out the need for securities regulation it proved out the need that when you invest money you should know what the people who are receiving that money intend to do with it what their financial interest is in what their intended in what they're going to receive from you and so I think that the fact that the as the boom exploded people simply were sort of Pat you know grabbing grabbing the tokens and then selling them to the next party in a way that became the sort of game of musical chairs that I honestly don't think that you could have the regulator could look at and say I'm okay with this happening because these are people who are making their own decisions without compromising the entire regulatory structure of investor protection okay so just to get my voice back on the recording system again thank you Jeff I'm gonna pass it back to Jeff because um I want to just have a little bit of a chat about going to an auction on a Saturday and buying a painting so I this Saturday if I wanted to I could go to an auction anywhere in Boston and I could go and buy really bad $50,000 painting and a lot as long as the vendor as long as the auctioneer or the auction house doesn't in any way misrepresent the origins and let's just assume they're not saying it's a Picasso I'm just looking at it thinking it's it's by a nobody and I think it's gorgeous and I'm hoping there's a greater fool than me now the greater fool principle is what drives a speculative bubble it's the idea that I buy the bad painting for 50 thousand in the expectation that there'll be somebody stupider than me who'll buy it for seventy-five thousand now for me most people buying those crypto tokens on those ico product program programs or projects or of those white papers we're just operating on the greater fool principle and I don't know why they can't why is that so bad why does the SEC think there's some special relationship that we have with crypto that we don't have with the bad painting I'm gonna buy on Saturday you've hit the fundamental legal point here is that what is a security versus what is a commodity versus what is any other speculate about a speculative item right I mean it's entirely clear whether it's in a painting or an apartment that you buy hoping to flip it that doesn't make it a security so the question that has come into this this particular area is why exactly would we treat this you know your question is why does this token I'm buying online treat it different than the painting and I think the answer is you know there are rules and regulations around auctions and auction houses and how they work and we fit them in a regulatory regime what crypto effectively came out of the gate saying was hey there is no regulatory regime that applies there's commodities law so if you were to do what you're describing with an orange juice future you would face the CFTC in the question of how they manage how people who buy commodities and intending them for resale are able to engage in their business so there is this in you know regardless I think what happened with crypto was the position was well it didn't fit in any of the various categories that we've built up to regulate these type of behaviors so let's just say no rules apply which to me is the same as saying hey I don't have a line item on my budget for this thing so therefore I have an unlimited spending I can do it just doesn't it doesn't yeah I think that makes sense I think it's it's sort of what they've been allowing to happen with the sort of regulation by enforcement approach that the SEC is taken rather than kind of passing rules that you can't then repeal as easily I I do think that sort of what the product looks like and the ability to see that this is a painting and I know what it looks like and I've seen one of these before versus a token that works on a blockchain on a network there is sort of with the ladder there is this information asymmetry between the purchaser and the business who is creating the token and creating the business and has the financial statements and has kind of done standing the technical knowledge that I think can be resolved by sort of requiring these companies to produce helpful and clear disclosures which is really the point of the securities laws I think and so um you know maybe it's not that we need something that looks like IPO securities registration but I think that we we do need other requirements above and beyond sort of litigation and regulation by enforcement I think we need sort of rules that require businesses who are building something who have information that their purchasers inherently just doesn't have the ability to access I think we need to require those businesses to give information to their potential customers and if that's something that once they do it looks enough like a painting or it looks like a tool that they can use and they can see that and then I think that's the time when you know the law can stop sort of protecting and allow the transaction in the business to occur I think they're forced to work with it I think it's a great point if it's a big it's a novel issue in crypto in the way of how it's applying and kind of responding to what Jeff was saying I agree a lot of projects came out saying well we don't offend any of these buckets so therefore some rules not apply but a lot of times their agency's approach was well we all apply so you have situations in which Vince and as a currency is saying that you're a money service business you need to register you do know your customer anti money laundering regulations at the same time if you were a currency you can't be a security that is exempted out of the Securities Act of 1933 so there is this bubble where the projects themselves don't know which way to go now when it comes to kind of different jurisdictions I think a great example of that is New York where a lot of projects has moved out of New York because of a state-run regulatory regime which was difficult for them to deal with but I think that is also a prod a problem with the age of the internet and where projects aren't local anymore they are global and so there is at all times having to worry about not only the state and the country you're in for example a province but also where your consumers may be they're definitely here in the u.s. CPA in California which is in some sense even stricter than GDP are from our specific use case elections and voting we have an even higher burden in terms of privacy and data security so definitely that is top of mind and then sort of touching back on the the jurisdiction question earlier for us that's also a very interesting question because elections in a sense have been traditionally the most centralized use case ever and now that there is some movement to somewhat bring more transparency decentralize them at least at the jurisdictional level it creates this interesting question would a jurisdiction let us conduct an election on the Bitcoin block chain or the e3m blockchain where you really can't control where the nodes are running and so how do you get that sense of confidence that if even if half of the servers are running in potentially unfriendly parts of the world that maybe your elections not going to get compromised so I think you have to look at use diction's from use case by use case perspective there isn't going to be a like one-size-fits-all formula for everybody so it's been the single biggest hurdle we faced the opposition we face is exactly like you said there is this perfect vision of a perfect election system which doesn't even exist in the in-person version right now and so we are constantly compared against that and I think the challenge is to bring to the fore that we may never get a perfect election system ever but we can get something which is better than what we have and take into account in most cases more than half of the country is in voting so do you want to stick paper on that and use that as probably the biggest form of you know water suppression or offer alternate technologies to people who don't want to go out in person or can't go out in person for whatever reason so I think yeah it's it's a big big challenge there is this idea of perfection but then we've been trying hard to bring people to reality and especially now with the proliferation of smartphone technology I mean you could make a case that your smartphones are more safe than your average computer and so why not experiment with smart phones when literally 80% the world now has it has a smartphone yeah that's a great point I think just offered I think two of the things that brought me into a blockchain and cryptocurrency projects is the idea of kind of inclusivity of what the project can be and the idea of making it be a peer-to-peer sharing economy where you don't need to rely on these third parties to do certain actions I think going to moving forward with this Compu on kind of this structure to it I think you face one thing is the risk involved the roll out of one issue but off of that being the reactionary tendency of people in these kind of projects where if one flaw occurs it could set back the idea of this move progress moving forward decades that kind of process so there needs to be this sort of measured approach and I think you could probably cave in that to risk in the way of how to make it work but also how to have people to have buy-in to it and then also believe what they're seeing through this immutable distributed ledger and like this proof of work structure is exactly what they would have seen if they were in person and talking to that individual or checking the box and I'm voting booth that's a great question I think me personally I think it comes to like you using certain use cases in certain instances in gana gaining that yourself of seeing the record I play out I think we are close I think the issue is for the community at large of whether or not you'll have to get uniform buy into these projects is probably further down the road but I think in certain specific use cases the results are clear and so you can the more and more people who use the product and kind of see that process there will be more and more buy-in that way one of the things the Strayer is trying to distinguish between whether you're going to deliver and in Australia everybody wants rolls-royce litigation or rolls-royce legal services but they can't afford it but they can afford as a corolla so I just think is that something that we all need to have a little bit of a reality check about and understand that there's a lot of people who are missing out on really good investment services investment advice legal services legal advice but we could deliver at a bit of level something that would suit more people and we can do this online and so we need to stop expecting people to build the rolls-royce or the Ferrari and just go well actually everyone knows that yeah I think um just think going through sort of being in this industry for a while and seeing all the new sort of blockchain kind of projects that have been built over time I think that transparency and Trust have really become much more of a of a something that a consumer looks for and I think that what will be helpful is maybe not providing a Ferrari of you know a voting system or some other type of system but maybe an an auditable system so something where you know even if you don't understand kind of the inner workings of the technology I think the problem that needs solved is that the everyday consumer can have sort of access to a validation or a confirmation that the system is transparent and the system is doing what what it says it's doing just a quick example there was a very interesting watching project that came out a couple of summers ago called Bank or and it's basically kind of has these smart tokens and the way that the network works is and I believe it's built on aetherium and there was a sort of a breach that occurred with respect to the bank or network about a year ago and what happened was everyone realized that the people who run the network like the individuals who started the business are able to actually sort of hit a kill switch and freeze the network and make sure that that didn't happen and so rather than having a fork like you did with etherium and if you're in plastic when the Dow was hacked you have this kind of kill switch centralized focus where something that was presumably a distributed decentralized network is now able to sort of be controlled unilaterally by the the individuals or the entity who built it and so I think that sort of understanding of I don't have to go in you know as a lawyer who doesn't code and research the smart contract code and the etherium code of you know this project but instead I have some sort of way to audit and Trust what I am looking at and that that thing will be transparent and fair where you say we need the human in the loop something's occurred there's been an event and we need to go that's when you now insert the human to do their bit to give satisfaction trust and a bit of comfort to everybody that there this isn't gone completely crazy and rogue one of the things we're doing I'm on I'm the lead author for the international standards for smart contracts and that's with I'm on the standards Australia team but that's the work I'm doing internationally and one of the things we've come up with over the last year which is sort of my idea and I'm applying it weapons algorithms and then also smart contracts is the idea that we should actually all work out how much autonomy do you want depending on how you're using the particular system so does that is that anything that resonates with you that actually all of this autonomy that we can build into a blockchain network whether we're gonna have Forks or whether we're gonna have kill switches should be determined upfront so you have transparency and a bit of clarity and predictability but also it should be based on what the use case is does that resonate with the kind of work you do or do you feel there needs to be a little bit more autonomy and less human in the system and then this would suggest no I think one of the things that we've been going around here is this question of you know what standards is the technology held to and the idea that it's held to fairly high standards is because when this when this technology is released into the wild the error is that it sort of you get those sort of Sorcerer's Apprentice type situation right where the music plays and all of a sudden there's a million disasters going on everywhere and so the question you know really to me is how reproducible how many what is the frequency at which transactions are occurring because if you build a system that has a glitch in it and it doesn't have the you know I think we've seen that this is kind of where we are we're talking about Forks and and other ways of handling and kill switches is what do you do when this is broadly disseminated and so of course with a voting system nobody wants to find out six months after the election that whoa there was a glitch in the technology we actually counted the votes wrong that's an absolutely 100% unacceptable resolve and so you know to me a lot of this hinges upon and where the human element needs to come in is the fact that you have to look at what is the consequence of error and I think that when you go back to that question of how you get the human back in there it feels like you sort of retread the same territory we've always had which is okay well what is that intervention is that intervention centralized is that intervention consensus based and all of the rules for figuring that out those aren't you know the technology is what enables the incredibly rapid iteration but you still need to all of those fundamental problems about how any human when human beings put a network together there's a there's a there needs to be a way in which you would ensure that that accomplishes the goals that people are sought to accomplish and so you know one of turning it around and you a little bit this question of would you think differently about back to that painting you offered if that if you could do that a million times over if that painting was being bought and sold a million times over versus just a one-off you at an auction that changes how you think about the regulatory aspects of it maybe in a not entirely sort of theoretical coherent way but in a way that says we have to deal with those problems differently than we deal with things that are by they're sort of technical or physical limitations one-offs yeah and I think that's a very important question because when we talk about scams scammers often want to just take a little bit from us so little that we either don't notice or we don't litigate and what they do if they do it on this multiplied level with all those multiple paintings that may be fakes are really bad and they make an enormous amount of money so yes you need a class action to bring up any kind of restitution but how do you even find who the scam Mazar the scammer probably gets away with it a lot and this is why I'm really interested in the way regulators are now deciding how to deal with these hacks and nefarious actions they're just going for the platform providers and that's what the gdpr is and there's look there's other examples just mindful of the time can I ask because we've got so many JD and LLM students in the room I wanted to ask the question and I'm sure there'll be lots of other questions we can get from the room once we hit the time for questions I wanted to just run back down the panel and ask how you think this computational law and blockchain future is going to change or impact the legal profession you can talk to speak to your particular practice or the wider legal profession I I think from my perspective this is all the ways out right I mean I think that what we're seeing is you know there's been the initial rush and then now the actual technology has to be employed in ways that are successful and reproduce of all I I look at what I do on a daily basis and obviously I'm biased of course but there is an element of sort of application of judgments to novel scenarios that I think by definition can't get reduced into an algorithm because you're always asking the question of how do you apply this unique you know innovation to something that is you know that has an older system that is in many cases not debt you know engineered specifically to move slowly like litigation courts is of rules what I learned in these hallowed halls they want to move slowly because it's better for the legal system protect its own sort of stability if it goes very slowly and causes litigation to be a rigorous process so you combine that with the fact that certainly these things are just going to move fast you're always going to be running out ahead of a bunch of the constraining based systems and then the question becomes for lawyers who do this work how do you match that sort of the the risk tolerance to the likely outcome of the application of new technologies to regulatory regimes and that I personally don't see is something that is ever going to be reducible into a spar contract and leaving out at work and if it does it's gonna be by the time I've long passed the age where I was out of work anyway yeah I agree I think that a huge change is sort of well you know we've seen it with the internet but I think it's kind of the jurisdictional issue in how really now no longer is information just kind of transcending borders and physical locations but also now sort of we can have self executing autonomous contracts and and in sort of any type of financial transaction there there's literally no physical Nexus to any state or jurisdiction anymore and I think you see that with some of the really adverse reaction to the state money transmitter laws that are kind of capturing crypto exchanges and and sort of there's there's a lot of interpretation there that your business falls within Alabama's law for example and I think that the removal now of really any physical aspect that occurs you're not even going to pick up a money order or a check from Western Union in in this state I think we're seeing that and even on the Securities level sort of the international transfer of tokens if you're going to have something that's deemed a security token you know move between a UK resident in the u.s. resident and just sort of the borderless bound boundary-less um sort of existence of these things I think jurisdictionally is going to create really interesting changes yeah I'm just gonna she's still my entire point I say the jurisdictional aspects really interesting to me I think one thing I would add to it is the fact that when he comes to the corporate side and the regulatory review when deals are occurring is I'm seeing more and more of the aspects of retaining counsel from various jurisdictions around the world in which it's turning the second habit of just putting on the phone like singapore council european council sways council to kind of basically turning more and more of a project and like a and corporate disclosures and kind of deal terms are becoming an international review just because of the kind of structure of things I think just another point I would say is is this also starting to have regulators kind of think through how they apply strict liability in certain situations one would be if you wanted to cut out the United States from say your offering of tokens because you're walking to avoid securities laws and you want to block VPN addresses so no American computers can access it what if someone gets outside of that if an American citizen is still somehow gets on to and purchasing your token you just violated American securities laws you did everything more in the steps that you needed to do and took additional steps yet thatis approach so I think that's kind of a step that will be come and going through a regulatory perspective it's how do you apply these where was a black and white line now going to this gray of figuring out well what do we truly mean here when it comes to stuff um reasonable precautions taken I have mixed feelings about that I'm not a lawyer so pardon my opinions on this but I am a little bit scared because I've been reading some papers on how now AI is filtering into the blockchain space so it is conceivable in the future that for starting with rudimentary law cases it might be a algorithm on a robot which is determining the outcome of the litigation which is a scary thought because as Jeff pointed out law is always been somewhat of not a yes or no question there's always somewhat of a gray area and if yeah becomes a grants which some date will if it's not already there then we will see the scenario of automatic algorithmic education at least for rudimentary law cases which where that leads to it's probably a scary thought so that's my layperson opinion not being from the legal profession thank you all for coming this has been really awesome I guess my question is sort of for everybody but maybe they kind of like regulated regulatory council or just people who work with clients Geoff and and Mike to what extent is your job like at this point educating regulators versus sort of educating your clients about what the regulations are and what they have to do like what kind of if you could draw a percentage line down the middle how are you sort of dividing your time on that task yeah yeah really good question um you know it's a lot of both especially in a company that is not you know huge we have like a 15 person legal team which is you know it was like three people five years ago so it's definitely better but there is a lot of educating I think that actually now we're sort of entering a phase where we don't have to do much educating I think that also is because there are you know bodies like coin Center for example who is really a policy type of body that's that's dedicated to educating regulators but early on especially when circle was first applying for our money transmitter licenses and in all the 50 states we really had to explain what bitcoin was I mean we really were starting it was like 2014 and it was from the very beginning and the other aspect was law enforcement and sort of getting subpoenas from them and okay give us all the information you have on this type of transaction and they would just mark kind of dumps of information and we had to really think thinking about customer privacy but also just kind of explaining to them how things worked with the Bitcoin blockchain and giving them a way to sort of focus their investigations and their inquiries so there's a lot of that it's a little better now a few years down the road and but there's there's a lot more I think educating the business on the regulation because the business as the business grows in as sort of the regulations become more complicated even though I guess more certain in and therefore more complicated I sort of understand that y'all not technologists and lawyers except for you limit but I'm shocked how easily people who spend most of their life on blockchain and the centralized type of way of thinking I understand it's very difficult way to switch your thinking from centralized to decentralized because that's how we live our lives that's how we grow up how easily you are willing to switch to some kind of centralized control of somebody flipping a switch most of you being a lawyers I'm curious if you thought about that since you're so easily willing to flip a switch what if the children wife or whatever significant others in their life of whoever is is able to smooth flip a switch gets kidnapped and get blackmailed so kidnapping and blackmail they just crimes so on or off chain still a crime I think I mean it's interesting question to me the answer it goes back to this human introduction of a human element and I think the theme that we've heard here is a purely automated system is never going to regardless of the degree of transparency has an amazing hurdle on trust and so the question is is what I think from the research you were discussing which is it's it's it's a given that you're going to need some human intervention so the quit you know on any of these systems for them to function properly maybe it's a smaller amount maybe it's a greater amount maybe it intercepts the process at different points but I mean I don't to me it's not about like one person with control or a kill switch and it's more the fact that in order to introduce that human element they gets away from a hundred percent technology you are back in the world of people and whether it's a kill switch whether it's an override through some other function all of the things that you're talking about about well there's crimes that are committed by people against people are sort of reintroduced and so it's just more like the technology does not escape the problem I guess is what I'm trying to say the code is written by humans and when we start allowing machines to write the code then we have moved into a domain the humans still need to understand otherwise we've lost agency in our own world I know that this world is populated by other bio systems and other animals and I accept that but I still contain a lot of agency in my role on this planet to ensure that charity goes to the right place to ensure that there's succession for sustainable development and that we take a very very strong interest in the future of the planet and I think if we're not watching the code how do we continue to share wealth care about charity and welfare care about the poor and the vulnerable and they will always exist and and any one of us can be inherently vulnerable or we could have vulnerability imposed on us by circumstances and those two are very important in the law to understand when you're inherently vulnerable or you're under the circumstances vulnerable and I don't think we should leave the code to machines I think that's a human experience and I think in the end the law is the social science and what we care about most is the social welfare of those around us and the future of generations so the pure automation without the human in the loop should be avoided particularly if you introduce AI where there's any self learning if it's programmatic self a programmatic AI or human remote-controlled AI I have a little more comfort but I think it's something to keep in mind when we talk about the human in the loop that actually these are human systems and that's what we care about when we talk about the law as lawyers another question any other questions um well yes go Amy you want to ask one I sort of wanted to hear what the biggest this year facing the earth at the moment right now so that students get a chance to see what you're facing day to day so the biggest legal issue sure personally the biggest issue I'm seeing is watching venture capital adjust to blockchain and watching investors this with the long-term successful VCS have always been chasing innovation watch them try to figure out how to maneuver into this world which presents a very different challenge than just about every sort of new innovation of the past as long as VC has been around because there is now a question of what if owning shares of the company which is what VCS have always done and relied upon to produce value doesn't actually create any value because the company produces some sort of you know crypto token and that creates all the value so now the investors own shares of a company but they don't have any way to access the value they made the right bet but they don't get the reward and that's a they're spending a lot of time thinking about how to make those investments in a way that covers off that problem yeah that's a really interesting issue and I think my sort of overarching thing that I'm preoccupied with is um you know we circle acquired this exchange Polonia X last year and we've had a lot of trouble kind of deciding what is this thing that we're gonna offer on our exchange and is it safe to offer it under US law from a u.s. entity and so um I had to kind of go through when the first kind of SEC report came out and figure out a framework for applying the Howey test which defines what is a security to the tokens and the products that we want to add to our exchange and then similarly when you encounter enter into sort of proof of stake and getting involved in staking and doing governance and getting sort of seller is one of the coins that offers inflation and what are these kind of ancillary payments are those securities are those investment funds how do you really classify what these things are and so trying to fit fit into a framework for understanding the business risk that we're taking on I think kind of more specific by thinking 2019 or within the probably next two years or so there's gonna be a case gonna be a test case of whether or not like the application of how we to legitimate non fraud token sales and token projects that are legitimate use cases that that's not in question and whether or not how these steps apply and so far we've had a lot of guidance a lot of statements a lot of settlements against small projects that weren't really doing much but noticeably there has not been any of the key projects that we talked about a lot in which everyone knows none of them have been a sign of Chinese regulatory regimes they're still in this gray area and one of those

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