For several years, I have worked to articulate a set of interlinked tools and concepts forming a
kind of "cryptolaw philosophy".
The below articles, presentations and legal forms projects embody these ideas.
Blockhain Network Tokens Are Shares of Network Equity Subject
to Modified
Securities Regulations
-Blockchain network tokens are not primarily products, software licenses or currencies
(though they may secondarily have such functions), but shares of network equity. They are
subject to securities laws regulations, unless the network has become sufficiently
decentralized. Sufficient decentralization occurs when the tokens no longer represent
investment contracts and no single party or group of affiliated parties objectively controls
the network equity or means of block production on the network
Tokens as Securities Certificates
- Tokens on public, permissionless blockchain networks function as transferable instruments
('certificates') representing traditional and decentralized securities.
Amendments to Wyoming's
Corporations Code, authorizing Wyoming corporations to deploy tokenized stock
certificates. I advised and assisted the Wyoming Blockchain Task Force on the
drafting.
Qualified Legal Deference to Smart Contracts
-Smart contracts deployed on public blockchain networks should be combined with
natural-language legal contracts under a synergistic "qualified code deference" methodology. This
will enable
parties to agree to abide by the results of smart contracts except in unusual circumstances
Blockchain Governance
-Blockchain governance is best understood through the lens of "Szabo's Governance
Trilemma".
According to Nick Szabo, blockchain governance generally takes one of the following three forms:
ruthlessly minimized
lord of the flies
lawyers
Each horn of the trilemma has pros and cons. Ruthlessly minimized governance, sometimes described as
following "Szabo's Law", is the most robust against certain forms of social capture. However, when
minimized governance is not desired or possible, my position is that legalistic governance is
preferable to lord-of-the-flies governance. If a network will be subject to frequent hardforks
which adversely affect minorities, due process is required and legalistic governance becomes
particularly important.
