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Making law in America is not a simple task. It can be legislated by Congress, enforced by the executive, interpreted by the courts, and augmented by a massive body of rules created by administrative agencies such as the Securities and Exchange Commission (SEC). The Dodd-Frank Wall Street Reform and Consumer Protection Act (2010) (Dodd-Frank was passed) with an eye to preventing future financial crises. Four years later, many details of Dodd-Frank have yet to be finalized as the SEC is still in the process of developing the regulations that the legislation required them to create. Even once the regulations are finalized by the SEC, the regulations will be challenged by various parties in the courts. The regulations will be either upheld or rejected. Those that are upheld will then face numerous challenges when applied in specific cases, while those rejected will have to be redone all over again. The process of developing these regulations is cumbersome and attracts many of the special interests that were present in the legislative phase of Dodd-Frank and who will also be present in the litigation phases of testing Dodd-Frank in the courts. This paper focuses on the requirement that investment advisors and broker-dealers be deemed as owing fiduciary duties to their clients as a case study for the entangled political economy theory. The paper shows how the development of a simple rule such as whether these fiduciary duties should be owed or not requires years of back and forth between the legislative, executive, administrative, and judicial branches.

In July 2008 the U.S. Securities and Exchange Commission (SEC) published three proposals relating to the use of credit ratings in its rules and forms. The proposals were designed to address concerns that the misuse of credit ratings may have contributed to the current crisis. The SEC sought market feedback regarding the effect the removal of credit rating references may produce on the markets.

This article examines the use of ratings by various market constituents, analyzes the details of the SEC proposals, and reviews the provided feedback. The main finding is that the majority of the market participants opposed the SEC proposals. Fiduciaries and regulated entities are looking to regulators to offer a common measure of risk, stable, accurate and free of conflict of interests.

The Dodd–Frank Wall Street Reform and Consumer Protection Act calls for substantially increased government regulation. Whether those regulations are, in some sense, appropriate is a function of whether the benefits of the increased regulation exceed the costs. Those costs and benefits, however, are probably impossible to measure, at least at this early stage of the implementation of the Dodd–Frank reforms. On the other hand, financial professionals who regularly deal with governmental regulations probably have a good sense of the costs and benefits based on their own experience with other similar regulations. This chapter reports the result of a survey of high-level auditors and CFOs regarding their perceptions of the costs and benefits of the main parts of the financial regulatory reform incorporated into the Dodd–Frank legislation. It concludes that there is support among these individuals for some aspects of Dodd–Frank, but no consensus.

Tokenization is a relatively new activity in digital finance. Tokenization, a process that creates a blockchain representation of the underlying instrument, can enhance the standard features and characteristics of assets and securities. Asset and security tokenization produces many benefits. These benefits include reducing issuance and trading costs, lessening dependency on intermediaries, facilitating more liquidity in markets, and providing greater transparency around an asset’s lifecycle for all parties involved. This chapter synthesizes the key characteristics, benefits, processes, tools, and techniques of tokenizing real-world assets. It also provides several examples of current asset-backed token applications to help understand the rapidly growing industry and analyzes future expectations of this new technology.

The purpose of this chapter is to expose the limitations of the equity-based crowdfunding provisions of the 2012 JOBS Act. These provisions have received much attention because they have the potential to open funding opportunities to countless underfunded entrepreneurs and small businesses. In addition, they can provide everyday investors with new ways to diversify their portfolios. However, the author asserts that the JOBS Act is unlikely to be successful in its current incarnation, because it overly burdens the entrepreneur with reporting and accountability requirements, among other things. The author resolves these issues by articulating a regulatory alternative to the JOBS Act.

This chapter reviews the general requirements for equity-based crowdfunding under the 2012 JOBS Act. It also reviews the various approaches individual states and other countries have taken to promote equity-based crowdfunding.

The existing law and proposed regulations for equity-based crowdfunding under the JOBS Act are overly burdensome and will impair the ability of entrepreneurs and small-businesses to successfully use equity-based crowdfunding throughout the United States. Regulators and other lawmakers need to adopt new rules focused on protecting consumers via spending limits.

Most of the research is based on theory, because the equity-based regulations have not been finalized or implemented at the federal level. However, the United States can learn much from the equity-based crowdfunding efforts of individual states and other countries.

This chapter’s critique is designed to engage lawmakers, regulators, entrepreneurs, and small businesses in a new discussion about equity-based crowdfunding regulations.

Cryptocurrency arose, and grew in popularity, following the financial crisis of 2008 built upon a promise of decentralizing money and payments. An examination of the history of money and banking in the United States demonstrates that stable money benefits from strict controls and commitments by a centralized government through chartering restrictions and a broad safety net, rather than decentralization. In addition, financial crises happen when the government allows money creation to occur outside of official channels. The US central bank is then forced into a policy of supporting a range of money-like assets in order to maintain a grip on monetary policy and some semblance of financial stability.

In addition, this chapter argues that cryptocurrency as a form of shadow money shares many of the problematic attributes of both the privately issued bank notes that created instability during the “free banking” era and the “shadow banking” activities that contributed to the 2008 crisis. In this sense, rather than being a novel and disruptive idea, cryptocurrency replicates many of the systemically destabilizing aspects of privately issued money and money-like instruments.

This chapter proposes that, rather than allowing a new, digital “free banking” era to emerge, there are better alternatives. Specifically, it argues that the Federal Reserve (Fed) should use its tools to improve public payment systems, enact robust utility-like regulations for private digital currencies and limit the likelihood of bubbles using prudential measures.

This chapter examines some emerging topics and trends as it connects cryptoassets to accounting, auditing, and financial reporting. It discusses the treatment of cryptoassets from a financial reporting perspective under the US and international accounting standards, frequently asked questions about auditing and attestation, and potential best practices for auditing various cryptoassets. It also discusses accounting for now and potential in the future. The chapter outlines how the rapidly changing cryptoasset landscape could lead to differentiated accounting treatment and audit best practices for practitioners seeking to attest to certain aspects of cryptoassets.

This chapter discusses legal considerations relating to digital assets. The legal aspects of tokenized and non-tokenized assets are evolving. Although some states have enacted specific laws or regulations for digital assets, Congress and federal agencies have been slower to craft specific rules and regulations for such assets. As a result, regulators, such as the Securities and Exchange Commission, Commodity Futures Trading Commission, and Internal Revenue Service, and market participants must apply existing guidance to digital assets. This chapter examines applying specific aspects of federal securities and tax law to digital assets. It also discusses general business law considerations for blockchain and cyber enterprises. The discussion of state law applications centers on the New York Virtual Currency License and Wyoming and Delaware crypto initiatives. This chapter does not provide a comprehensive review of all legal issues related to cryptocurrency. Each legal issue about cryptocurrency is complex and requires separate analyses.