CODE | ECL5074 | |||||||||
TITLE | Cryptocurrencies, Distributed Ledger Technologies and the Law | |||||||||
UM LEVEL | 05 - Postgraduate Modular Diploma or Degree Course | |||||||||
MQF LEVEL | Not Applicable | |||||||||
ECTS CREDITS | 6 | |||||||||
DEPARTMENT | European and Comparative Law | |||||||||
DESCRIPTION | The rise of a new technology is often followed by regulatory concerns. This study-unit will debate and hypothesize on the framework for the regulation of distributed ledger technologies and blockchain, which is the cryptocurrency technology behind Bitcoin and Ethereum. The unit will kick off with an introductory seminar on how DLTs work, their (potential) uses, and their perceived benefits and challenges, by Dr Joshua Ellul from the Faculty of ICT. This will be followed by further discrete segments, each led by a specialist in the field (as listed above). The first segment will discuss regulatory strategies and in particular the challenges for States and regulators seeking to control, shape, or influence the development of DLTs/ blockchain technology, with a focus on how DLTs/ blockchain can be deployed both to support and undercut existing laws and regulations, such as those on data protection and anti-money laundering. The unit will furthermore equip students with the requisite knowledge and skills as professionals on rapid developments in technology and the notion and use of smart contracts. It will give the students the opportunity to review how the Malta Digital Innovation Authority Act and the Innovative Technology and Services Act and subsidiary legislation will capture and cater for smart contracts. It will also provide comparisons with other jurisdictions. The unit will also give the students the opportunity to review and examine the Malta Virtual Financial Assets Act, the financial instrument test and the role of the MFSA vis-à-vis the regulation and supervision of crypto assets. Comparisons with the initiatives in other European countries and the European Commission’s FINTECH Action plan will also be made during the course. The last discrete component of the unit will focus on matters relating to taxation of virtual financial assets in light of European Union direct and indirect tax principles, taking into consideration approaches by third countries, ancillary jurisprudence, as well as financial regulatory considerations applicable to issuers and investors, a space still marred with significant ambiguity. Study-unit Aims: This study-unit aims to familiarise the students with the theory and practice of regulatory mechanisms for DLT/ blockchain-based systems and applications in the EU, with a special focus on Malta. The study-unit will also provide an opportunity for the student to learn about the different laws and policies adopted by the Member States. It will also engage with some further comparative elements, such as with Switzerland, Japan and the US. The study-unit aims to foster an instructive debate regarding issues such as: - Self-governance v state law; - Impact and technological competence of regulators; - Whether code can be law and whether smart contracts can be legally binding contracts; - What regulatory strategy will enable governments to regulate these emergent blockchain-based systems without excessively limiting the opportunities for innovation; - The new blockchain and cryptocurrencies regulatory framework in Malta; - The ways blockchain technology will impact the legal industry; - The categorisation of digital currencies, particularly ‘coin offerings’ in ICOs, as payment instruments, utility type with an entitlement to a right/service/product, financial instruments, or hybrids thereof; - The putative independent monetary base qualities of virtual financial assets; - An analytical comparison of crowdfunding initiatives to virtual tokens issued in fundraising transactions (initial coin offerings [ICOs] or token generation events [TGEs]); - The issuance (or mining) of tokens; - The holding or investing in such asset classes; - The exchange of the different type of tokens for fiat currency; - The use of tokens as a method of payment (or exchange) for goods and services; - Volatility in calculating the tax base reference rate for virtual financial assets. Learning Outcomes: 1. Knowledge & Understanding By the end of the study-unit the student will be able to: - Describe what is blockchain and what are distributed ledger technologies (DLTs), their (potential) uses and their perceived benefits and challenges; - Explain the meaning of the rule of code v the rule of law, and the assumptions regarding the superiority of one or the other when it comes to freedom and autonomy; - Assess the problems from a legal and regulatory perspective (e.g. data protection; anti-money laundering (AML) and know your customer (KYC) regulations); - Examine and appraise the new blockchain and cryptocurrencies regulatory framework in Malta; - Explore the meaning of smart contracts and their regulation at law; - Discuss matters relating to taxation of virtual financial assets. 2. Skills By the end of the study-unit the student will be able to: - Analyze the deployment of blockchain-based systems and carefully evaluate how to regulate the technology; - Appraise the rule of (autonomous) code v the rule of law, and the assumptions regarding the superiority of one or the other when it comes to freedom and autonomy. Main Text/s and any supplementary readings: Note: As Information Technology law is a rapidly developing area, the law is often challenged to respond to the many advances in technology. It is therefore important to keep abreast of developments. The specific area of the law and policy relating to DLTs and blockchain is a fast moving one. As such, it can be difficult to find books which are up-to-date with current developments, as books can often be 12 months behind current developments even at the time of their publication. Journal articles are often the best source of more recent information, and have the added advantage of often being available electronically via the WWW. As a result a lot of reading will be set from journals. Primary materials, such as legislation and caselaw, as well as other useful secondary material are also often published on-line and, as a result, learning how to search Internet resources effectively is an increasingly important skill. Up-to-date readings will be assigned by lecturers as the course progresses, given that legislation and guidance is a shifting target as the industry evolves. Main texts - De Filippi, Primavera and Aaron Wright, Blockchain and the Law: the rule of code (Harvard University Press 2018) - Sklaroff, Jeremy M. 2018. Smart Contracts and the Cost of Inflexibility. Penn Law: Legal Scholarship Repository, accessible at: https://scholarship.law.upenn.edu/cgi/viewcontent.cgi?article=1009&context=prize_papers - Ryan, Philippa. 2017. Smart Contract Relations in e-Commerce: Legal Implications of Exchanges Conducted on the Blockchain. Technology Innovation Management Review, accessible at: https://timreview.ca/article/1110 - Werbach, Kevin and Nicholas Cornell. 2017. Contracts Ex Machina. Duke Law Journal 67:313, accessible at: https://scholarship.law.duke.edu/cgi/viewcontent.cgi?article=3913&context=dlj - Kerikmäe, Tanel, Addi Rull (editors) The Future of Law and eTechnologies (1st ed) (Springer 2016) - Szabo, Nick. 1996. Smart Contracts: Building Blocks for Digital Markets, accessible at: http://www.fon.hum.uva.nl/rob/Courses/InformationInSpeech/CDROM/Literature/LOTwinterschool2006/szabo.best.vwh.net/smart_contracts_2.html Supplementary readings - Financial Action Task Force, Guidance for a Risk-Based Approach: Virtual Currencies, 2015 http://www.fatf-gafi.org/media/fatf/documents/reports/Guidance-RBA-Virtual-Currencies.pdf - Financial Stability Board, Financial Stability Implications from Fintech: Supervisory and Regulatory Issues that Merit Authorities’ Attention, (2017) http://www.fsb.org/wp-content/uploads/R270617.pdf - International Organisation of Securities Commissions, IOSCO Board Communication on Concerns related to Initial Coin Offerings (ICOs). 2018 https://www.iosco.org/news/pdf/IOSCONEWS485.pdf - A. Carstens, Money in the digital age: what role for central banks?, 2018 https://www.bis.org/speeches/sp180206.htm - A. Enria, Designing a Regulatory and Supervisory Roadmap for FinTech (2018) https://www.eba.europa.eu/documents/10180/2151635/Andrea+Enria%27s+speech+on+FinTech+at+Copenhagen+Business+School+090318.pdf - C Lagarde, Central Banking and Fintech – A Brave New World (2017) http://www.imf.org/en/news/articles/2017/09/28/sp092917-central-banking-and-fintech-a-brave-new-world - C Lagarde, An even-handed Approach to Crypto-Assets (2018) https://blogs.imf.org/2018/04/16/an-even-handed-approach-to-crypto-assets/ - Y Mersch, Virtual Currencies Ante Portas (2018) https://www.ecb.europa.eu/press/key/date/2018/html/ecb.sp180514.en.html |
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STUDY-UNIT TYPE | Lecture and Independent Study | |||||||||
METHOD OF ASSESSMENT |
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LECTURER/S | Mireille-Martine Caruana Oleksandr Pastukhov Ioannis Revolidis (Co-ord.) |
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The University makes every effort to ensure that the published Courses Plans, Programmes of Study and Study-Unit information are complete and up-to-date at the time of publication. The University reserves the right to make changes in case errors are detected after publication.
The availability of optional units may be subject to timetabling constraints. Units not attracting a sufficient number of registrations may be withdrawn without notice. It should be noted that all the information in the description above applies to study-units available during the academic year 2023/4. It may be subject to change in subsequent years. |