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Houman Shadab
New York City
Professor of law and finance at New York Law School
Recent Activity
The following are my speaking engagements for the first half of 2016 on various aspects of fintech, smart contracts, blockchains, and Bitcoin: Jan. 10: American Association of Law Schools 110th Annual Meeting: Section on Economic Globalization and Governance, The Future of Global Finance: A Roundtable, New York City. Jan. 22:... Continue reading
Posted Jan 18, 2016 at Lawbitrage
Since their inception, Bitcoin exchanges have operated under a fog of legal uncertainty. Last week, just one day after the New York-based exchange itBit announced obtaining a banking law charter giving it the ability to operate in all 50 states, a California official called that into question. Almost every state... Continue reading
Posted May 11, 2015 at Lawbitrage
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It is difficult to overstate the growing importance of software to companies, whether it be in the form of automated trading, web-based applications and data storage, or monitoring systems to comply with regulation. But software may soon also be changing the very nature of business enterprises by giving rise to... Continue reading
Posted Feb 21, 2015 at Lawbitrage
The year is 1941 and the place is Lake County, Florida, a town just outside of Orlando with a population of about 30,000. The W.J. Howey Company, then operated by Dodge Taylor, is selling plots of a citrus grove along with the right to share in any profits from crop... Continue reading
Posted Nov 12, 2014 at Lawbitrage
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Products being developed for large, sophisticated players is usually a sign of a maturing market. And the Bitcoin market is no different. Until recently, derivatives based on Bitcoin, such as those offered by ICBIT and BTC Oracle, were suited only for small, individual traders. But recent months have witnessed the... Continue reading
Posted Nov 6, 2014 at Lawbitrage
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On October 9th, 2014 I presented before the Commodity Futures Trading Commission (CFTC) at its Bitcoin hearing. I also provided a written statement that discusses how the CFTC should approach regulating derivatives that reference Bitcoin and "smart contract" derivatives that are made with the Bitcoin block chain. The following is... Continue reading
Posted Oct 11, 2014 at Lawbitrage
One of the great promises of cryptocurrency networks such as those underlying Bitcoin and Ripple is that they will allow for the creation of a wide variety of economic applications that go far beyond transferring digital money. The "internet of money" refers to the capability of decentralized ledger networks to... Continue reading
Posted Sep 4, 2014 at Lawbitrage
The overwhelming majority of global trade is financed either by companies themselves (through trade credit) or by bank-intermediated trade finance, which is estimated by the Bank for International Settlements to support a third of world trade. Although a nascent technology could speed up how trade is financed, global corporations are... Continue reading
Posted Aug 21, 2014 at Lawbitrage
Bitcoin price volatility isn't what it used to be. Compared to its meteoric rise and fall in 2013, recent months' fluctuations around $600 seem tame. But despite the fact that Bitcoin has become boring--at least for speculators--widespread adoption of the cryptocurrency will not happen unless merchants and others can shield... Continue reading
Posted Aug 6, 2014 at Lawbitrage
This week's record $7 billion settlement between the Department of Justice and Citigroup stemming from the bank's flawed mortgage-backed securities closes yet another chapter on the financial crisis of 2008. Although the particular type of subprime mortgage securities involved in the case are no longer being issued by any bank,... Continue reading
Posted Jul 16, 2014 at Lawbitrage
A recent Risk magazine story by Kris Devasabai notes that hedge fund borrowing costs from prime brokers may increase due to higher bank regulatory capital requirements under Basel III. One important effect of potentially higher funding costs is undermining the borrowing-dependent business model of fixed income hedge funds. As Devasabai... Continue reading
Posted Jun 26, 2014 at Lawbitrage
Almost all U.S. financial regulators have taken an official stance regarding Bitcoin and other virtual currencies. The Treasury Deparment's Financial Crimes Enforcement Network (FinCEN) stated that companies sending or exchanging "convertible virtual currencies" like Bitcoin would be subject to anti-money laundering and related regulations. The Securities and Exchange Commission successfully... Continue reading
Posted Apr 16, 2014 at Lawbitrage
Over the past decade, the cost of launching a tech startup has plummeted. Due to innovations from cloud computing to open source software, building and scaling a new product or service now takes far less capital. Lower costs haven’t only made it easier to set up shop, however. Lower costs... Continue reading
Posted Apr 14, 2014 at Lawbitrage
One might expect that the impact of high-speed, computerized securities trading would not be a controversial subject because the relevant information can be quantified, measured, and assessed. But one would be wrong. When it comes to the impact of high-frequency trading (HFT) on securities markets, limited data and inconsistent measures... Continue reading
Posted Mar 31, 2014 at Lawbitrage
Financial regulators are often criticized for failing to understand the world they regulate and not learning from economists and other experts. But when it comes to Bitcoin, those roles seem reversed. Recently, the prominent New York University economist Nouriel Roubini chastised Bitcoin. Writing on twitter, Roubini stated: Bitcoin is not... Continue reading
Posted Mar 12, 2014 at Lawbitrage
The Finanical Times' Tracy Alloway and Michael Mackenzie report on the failure of new, independent bond trading platforms established by firms such Goldman Sachs, UBS, and Morgan Stanley to gain traction in the marketplace. To date, their combined market share is only 1 percent. A major reason for the failure... Continue reading
Posted Feb 18, 2014 at Lawbitrage
The Intenational Swaps and Derivatives Association's (ISDA) much-awaited updates to its definitions for standardized credit derivatives contracts have been delayed until September 2014. The delay is probably hindering the market for credit default swaps that pay protection buyers if a government borrower fails to pay its bonds. This is because... Continue reading
Posted Feb 5, 2014 at Lawbitrage
Bitcoin is a digital payment system and quasi-currency. It allows people to send payments anywhere in the world directly--without an intermediary like a bank. The network makes the transaction public yet keeps identities private. Understanding Bitcoin can quickly get complicated and involve lots of technical jargon including nodes, hashes, and... Continue reading
Posted Jan 27, 2014 at Lawbitrage
As financial market regulators seek to coordinate their post-financial crisis reforms, a contentious question is to what extent one nation's regulations apply to companies in other countries. The general principle under the Dodd-Frank Act is that U.S. derivatives (swaps) regulation only applies to transactions that have a significant connection or... Continue reading
Posted Jan 17, 2014 at Lawbitrage
The Volcker Rule seems like a well-intentioned attempt to prevent banks from taking risks that are ultimately paid for by depositors and taxpayers. Nonetheless, as the final Volcker Rule and banks' reactions to it begin to take shape, it should be increasingly clear that the Rule shifts risk around as... Continue reading
Posted Jan 15, 2014 at Lawbitrage
Analysts of corporate credit have recently expressed concern about a possible bubble in corporate loans fueled by low interest rates, yield hungry investors, and a slowdown in the Federal Reserve's bond buying program. The New York Times even described the recent growth of so-called "leveraged" loans to riskier borrowers, which... Continue reading
Posted Jan 13, 2014 at Lawbitrage
Blogging to return in the New Year. Continue reading
Posted Dec 19, 2013 at Lawbitrage
A new report released yesterday by Americans for Financial Reform and the Roosevelt Institute offers a wide ranging analysis of the status of financial regulatory reform. Without having read the entire report, it seems like a good overview of persistent issues in financial reform such as capital regulation and regulatory... Continue reading
Posted Nov 12, 2013 at Lawbitrage
Bank regulators recently sounded alarms about weak commercial loan underwriting standards that could come back to haunt lenders if the economy suffers a new downturn. The credit ratings firm Moody's also warned of rising risks in corporate lending. There are certainly reasons to worry about risk in the corporate loan... Continue reading
Posted Oct 30, 2013 at Lawbitrage
Earlier this month, the International Swaps and Derivatives Association (ISDA) published a research report that began by noting the massive decrease in the notional value of credit default swaps (CDSs) in recent years. CDSs shrank from nearly $60 trillion in 2007 to $25 trillion by the end of 2012. That... Continue reading
Posted Oct 27, 2013 at Lawbitrage