FINANCE REFLECTED BY FUNHOUSE MIRRORS

A PROPOSAL OF INDIRECT REGULATION (GATEKEEPERS) TO CRYPTO CENTRALIZED EXCHANGES (CEX)

Auteurs

DOI :

https://doi.org/10.21783/rei.v9i2.766

Mots-clés :

Banking, CEX, Financial regulation, Cryptoassets

Résumé

Money is money, securities are securities, and banking is banking. Their fundamentals are not changed by whether technology rails are centralized (classic) or pseudo-decentralized (virtual assets) – the song remains the same. As such, this paper does not reinvent the wheel on why we should regulate cryptoasset centralized exchanges (CEXs), as there is enough bibliography from today to the XVII century to go around on that. Instead, we focus on how to regulate the CEXs, which comes into play in a world where their distributed ledger technology (DLT) rails are off-the-grid and hinder regulators from: (i) collecting market data (information asymmetry); and (ii) practical enforcement (technology/operational asymmetry). After revising current regulatory practices from various countries, we identify grounds for a practical approach – we propose that regulators might enforce full trading/financial intermediation obligations on the CEXs by enacting an indirect regulation/gatekeeper scheme, as inspired by the U.S. Foreign Account Tax Compliance Act (FATCA). In this model, regulators would restrict traditional institutions (i.e., banks, broker-dealers, clearings, funds) from transacting with CEXs which do not provide adequate evidence of material compliance with their trading/financial intermediation obligations. On a final remark, we narrate a growing movement which aims to insulate non-compliant crypto from the financial systems altogether, avoiding risks of contagion.

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Bibliographies de l'auteur

Marcus Paulus de Oliveira Rosa, Universidade do Estado do Rio de Janeiro (UERJ)

Mestre (2023) e Doutorando em Direito das Empresa e Atividades Econômicas pela Universidade do Estado do Rio de Janeiro (UERJ). Especialista em Direito da Infraestrutura e Regulação pela FGV Direito Rio (2021) e em Direito do Estado pelo CEPED/UERJ (2011). Procurador do Banco Central do Brasil desde 2010, com atuação na consultoria jurídica sobre regulação financeira e de pagamentos. Professor convidado da disciplina sobre Fintechs, Regulação e Concorrência em Mercados Digitais no LLM em Direito, Inovação e Tecnologia da FGV-Direito-RJ (2022). As opiniões manifestadas no presente artigo não representam necessariamente a posição do Banco Central do Brasil ou da Procuradoria Geral do Banco Central.

Lucas Caminha, Fundação Getulio Vargas - Rio de Janeiro (FGV-Rio)

Doutorando em Direito da Regulação pela FGV Rio. Mestre em Direito Empresarial pela UERJ. Autor dos livros “Novo Mercado de Crédito: Concorrência, Regulação e Novas Tecnologias” e “Captação de Recursos por Startups”. Advogado no setor financeiro.

Références

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“DLT” refers to the infrastructure of the proverbial ledger in which anyone may record, validate, and audit transactions. The concept itself was born in 1991, but only came into prominence with Bitcoin and Satoshi Nakamoto. Among the diverse protocols which may run on DLT technology, the most famous/adopted one is the blockchain. See (i) SAREL, Roee; JABOTINSKY, Hadar; KLEIN, Israel. Globalize Me: Regulating distributed ledger technology. Vanderbilt Journal of Transnational Law, forthcoming 2023, p. 10-13; and (ii) BANK FOR INTERNATIONAL SETTLEMENTS (BIS). The Future Monetary System, In BIS Annual Economic Report 2022. BIS, June 2022, p. 75-102.

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The nickname of the Buy and Hold investment strategy of a cryptoasset.

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Smart contracts which are triggered during a collapse will continue to execute and cannot be stopped, intensifying volatility, accelerating deleveraging across crypto, and taking financial risks to yet another level. See ECB. Decentralised finance – a new unregulated non-bank system? ECB Macroprudential Bulletin, issue 18, July 2022, p. 5.

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Publiée

2023-08-07

Comment citer

de Oliveira Rosa, M. P., & Caminha, L. (2023). FINANCE REFLECTED BY FUNHOUSE MIRRORS: A PROPOSAL OF INDIRECT REGULATION (GATEKEEPERS) TO CRYPTO CENTRALIZED EXCHANGES (CEX). REI - REVISTA ESTUDOS INSTITUCIONAIS, 9(2), 369–397. https://doi.org/10.21783/rei.v9i2.766

Numéro

Vol. 9 No 2 (2023)

Rubrique

Dossiê

Licence

(c) Tous droits réservés Marcus Paulus de Oliveira Rosa, Lucas Caminha 2023

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