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Jake Chervinsky
@jchervinsky
1/ As U.S. regulators continue their war on crypto, many founders are thinking about geofencing as a compliance strategy. It can work, but only if it's done right. That’s why @dbarabander and I wrote this Practical Guide to Geofencing: https://blog.variant.fund/newsletter-legal-regulatory-affairs
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Jake Chervinsky
@jchervinsky
2/ Our guide explains what you (and your counsel) need to know about geofencing. Geofencing means stopping people in a certain "geography" from accessing a product by creating a virtual “fence” around it. We start by explaining when it's useful as a compliance strategy.
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Jake Chervinsky
@jchervinsky
3/ Geofencing is essentially a “when all else fails” fallback option when a company can’t: - satisfy applicable compliance obligations, like registration, disclosures, KYC, etc.; or - design the product in such a way that no compliance obligations apply in the first place.
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Jake Chervinsky
@jchervinsky
4/ Geofencing is useful when neither of those options work. It’s a pretty extreme solution to the problem of regulatory uncertainty — completely abandoning the US market — but sometimes there’s just no other way. We then do a deep dive into the case law on geofencing.
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Jake Chervinsky
@jchervinsky
6/ The Morrison court held that: - if a statute has an explicit extraterritoriality provision, then it applies outside U.S. borders, but only up to the provision's limits. - if not, then it only applies to domestic activity under the “presumption against extraterritoriality."
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