Visit the new website of the Regulation of Crypto-Finance research project that I lead.
My crypto Twitter alt account: @0xMikolaj.
Interpreting EU MiCA
I’m working on papers on market abuse under MiCA and about the meaning of “full decentralisation.”
- I presented on “MiCA and Consumer & Data Protection” as part of the Crypto-Assets Masterclass that the Florence School of Banking and Finance held for the European Central Bank and the Single Supervisory Mechanism staff (mainly staff from national central banks).
- I taught a module on market abuse under MiCA for the MiCA Advanced Course at the EU Supervisory Digital Finance Academy (EU SDFA) organized by the European University Institute (EUI) – Florence School of Banking & Finance together with the European Commission (DG REFORM) and the European Supervisory Authorities (the ESAs): EBA, ESMA and EIOPA.
MEV and the law of the dark forest
I’m exploring the question of legality of (and potential legal liability for) some of the cryptocurrency market strategies known as Maximal Extractable Value (MEV). See:
- “Blockchain Transaction Ordering as Market Manipulation” - an article forthcoming in the Ohio State Technology Law Journal.
- “Battle of the Crypto Bots: Automated Transaction Copying in Decentralized Finance” - an article forthcoming in the University of Pennsylvania Journal of Business Law.
- “MEV on Ethereum: A Policy Analysis” - a white paper published by the International Center for Law & Economics (January 2023).
- “Law and regulation vs MEV extraction” (Flashbots Collective, 7 October 2022)
- My working paper co-authored with Alex Sarch: “Shedding Light in the Dark Forest: A Theory of Liability For Cryptocurrency ‘MEV’ Sandwich Attacks”. Draft available to download from SSRN. TLDR version in a Twitter thread.
Blockchain privacy and censorship
- “Blockchain Censorship” - co-authored with Anton Wahrstätter, Jens Ernstberger, Aviv Yaish, Liyi Zhou, Kaihua Qin, Taro Tsuchiya, Sebastian Steinhorst, Davor Svetinovic, Nicolas Christin, and Arthur Gervais.
Financial surveillance and the ‘travel rule’ in the EU
I argue that some key features of the current regulatory financial surveillance framework in the EU, including anti-money laundering measures like the ‘travel rule’, are likely incompatible - at least in part - with the EU’s own constitutional (fundamental) law. One of the key problems is that there is no reliable evidence that those rules are proportionate (i.e. that they work as they should), which makes it urgent to explore alternative ways for fighting crime, instead of extending the current rules to new cases (eg transactions with non-custodial wallets).
- My Twitter thread from 29 June 2022.
- “Why the EU’s Rushed ‘Travel Rule’ for Crypto Should Be Struck Down” (Coindesk, Yahoo, 25 July 2022)
- “Privacy, Crypto, and EU Financial Surveillance” (Truth on the Market, 11 July 2022)
- My comments on self-custody and the EU Transfer of Funds Regulation quoted in “Crypto winter teaches tough lessons about custody and taking control” (Cointelegraph, 2 September 2022)
Crypto’s base layer and legal liability
By crypto’s “base layer”, I mean the “infrastructural” participants of blockchain networks (miners, validators, node operators) and some service providers directly serving the former (e.g. private relay operators like Flashbots, specialized node hosting services like Infura). It is understandable that regulators and law enforcement, in the U.S., the EU, and elsewhere, may be inclined to treat the crypto’s base layer as the right target for regulation or enforcement of rules, like sanctions or anti-market manipulation rules. However, such rules are rarely - if ever - applied to seemingly analogous actors or protocols in other contexts (e.g. SWIFT, telecommunications operators, operators of internet exchange points).
I’m currently researching two aspects of this problem:
- SWIFT v crypto’s base layer analogy: developing an analogy between SWIFT (and the position on legal compliance - especially with sanctions law - taken by them) and crypto base layer operators.
- Validator control as liability: the lack of “credible neutrality” of validators (e.g. from the perspective of sanctions law) may increase their risk of legal liability. If so, then it may be worthwhile to prioritize protocol-level changes to increase credible neutrality of validators.
- “Response to the U.S. Treasury Department’s consultation on digital assets and illicit finance” (International Center for Law & Economics, 3 November 2023)