INTRODUCTION

The market for cryptoassets is burgeoning as distributed ledger technology transforms financial markets. With the extraordinary growth in the crypto-markets comes the need for regulation to promote efficiency, capital formation, and innovation while protecting investors. With the need for regulation comes enforcement. The blockchain revolution in capital and financial markets has already attracted the attention of enforcement agencies in many jurisdictions. In this Article, we elaborate on crypto-related enforcement and report on the results of the Enforcement Survey conducted by the Rutgers Center for Corporate Law and Governance Fintech and Blockchain Research Program.

We find that the United States Securities and Exchange Commission (“SEC” or “Commission”) brings more enforcement actions against digital-asset issuers, broker-dealers, exchanges, and other crypto-market participants than any other major crypto-jurisdiction. By the same token, its enforcement entails more serious penalties. In addition to reviewing the international data, we provide detailed comparisons of the crypto-enforcement actions of the United States Commodity Futures Trading Commission (“CFTC”) and the crypto-enforcement program of the SEC. Whereas SEC enforcement has been relatively stable, CFTC cases have been trending up. By contrast, enforcement in foreign jurisdictions seems to be subsiding. Our data raise theoretical questions on regulation via enforcement, its effect on financial innovation, and regulatory competition.

In Part I, we start with discussing the pros and cons of regulation by enforcement, as well as its consequences for innovation and a possible outflow of capital. Part II describes the methodology of the research. Part III presents the main findings. Parts IV and V discuss SEC and CFTC enforcement data, respectively, while Part VI compares the enforcement actions of the two regulators.

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*. Alan V. Lowenstein Professor of Corporate and Business Law, Co-Director of the Center for Corporate Law and Governance, Rutgers Law School (douglas.eakeley@law.rutgers.edu).

†. Professor of Law, Director of the Fintech and Blockchain Program, Rutgers Law School (yg235@rutgers.law.edu).

‡. J.D., Rutgers Law School 2020, Fintech Program Researcher 2019–2020, Associate at Sosnow& Associates PLLC (leo@jobsactlawyer.com).

§. J.D., Rutgers Law School, Fintech Program Researcher 2019–2020, E-Commerce and Contracts Manager at WingIt Innovations LLC (klg190@scarletmail.rutgers.edu).

**. The Blockchain and Fintech Research Program is generously supported by the University Blockchain Research Initiative, the Ripple Impact Fund, and Silicon Valley Community Foundation. The authors would like to thank the participants of the Yale Law School 2020 Conference on Law and Macroeconomics and the 2020 Annual Meeting of the American Society of Comparative Law, UCLA Law School, for their comments and suggestions.