The New Frontier for Bankruptcy: Crypto

Authors

• Lindy Lofton, Benjamin N. Cardozo School of Law

Abstract

The note examines the regulatory challenges posed by the rise of cryptocurrency platforms like Celsius and FTX, which have faced significant financial difficulties and bankruptcy. These platforms operate similarly to traditional banks and brokerages but lack the same regulatory oversight, leaving customers vulnerable without protections like FDIC insurance. The note argues that adopting legislation akin to the Banking Act of 1933 or the Securities Investor Protection Act (SIPA) could provide necessary safeguards, such as insurance mechanisms similar to FDIC or SIPC. However, the decentralized nature of cryptocurrency and opposition from the crypto community pose challenges to implementing such regulations. The note emphasizes the need for a balanced approach that protects consumers while respecting the unique aspects of cryptocurrency.

Disciplines

Agriculture Law | Banking and Finance Law | Entertainment, Arts, and Sports Law | Environmental Law | Law | Securities Law

Recommended Citation

Lindy Lofton, The New Frontier for Bankruptcy: Crypto, 42 Cardozo Arts & Ent. L.J. 537 (2024).
Available at: https://larc.cardozo.yu.edu/cardozoaelj/vol42/iss2/9