Legal Seminar, Denver, CO

Cryptocurrencies • Perceived Advantages/Disadvantages: – Pseudo‐anonymity (but not as anonymous as some would  like)   – Peer‐to‐peer (without intermediaries) (who benefits?) – Security • As long as you control your private key • As long as no one hacks the storage entity – Note emergence of private audits in this context – Regulatory framework for banks has not been scaled to this business  model – more like brokerage?  Area for regulatory growth?  – Finality (but is this a disadvantage?) – Transaction costs (but what are the all‐in costs?) – Volatility/Acceptance (would you spend Morgan dollar?) – True scarcity?  (What about substitutes?) – Computing power/Obsolescence?   Cryptocurrencies – Choke Points • Chokepoints provide nexus for regulation. – AML Rules for Exchanges, Users, Miners. • MSBs (but not mere users) subject to otherwise  applicable BSA/AML rules. • Exchanges/Administrators distinction. • Miners may not be exchangers by virtue of exchanging  for fiat currency – but transferring to TP on or for  benefit of another will result in MSB treatment.  – KYC requirements for exchanges are being applied  – but are they effective?   – States are also engaged in regulating exchanges.