Here’s a breakdown of the provided text, focusing on the legal protection mechanisms for international investors in the context of cryptocurrencies:
I. Introduction (Implied)
The text implicitly sets the stage by highlighting the rapid growth of cryptocurrencies and the challenges this poses to existing legal systems, notably for international investors.
II. Regulatory landscape in Key Jurisdictions
This section provides examples of how different countries are approaching cryptocurrency regulation, with a focus on investor protection:
Japan:
Financial Services Agency (FSA): Imposes approvals on exchanges.
Asset Segregation System: Requires exchanges to keep customer assets separate from their own.
Legal recognition: Cryptocurrencies are legally recognized as digital property.
Singapore:
Payment Services Act: Establishes a licensing regime.
Strict Requirements: Licenses demand high capital, cybersecurity, and compliance standards.
III. Legal Protection Mechanisms for International Investors
This is the core of the text, detailing the ways investors can be protected:
A. The Right to Details: Foundation of Protection
Openness is Key: Effective legal protection relies on transparency.
Whitepapers: Crucial for pre-contractual information.
Limitations of Whitepapers:
Not always independently controlled.
Frequently enough technical and ambiguous.
May omit legal, tax, or operational risks.
MiCA (Markets in Crypto-Assets Regulation): Imposes responsibility on issuers for false declarations.
Outside the EU: Guarantees are frequently enough nonexistent or ineffective.
B. Responsibility Mechanisms and Remedies
Investor Actions:
Contractual Action: If contract clauses are violated.
Action in Tort Liability: For fraud (dol),breach of trust,or negligence.
Collective/Class Action: When multiple investors are harmed.
obstacles:
Jurisdictional competence (which country’s laws apply).
Enforcement of decisions abroad.
Anonymity of perpetrators. Challenge for Private International law: Difficulty adapting to decentralized systems.
C. Cybersecurity,Storage,and Assurance of Assets
Technical Protection Complements Legal Protection:
Minimum Standards:
Compulsory Audit of Smart Contracts: To identify vulnerabilities.
Cold Storage of Customer Assets with Multi-signature: Enhances security by keeping assets offline and requiring multiple approvals for transactions.
Flight Insurance or Technical Failure Insurance: To cover losses due to platform failures or hacks.
Business Continuity Plan: To ensure operations continue during crises.
Certification: Technical certifications like ISO/IEC 27001 could become mandatory for platforms.
IV. Towards International Legal Governance
This section advocates for a more unified and coordinated approach to cryptocurrency regulation:
A. The Urgency of Transnational Harmonization
Problem: Diverse legal regimes lead to “forum shopping” (investors choosing jurisdictions with weaker regulations) and weaken protection.
Essential Considerations:
Common International Definition of Cryptocurrency: to ensure consistency.
Harmonized Minimum Investor Protection Framework: A baseline of protections across countries.
Cooperation Between National supervision Authorities: To share information and coordinate actions.
Portability of Approvals (Passporting): Allowing approved entities in one jurisdiction to operate in others.
B. Role of international Organizations
Key Players: IMF, BRI, OECD, GAFI (FATF), IOSCO.
Strategic Roles:
Adopting international governance and transparency standards.
Creating a global Crypto Risk Observatory.
Developing a model multilateral treaty on cryptocurrencies.
Potential for Specialized Court: A dedicated international court to handle cross-border crypto litigation.
C. proposals for an Integrated Global Framework
Specific Proposals:
Uniform Code of Cryptocurrency: A standardized set of rules.
Public Register of Transmitters and Tokens: For transparency and accountability.
Unique Identification Number for Each Token: For tracking and identification.
Blockchain Arbitration in smart Contracts: Incorporating dispute resolution mechanisms directly into smart contracts.
* Inclusion of Crypto-Assets in Investment protection Agreements: Extending existing investor protections to crypto.
Conclusion (Implied)
The text concludes by reiterating that cryptocurrencies represent a significant financial and technological revolution, but their rapid growth has outpaced legal systems, creating risks for international investors. Achieving better protection requires a structured, transparent, and cooperative approach.
