# Lessons from International Law: How to reframe our thinking around crypto governance by Katherine Wu

- Channel: [Devcon](https://streameth.org/devcon)
- Date: 2019-10-09
- Duration: 15:56
- Topics: blockchain, smart contracts, distributed ledger, Science & Technology
- Watch: https://streameth.org/watch/yt-_0RSB8lrGYY
- YouTube: https://www.youtube.com/watch?v=_0RSB8lrGYY

## Description

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https://archive.devcon.org/archive/watch/4/lessons-from-international-law-how-to-reframe-our-thinking-around-crypto-governance

Governance challenges have plagued international politics since the beginning of time. As we think about governance in crypto, it's critical to understand the history of politics and law - because governance is inherently about human nature and behavior. Whether it's smart contracts, proof of stake, centralized nodes, or miner consolidation concerns, these are all rooted in age-old governance problems presented in a new form. In my presentation, I will cover the foundational principles of international law, its evolution, and how we can take those lessons and context and think about governance from a new perspective. Specifically, I will use examples of current global governance organization such as the UN (and its predecessor, the League of Nations), the ICJ (International Court of Justice), and the lessons that these organizations hold for the emerging field of crypto governance.

Speaker(s): Katherine Wu
Skill level: Beginner
Track: Society and Systems
Keywords: history, UN, global

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## Transcript

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