Legally required financial surveillance is often in tension with the fundamental right to privacy. This is especially true in crypto-finance, where the problem is amplified by transparency of public blockchains. We explore the tension between privacy rights and law enforcement.
Crypto-finance not only reproduced old methods of market abuse (e.g. simple fraud, “pump and dump” schemes), but also created opportunities for novel kinds of potentially abusive behavior. We investigate which behaviors (e.g. types of “MEV extraction”) should be considered as abusive and how the regulators should respond.
“Infrastructural” participants of blockchain networks (e.g. miners, validators, and node operators) constitute the base layer of public blockchains. Our focus is on the question what kind of legal liability (e.g. under sanctions law) is and should be attached to different base layer operators?
It is often argued that at least some transparency-oriented regulatory tools used in “traditional finance” are not needed in DeFi, because DeFi is by design much more transparent, especially on Ethereum. This is likely true to some extent, but not enough attention has been devoted so far to investigating both the promise and the limitations of this approach.
