for those of you who don't know my name
is Catherine Wu I work for Masari or a
new york-based company that you know our
mission is to sort of provide more
transparency into the crypto asset
industry and you know I am a u.s. lawyer
by training I don't practice law but I
do spend a lot of time thinking about
the intersection between law and
technology and also politics so this is
an issue that's pretty near and dear to
my heart so yeah so without further ado
you know I'm here today to discuss a
topic really that I think would be a
little hard to cover in the next 20
minutes but is you know nonetheless
relevant to a lot of discussions that's
been happening both at DEFCON and also
in the broader crypto ecosystem thus far
so you know let's start with a question
okay as we think about the future of the
crypto space about web 3 about Kryptos
impact on society I think sometimes it
helps to bring the discussion back to
basics and think about two questions
which is you know what is what is it
about the current state of the world and
it's governance structure do we want to
change and secondly does it need to be
changed so my goal of course is not to
present an answer to the above questions
but to develop a framework and hopefully
provide a little bit more nuance into
this context that I think can be quite
polarizing at times especially online on
Twitter and other forums so with that
here's where I want to kick off the
discussion which is you know to look at
the history the formation and the
evolution of public international law so
international law consists of the
framework and infrastructure in which
the Foreign Affairs of states are
conducted so that includes the
institution's forms and procedures for
daily activity the assumptions on which
the society our society is founded
concepts which permeate through those
societies and the various relations
between the societies individual members
and the infrastructure for all of those
agreed upon assumptions and practices
commitments expectations and reliance is
all
all kind of under the umbrella of
international law and this is important
I think to crypto because you know the
cryptic community is also a global
community and I think there are some
parallels you can draw between nation
states and also readers various actors
in the space so you know I'm glad I
actually went after Santiago because I
loved the discussion that he provided
specifically some of the context that I
want to start with which you know when
we think about the 30-year war and what
ended it right the Treaty of Westphalia
two important things resulted from that
treaty which he went to a little bit
earlier but you know first it's the
birth of the modern state from
international relations perspective so
it became clear that the primary origin
of international discourse was the
nation state and the nation-state was
also defined in a critical way which is
you know that the state is sovereign so
you know what happens in the border of
the state is subject to the control of
that state and that state only and
secondly it gave rise to the notion of
the sovereign equality of the states so
this means that in theory no matter the
realities of economic disparity that in
the eyes of the law all states are
considered or understood to be equal so
no state has greater power to sit in
judgment over another so this treaty
created sovereign states in theory and
from there on out customary law which is
the practice that's reinforced both
through actual practice and common
understanding of the international
community developed very fast so you
know customary law is sort of one way in
which international law derives its
authority from but of course the
question of course is you know how
exactly does international law on a
global scale even gets enforced so there
are two ways generally speaking when it
comes to enforcement mechanisms so the
first enforcement mechanisms are pretty
clear-cut when it's considered to be
vertical so if you take the u.s. for
example right so US Congress can impose
a rule or a law or regulation that says
insider trading is illegal so once they
impose that the law is then reinforced
by the relevant government regulators
like the SEC and DOJ which we've heard
plenty about so you know they have harsh
penalties for non-compliance and as a
result the individual traders have an
incentive to comply with the law
and avoid the sort of risks associated
with trading based on material and
non-public information of course the
challenge arises when governance is
horizontal so for example though we have
the framework for international human
rights law human rights violations
persists around the world we continue to
see gross violations and disregard for
basic human rights that are being
perpetrated by individuals by
governments and by international
organizations so here we're faced with
the biggest challenge in international
law which is that it's not real or
rather how does it get him reinforced or
enforced international law does not have
like a central lawmaker right because we
don't have a world police force or a
world government and so there's no
mandatory vertical governance in this
instance so you know there are some
scholars out there who are very very
skeptical about international law and
they think that you know the reason why
international law doesn't work is
because there's an absence of a
comprehensive judicial system with
compulsory jurisdiction to settle these
disputes and the absence of a central
executive to enforce compliance with
judicial system decisions and I actually
disagree with that you know I think that
the emphasis on global courts or a
global police force is quite misleading
in fact you know when you look at the
reality of it international law derives
its binding force from sources other
than courts other than police forces
stays comply with international law out
of a number of reasons but a strong one
is out of this expectation of
reciprocity or reality retaliation if
they don't comply or generally out of a
belief that a law is morally legitimate
and therefore ought to be obeyed and so
for example you know effective sanctions
exist without the need for a centralized
adjudication or enforcement agencies but
you know mostly I want to point to the
formation of customary international law
which is like I said earlier the
practice of you know this is a practice
that's reinforced both through a
consistent practice and be common
understanding of the international
community which remains a highly effect
one so for the record I'm not dressing
like other sources of international like
like treaties which are kind of more
like contracts or written agreements but
rather customary international law are
formed from a general and consistent
practice of states that is followed by
States out of a sense of obligation
so thinking like what the right thing to
do is and that sense of obligation is
called open EO jurist in length legal
terms so examples of that include
diplomatic immunity right its agreement
and it's consensus among members and
States first and then the establishment
of governing laws second so you know I
think a lot of people typically assume
that the only binding force or rules are
made by legislative and courts and we
tend to forget that honestly you know
law can also be made by a consent that
comes from a community of people without
any formal enactment by government
entities and in fact you know such
customs or practices are not even
written down sometimes so you know as an
example we can think of like industry
practices right like let's take this out
of the nation-state for a minute and
listing about sports and in general like
sportsmanship there was a couple years
ago so when we were talking about like
US football am I gonna name the team but
you know there was one US team that was
kind of going around and like recording
other teams and their practices which is
not a rule there's no role like by the
NFL that says you can't do that but it's
generally understood that you shouldn't
do that because it's not the right thing
to do of course you know after they
started doing that I think eventually
the NFL then imposed you know kind of
made that like okay you can't do this to
another team but you know like to bring
that back to you know that's sort of
accepted that you don't do this and and
and teams traditionally have not done
this and because of this behavior and
that's consistent but then gets codified
later on and so you know like going back
to international law like ultimately
customary international law is a signal
source of both strength and flexibility
for for international law and it allows
international actors to develop rules
for behavior that are sort of informally
without the need to resort to a formal
lawmaking with a central a lawmaker with
a central body so what's an example of a
consistent practice and common
understanding from the community that we
can bring in
to space well I think first we need
standards so you know there's something
that I read one time which emphasizes
the importance of values so you know
it's possible or it might be possible
for two equally effective governance
systems to complete to compete by
internalizing different values so you
know one could perhaps embrace diversity
and openness at the cost of some
efficiency and the other could be
optimized for efficiency but for a more
sort of like homogeneous set of users
and interests so whether you know it's
the crypto industry working out a global
taxonomy that makes sense or
standardizing the very sort of minimal
amount of disclosures that should be
demanded from token projects whether
it's before or during or after the token
sale it's it's about figuring out the
values that the community agrees on and
pushing those forward you know so
bringing this back to the earlier
criticisms of international law you know
personally I think the critics are
asking the wrong questions at the end
you know what matters is not whether
international law has the exact same
legislative judicial and executive
branches that domestic states do
internally what matters is whether
international law is reflected in the
behavior of the states so you know it's
not whether or not there's a formal
judiciary instead it's whether disputes
are resolved in an orderly peaceful
fashion in accordance with international
law which they mostly are and more
importantly it's not where they're about
you know if the law is enforceable or
not the question is whether or not its
de facto being observed and whether it
influences the behavior of the states so
nations have generally accepted
important limitations on their
sovereignty and the result is
substantial order that we live in today
it's not perfect it's not optimal but
it's substantial and it's and it's you
know it works well enough for you and I
to be here today and like you know just
have the day to day work out fine and so
you know in reality I think the actual
international system is a hybrid of two
theories one norms that are formed by
treaty and two by consent and so
therefore the actual international
system is a compromise point between
those two theories now over the kind of
you know just being online and over the
pass
you know year and a half being crypto I
overhear conversations that often go
something like this we don't give a damn
about governments and their laws because
we're building web 3 so to me I think
that's sort of a misunderstanding of
what we're really striving to work
towards you know what we're trying to
work towards in the space effect
specifically it's you know we're trying
to empower sovereign equality in
individuals
it's about creative incentives for human
cooperation and it's about creating good
citizenship among the global community
ultimately governance is a bottom-up
approach goals and value go hand-in-hand
but are created from ongoing community
consensus more than predefined rules and
you know technology may ultimately move
the discussion forward and give us a
framework to build upon
but governance is not a ground 0 issue
and at the end of the day it's about
human behavior and that's it thanks guys
you can find me that's my Twitter and
for Masari
[Applause]
alrighty yeah we have time for one or
two questions does anybody have a
question looking looking looking again I
have oh hey Catherine thanks for the
awesome talk it just struck me a moment
ago as you were describing international
law that there are some parallels with
sorry sorry this is way out there but
like the way that different block chains
are governed right and like systems like
polkadot that are being built that are
saying hey each chain can go off and do
its own thing and can have its own rules
its own governance on chain but then
there's some sort of central system
where they coordinate and there's some
higher level they can communicate and
some level of invariants I'm just
wondering you've ever thought about that
no there's anything we can learn from
international law in building these
systems yeah I mean I think ultimately
what I'm trying to say here is just sort
of like when we're looking to rebuild
any sort of governance systems
let's not totally disregard history
right and so you know and I wanted to
mention this earlier today I didn't have
the quite time to get to it but if you
look at the UN for example and you know
UN is a good example of a body of
contour you know 200 plus countries has
come together voluntarily signed an
agreement and that's fantastic in theory
but when you really look at like for
example two UN security
so that's ultimately five members that
decide everything right and that so the
UN is a member you know it's supposed to
be like two hundred equal members
together but then you have five who
centralize all the power and so that's
an example of a centralized
decision-making body that maybe isn't
for the best interests of people because
we all know how gridlocked it can get I
don't know if I answers your question
but so like going back to what you were
describing on I guess like horizontal
versus vertical would you say that
currently like customary international
law is like there are somewhat similar
to how like a self-regulating like like
SROs work in that there's like a body of
institutions or businesses or
what-have-you
that basically just kind of like make
sure that for the sake of like not
having to like bring in like some
vertical like watchdog they gotta just
kind of like police one another and make
sure that there aren't like bad actors
yeah no that's a great question I think
ultimately like the point I bring up
with customary international law is that
it's very like dialogue focused and it's
very sort of like you put out the
standards among yourselves first and
then that gets codified right so when
you're thinking about like how do you
regulate the crypto industry like how
does I even start with let's start with
like I said earlier standards right like
what so for example Masari is part of
this initiative called the ditch global
digital finance and we had a huge debate
recently over what does it even mean to
be an investor right are you talking
about investor people who are using or
buying tokens for speculative use are
you talking about people who are using
this are you talking about me could
miners technically be a user I mean it's
it's just there's so it's like very
convoluted and like as an industry we
can't even agree on like what these
different standards are like what best
practices are that gets hard for
ultimately everyone to like want to
follow the same set of rules because
definitions are all different so you
know tying it back to like dialogue and
conversations and community consensus I
think that's important like dialogue is
important and we're still very early and
I think that like that's really
important to be having right now
you