Cryptocurrency in a Declining Market: What Lawyers Need to Know About Bankruptcy, Regulation, and Other Trends
Like any investment, cryptocurrency can be exciting and rewarding when the market is hot – and when it cools down, investors, funds and the lawyers who advise them can face tough questions.
As mentioned in a recent briefing on the Practicing Law Institute, Cryptocurrency and Bankruptcy: What Lawyers Need to Know Now that “Crypto Winter” Is Herecrypto is not immune to the effects of a falling market – nor to bankruptcy and related laws.
During the information-filled One-Hour Briefing, presenter Noah Schottenstein, from DLA Piper, participants walk through the fundamentals of the crypto-finance market, defining its unique characteristics compared to traditional finance. He goes on to explore new legal issues that bankruptcy courts are just beginning to face.
As explained by Schottenstein, the “crypto winter” that began earlier this year was associated with the crash of the Terra/Luna cryptocurrencies. The dramatic downturn in the crypto market eventually saw high-profile bankruptcy filings, including the Three Arrows Capital hedge fund and the retail-focused crypto platforms Voyager and Celsius.
The briefing continues with discussion of topics such as the application of avoidance actions to cryptocurrency transactions, the types of claims and protections retail “depositors” and other counterparties may have in bankruptcy proceedings, and the overlap between regulatory structures and bankruptcy law.
In-house counsel, outside counsel, and compliance, finance and other allied professionals interested in the structure of cryptocurrency financing markets and bankruptcy law can be updated with this program – and learn why expectations around the consequences of bankruptcy can be lifted in this evolving landscape.
Crypto and securities regulation
The bankruptcy program comes at a time when the intersection between regulations and crypto is an increasingly hot topic. On The SEC is talking in 2022presented by PLI with the SEC in Washington, DC on September 8 and 9, the main theme was “crypto, crypto, crypto,” said Kurt Wolfe, PLI’s co-host inSecurities podcast, in an episode about the conference. “Every single panel I attended talked about crypto, even some of the ones you wouldn’t think of, like trading and markets,” he said.
Wolfe and co-host Chris Ekimoff discussed the importance of Chairman Genslers opening remarks to The SEC is talking, entitled “Kennedy and Crypto.” In his speech, the chairman asserted: “Nothing about the crypto markets is inconsistent with the securities laws. Investor protection is equally relevant, regardless of the underlying technologies.”
Interested in learning more?
PLI offers a wealth of resources on cryptocurrency.
If you want to brush up on the basics, check out the daily program Think Like a Lawyer, Talk Like a Geek 2022: Become fluent in technologywhich will take place via live webcast and in person on October 14. This unique program is designed to provide attorneys with the necessary background to become more knowledgeable advocates in technology-related matters and understand the emerging trends in this field, including blockchain, cryptocurrencies, and NFTs.
For those interested in diving into the growing crypto trend of DAOs, or Decentralized Autonomous Organizations, PLI will offer Decentralized Automated Organizations (DAOs): Practical Applications and Legal Framework. Register for the November 16th One-Hour Briefing to learn how DAOs have the potential to disrupt the traditional financial system as they become active investors and lenders, while raising significant securities, tax and corporate law issues.
See additional crypto-related content at PLI’s website.
The Practicing Law Institute is a non-profit learning organization dedicated to keeping lawyers and other professionals at the forefront of knowledge and expertise. PLI is chartered by the Regents of the University of the State of New York and was founded in 1933 by Harold P. Seligson. The organization offers high-quality, accredited, graduate legal and professional education programs in a variety of formats delivered by more than 4,000 volunteer faculty, including distinguished attorneys, judges, investment bankers, accountants, corporate counsel, and U.S. and international government regulators. PLI publishes an extensive library of theses, course manuals, answer books and journals which are also available via the PLI PLUS online platform. At the heart of PLI’s mission is its commitment to the pro bono community. See PLI’s upcoming programs here.
