Non-fungible tokens (NFTs) are used in numerous markets for collectibles, art, securities, and commodities. These are different markets, and there is no regulatory framework for all NFTs. To determine a proper legal regime, it is essential to locate the market to which an NFT belongs. This task requires a deep understanding of the economic realities of the associated rights, assets, and transactions. Economic-reality-based interpretations should provide a solid footing for better regulation of NFTs in the US and other jurisdictions grappling with NFT regulation. The new cryptoasset regime in the EU already incorporates a “substance over form” approach. In the US, courts have been successfully applying the Howey test to examine transactions and schemes and establish whether securities law should apply to cryptoassets. In 2023, the SEC and a US federal district court applied the Howey test to demonstrate why and how securities law built for legacy markets where mainstream assets are fungible could apply to transactions in non-fungible assets. The decisions are an example of establishing economic realities of transactions with novel assets regardless of the underlying technologies on which the assets are built. An economic reality approach should help courts and other policy-makers ascertain to which market an NFT belongs and which corresponding legal regime should govern.

The popularity of digital assets and blockchain solutions is accelerating. This chapter explores the environmental, social, and governance (ESG) impact of digital assets due to increasing institutional and retail investors participation. Blockchain technology can help financial institutions drive favourable enterprise ESG outcomes.

This chapter explores the ways in which personal data and digital assets might be misused by strangers and third parties in the context of asset management. As global asset management markets move increasingly to handling investments with the aid of autonomous platforms and algorithms, it is important to be able to identify entities, investors and their agents. Decision-making and transactions need to be trackable. Asset and wealth managers also gather, store and use the personal information of their customers. At the heart of these arrangements is trust. However, the threat of cyberattack or systemic failures gives rise to the question of who should be made liable when losses arise from malicious or negligent data breaches. Often, it is not possible to identify a nefarious individual. Importantly, in the context of asset management, liability for knowing receipt, knowing dealing or knowing assistance may attach to persons dealing with trustees and other types of fiduciaries. This is not an area of law to which a universal regime of absolute liability applies. For this reason, it is useful to identify types of risk and the means to address them.

The law as a structural system attempting to stabilize the social order is confronted with far-reaching technological advances that have the potential to undermine traditional normative principles. Particularly in a digital and globalized environment, a broader and better coordinated rule-making approach is needed. Legal interoperability as process of making normative rules cooperate across jurisdictions to avoid a fragmented landscape gains importance. In view of the technological innovations an appropriate international framework for the data-driven world should implement three basic regulatory principles, namely (i) transparency, (ii) accountability, and (iii) safety and robustness, leading to trust and traceability. Furthermore, such a framework must contribute to the avoidance of distortions caused (i) by an anticompetitive behavior of market dominant enterprises, (ii) by a not justified denial of network neutrality, and (iii) by the imposition of inappropriate data localization rules. A new digital trade regime overcoming the outdated goods’ and services’ classifications and encompassing international regulatory cooperation is also needed in view of overcoming the present tensions in WTO law and of developing an appropriate framework for digital assets. The new business models with tokenized values must become part of the trade rule framework with regulatory elements being an enabler of digital innovation.

1. To define economic exposure and its strategic significance for the MNE.

2. To describe the various approaches to manage and minimize economic exposure.

3. To explain the added complexities surrounding economic exposure when MNEs operate multiple business models, following from a high level of diversification.

4. To introduce a new-economy financing tool, namely, crowdfunding, that could be used by resource-constrained MNEs to raise financial resources and to manage potential economic exposure across national borders.

5. To explain the linkages between the MNE’s administrative heritage and its organization of the risk exposure management function, thereby also paying attention to the advent of digital assets.