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118 Colum. L. Rev. 2323 (2018)
Broker-Dealers for Virtual Currency: Regulating Cryptocurrency Wallets and Exchanges

handle is hein.journals/clr118 and id is 2417 raw text is: NOTES
Dennis Chu*
With the rise of cryptocurrency as a popular investment,
cryptocurrency wallets and exchanges have proliferated, offering
platforms that allow investors to hold and trade cryptocurrency.
Because these platforms hold cryptocurrency on their customers' behalf,
they present problems associated with custody. Namely, how do investors
ensure that these platforms do not misuse or mishandle their assets?
And how will customer assets be treated if a platform enters bankruptcy?
To answer these questions, this Note looks to the experience of
broker-dealers, exploring the similarities between the problems con-
fronting cryptocurrency platforms today and the problems that broker-
dealers faced in the late 1960s. Widespread broker-dealer failures
during the late 1960s revealed problems with mishandled client assets,
insufficient capital, and inadequate protection of customer assets in
bankruptcy. Similar problems plague cryptocurrency platforms today.
This Note therefore points to the regulation of broker-dealers as a
template for how to approach the regulation of cryptocurrency platforms.
Looking to the regulatory responses to broker-dealer failures in the late
1960s-including the customer protection rule, net capital rule, and
alternative bankruptcy regime created by the Securities Investor
Protection Act-this Note proposes that a similar regulatory framework
could be applied to cryptocurrency platforms.


* J.D. Candidate 2019, Columbia Law School. The author would like to thank
Kathryn Judge and the editorial staff of the Columbia Law Review for their helpful
comments and feedback.

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