Benjamin Leisinger
Homburger, Zurich
benjamin.leisinger@homburger.ch

Cintia Martins Costa
Elvinger Hoss, Luxembourg
cintiamartinscosta@elvingerhoss.lu

Cecil Quillen 
Linklaters, London
cecil.quillen@linklaters.com

Report on joint session of the Securities Law Committee and the Capital Markets Forum at the IBA Annual Conference in Paris

Tuesday 31 October 2023

Session Chairs

Theodor Haertsch Walder Wyss, Zürich; Senior Vice Chair, Capital Markets Forum
Philippe Tardif Borden Ladner Gervais, Toronto; Vice Chair, Securities Law Committee

Panellists
Anne Choné European Securities & Markets Authority, Paris
Nicole Dyskant Fireblocks, Rio de Janeiro
David Flechner Allen & Overy, New York; Vice Chair, Mergers and Acquisitions Subcommittee
Andreas Josuran Swiss National Bank, Zürich
Benjamin Leisinger Homburger AG, Zürich; Newsletter Officer, Securities Law Committee
Christoph Moser Schoenherr, Vienna; Vice Chair, Capital Markets Forum

The session was organised by the Securities Law Committee (lead) and the Capital Markets Forum and formed the second part of a session hosted by the IBA Banking & Financial Law Committee.

Led by co-chairs Theodor Haertsch and Philippe Tardif, this session gathered experts to explore the intricate legalities of digital assets. Key points of discussion included:

• the various types of digital assets and their implications in capital markets;
• the complex regulatory frameworks governing them;
• the innovative uses of blockchain in securities transactions; and
• real-world case studies of challenges and failures in the digital asset sector.

The panellists provided a thorough overview of the above topics. They emphasised the significance of adapting to the constantly changing legal landscape of digital assets.

The agenda covered various important topics.

Digital assets – what are they?

This segment delved into the different types of digital assets enabled by blockchain and their relevance to capital markets, including cryptocurrencies, stablecoins, non-fungible tokens (NFTs), smart contracts and digital securities. The panel even provided examples of traditional instruments, means of payment and commodities that have been digitised on the blockchain.

Regulatory and legal frameworks

The panel discussed the overarching legal and regulatory landscape applicable to digital assets, focusing on whether they can be classified as securities or commodities. It also covered the role of digital intermediaries such as exchanges and custodians, the impact of staking, decentralised finance (DeFi), the EU’s Markets in Crypto-Assets (MiCA) rules and private law remedies for investment losses in digital assets resulting from failed custody arrangements or regulatory non-compliance.

Blockchain in securities transactions

This part of the session focused on the use of blockchain in the settlement of securities transactions, highlighting case studies such as the European Investment Bank (EIB) digital bonds and the European Securities and Markets Agency’s (EMSA’s) distributed ledger technology (DLT) pilot project.

Case studies – when things go wrong:

The session concluded with analyses of various failures and crises in the digital asset space (Terra Luna, FTX), including regulatory enforcement actions (Gemini, Wahi), legal challenges, insolvencies (FTX), and the impact of cybersecurity breaches and failure of internal controls relating thereto.

The panel provided amazing insights into the complexities and evolving nature of the legal and regulatory framework surrounding digital assets. They also emphasised the need for ongoing adaptation and understanding in this rapidly changing field.