This CLE webinar will analyze legal challenges to financing bitcoin, for both bank and non-bank lenders. The panel will also discuss the underlying blockchain architecture for transferring bitcoin and other cryptocurrencies, and the issues to address when perfecting a UCC security interest in those currencies. Description As bitcoin and other cryptocurrencies continue to become an investment asset, so does the demand for financing from holders seeking to monetize unrealized gains without incurring thiedeman bitcoin liability and to magnify investment returns.
But, finance counsel should understand the regulatory and logistical barriers to making loans secured by cryptocurrency. The CFTC has determined that bitcoin is a commodity. There are UCC perfection issues as well. Bitcoin uses cryptographic digital signatures to verify that transactions are valid and to transfer ownership.
Theoretically, a lender should obtain its own private key or signature distinct from the borrower’s, but this presents issues as to whether a secured transaction or outright transfer has occurred. The CBOE recently began trading bitcoin futures, so lenders can now hedge against downward movement in bitcoin prices. No such ability currently exists for other cryptocurrencies, and the price of hedging bitcoin could be very high given its extreme volatility. Listen as our authoritative panel examines the issues to resolve and understand in financing bitcoin and other cryptocurrencies. The discussion will include CEA compliance, perfection under the UCC and how to hedge against price movement.