The Americans have their Constitution, and the Brits have… a set of norms? a series of conventions? a sense of fair play? While we don’t intend to re-litigate the events of 1776 (and all that), when it comes to crypto regulation could Washington D.C. learn a thing or two from the more flexible approach taken by London?
Coinbase CEO Brian Armstrong certainly thinks so, commenting on Twitter last month after a meeting with Andrew Griffith MP, the Economic Secretary to Her Majesty’s Treasury: “The UK is moving fast on sensible crypto regulation to both drive economic growth AND consumer protection. Excited to keep investing in the UK.“
This is in stark contrast to his statements on the regulatory position in his home country, noting that “the US is quickly falling behind on defining clear and fair rules, that protect consumers and enable innovation.” Coinbase have also made reference to a report by Electric Capital, which claims that the US is at risk of losing out on 1 million developer jobs over the next 7 years as web3 development moves overseas.
Their complaint relates to the ‘regulation by enforcement’ approach taken by agencies in the US, with the recent measures taken by the SEC and CFTC raising concerns that American authorities have adopted a rigid one-size-fits-all attitude with a view to breaking the US crypto industry. By contrast, and as summarised in our previous article in this series, the UK appears to be undertaking a more careful and iterative roll out of law and guidance with a view to welcoming business.
As any politics undergrad will tell you, the British Constitution can be tweaked by court decision and developments in the common law. In February 2023 the English High Court appears to have broken new ground with its order regarding the Jump Crypto fraud. The background is the ‘Wormhole Exploit’ of February 2022, whereby thieves hacked into Jump’s platform and drained it of millions. In a recent press release, Jump’s platform provider (the US based firm Oasis) confirm that they “received an order from the High Court of England and Wales to take all necessary steps that would result in the retrieval of certain assets involved with the wallet address associated with the Wormhole Exploit on the 2nd February 2022.“
One has to channel one’s inner Sherlock Holmes to get to the bottom of these cryptic crypto statements but, to summarise, it appears that the British court greenlit the use of a loophole in the underlying software to steal the crypto assets back from the fraudsters. The work of the court itself seems to take the cryptosphere and its participants at face value: enabling justice to be done and victims of fraud to recover their funds, never mind that those funds were denominated in ETH and not GBP or USD.
English law’s ability to judge the merits on a case-by-case basis has been foundational to London’s status as an international corporate and finance hub. Regulators and judges appear keen to ensure that the UK remains a go-to jurisdiction in the new world of smart contracts, tokenisation and DeFi. If the beam supporting the US crypto industry does break, maybe the sector would consider a Jump across the pond to the relative Oasis of the UK.
How we can help
Rosenblatt advises on all aspects of crypto assets and regulatory law. For enquiries, please contact our Dispute Resolution lawyers Tom Spiller OBE at Tom.Spiller@rosenblatt.co.uk and George Jackson at George.Jackson@rosenblatt.co.uk.
Disclaimer: We at Rosenblatt (and our parent company RBG Holdings plc) support and encourage free/independent thinking in relation to issues which are sometimes considered to be controversial subject matters. However, the views and opinions of the authors do not necessarily reflect the opinions, views, practices and policies of either Rosenblatt or RBG Holdings plc.
