Legal Seminar, Denver, CO

071018 Discussion Draft

E. Coin Offerings and Consumer Protection. ..................................................................... 23 1. Security or Commodity?............................................................................................. 23 2. Badges of Fraud.......................................................................................................... 23 3. Tax Issues. .................................................................................................................. 23 VI. New Regulatory Challenges: Drugs, Gambling, and Sales Taxes? .................................. 24 A. Marijuana. ...................................................................................................................... 24 1. A little history. ............................................................................................................ 24 2. Current guidance......................................................................................................... 29 B. Gambling & Fantasy Sports. .......................................................................................... 29 C. Sales Taxes..................................................................................................................... 30 1. Burdensome complexity. ............................................................................................ 30 2. Will payments technology provide relief?.................................................................. 30 Introduction. Computer technology has dramatically changed payment practices and other dimensions of the consumer marketplace. Electronic access to funds expands liquidity, increases transaction volumes, and allows transactions between strangers who might otherwise lack traditional bonds of trust. While electronic channels create opportunities for commerce, they also present new risks and threats for participants in the marketplace. Government efforts to enforce tax laws, address crime, and perform other regulatory tasks face challenges and new opportunities in this dynamic environment. This outline provides an overview of significant developments affecting law and technologies applied in this environment that is designed to assist regulators in developing a holistic approach to designing and implementing regulatory practices in and around the payments environment. It will draw from many sources, including the recent book, E LECTRONIC P AYMENT S YSTEMS : L AW AND E MERGING T ECHNOLOGIES (Edward A. Morse, editor, ABA 2018). Cash and Cashlessness: An Overview. Cash (particularly paper money) is familiar to us, but cash was an innovation at one time in our history. The advantages and limitations of cash provide useful context for understanding aspects of the electronic payments environment, and particularly the demand for innovation. A. Legal and Regulatory Features. Cash had to overcome practical barriers before it could be accepted as a medium of payment in lieu of other commodities, such as gold or silver. Laws could help overcome those barriers, but there are limits to what can be accomplished by law alone; customs and traditions matter in consumer and commercial environments, just as they are important in other dimensions of culture. Laws, government practices, and customs affecting cash can also have implications for electronic payments. I. II.

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