VOLUME 16
THE PROPOSED TAX CONSEQUENCES OF BLOCKCHAIN FORKS
Author: Marisara Meléndez Torres
Introduction
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On August 1, 2017, the software that runs the Bitcoin network was modified prospectively, causing a software spinoff or split that resulted in a separate blockchain with new rules and a shared history with the original Bitcoin blockchain (“BTC”). This spinoff is known as a hard fork. The newly created blockchain is the cryptocurrency Bitcoin Cash (“BCH”). All BTC holders prior to the spinoff automatically received the corresponding rights in the forked chain, effectively granting them an equivalent amount of BCH.
As of 2019, the IRS determined that a hard fork constitutes a realization event, asserting that the coins assigned to legacy coin holders are “received” and therefore subject to taxation as ordinary income. However, this conclusion reflects a fundamental misunderstanding of blockchain technology and its implications for taxation. The inability of the government to accurately classify these transactions hinders its ability to regulate and tax cryptocurrency assets effectively. While it is true that this particular hard fork –BCH– may have benefited some pre-hard fork holders of bitcoin, this purported windfall is not a predetermined characteristic of hard forks and thus, we argue that the subsequent exposures to the forked chain cannot be taxable events. Most importantly, any gain or loss from the sale or disposition of such forked rights should be treated as a capital gain or loss, not as ordinary income. Attorneys, advisors, and ultimately the government needs to consider the insuppressible and parasitic nature of fork formation in a blockchain. Scrutiny of this asset class suggests that blockchains may have more likeness to natural phenomena than to traditional financial assets. Consequently, the appropriate tax treatment of this asset class may well be guided by the treatment of appurtenant water rights as it was in Gladden v. Comm'r, 262 F.3d 851, (9th Cir. 2001).
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EFICIENCIA Y ESPECIALIZACIÓN: EL ARBITRAJE COMO SOLUCIÓN EN DISPUTAS DE SEGUROS DE INTERRUPCIÓN DE NEGOCIOS
Autor: Andrés Benítez Rodríguez
Introducción
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En el ámbito de los seguros comerciales las disputas sobre coberturas de interrupción de negocios representan un desafío, especialmente cuando las empresas enfrentan pérdidas significativas. Estas coberturas, diseñadas para proteger la estabilidad financiera de las empresas, pueden adquirirse como un complemento a las pólizas de propiedad o como pólizas independientes. Sin embargo, la interpretación de los términos y el proceso de reclamación bajo estas pólizas suelen ser motivo de conflicto, especialmente al valorarse las pérdidas y determinarse el alcance de las compensaciones. En este análisis, se explorará cómo el arbitraje ofrece ventajas significativas sobre el litigio tradicional para resolver estas disputas, proporcionando más pericia y eficiencia.
Este ensayo examina los elementos esenciales de una reclamación de interrupción de negocios y su valoración. Entre ellos se incluye el periodo de restauración y los componentes financieros que dan base a la compensación. También se analizará la jurisprudencia que pone de relieve las limitaciones del litigio en estos casos y las inconsistencias y retrasos que las cortes generan. Este escrito sostiene que, pese a algunas limitaciones legales, el arbitraje debería ser el método preferido para resolver disputas de seguros de interrupción de negocios con ventajas en rapidez, pericia, y potencial reducción de costos.
FACTORING IN THE HAND OF GOD: DEVELOPING STANDARD FORCE MAJEURE CLAUSES FOR TRANSNATIONAL BUSINESS
Author: Christian F. Wolpert Gaztambide
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Introduction
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The global nature of modern business has meant that goods once thought exotic are now within the reach of consumers the world away. Great shipping lanes have been stretched across the seas to connect manufacturers, distributors and sellers. Along with this vast network, hubs have been built in strategic locations to manage the task of mobilizing the trillions of dollars in goods traded. Yet, despite all the logistics and planning involved to ensure the optimization of the global supply chain, transnational business is not out of the reach of the hand of God.
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Transnational business is no stranger to difficulties. Certainly, the complexity of global commerce itself makes the system prone to issues. Over time, international mechanisms have been recognized and established to answer the man-made problems it may face. Piracy, for instance, has been addressed through its recognition as a universal crime, and incorporated within the body of international ius cogens. Unforeseen problems, however, have been treated in a less standardized manner. The effects of the recent COVID-19 pandemic, as well as the outbreak of multiple wars in some of the most significant areas of global commerce, have provided the circumstances by which a uniform system to treat the “hand of God” could be developed through the standardization of force majeure clauses for transnational business transactions.
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In this essay, I shall describe the nature of force majeure clauses and the differences these may have across legal systems. I will then discuss the various models proposed by three key transnational organizations, comparing their reach and focus, to then apply to the material. Such a discussion will demonstrate the ways in which transnational actors –mainly business-related entities– are coping with the unforeseen and unforeseeable and thus factoring in the hand of God.
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AYER, HOY Y EL MAÑANA DEL CHEQUE EN PUERTO RICO
Autor: Ralph A. Martínez Rosario
Resumen
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Durante gran parte del siglo XX, los cheques fueron el método de pago no monetario más utilizado en los Estados Unidos. Su popularidad era atribuible al punto de vista práctico: el cheque evita el pago en moneda de curso legal y, una vez cobrado por el acreedor, provee a quien pagó un instrumento cancelado que le sirve como prueba de pago. La exposición de motivos de la Ley de Transacciones Comerciales de Puerto Rico atribuye la mayoría del tráfico de documentos bancarios comerciales en Puerto Rico a los cheques utilizados por los individuos para atender sus compromisos financieros. A través de los años el uso y sentido del cheque ha cambiado desde su procesamiento, su impacto en la banca y en el sistema de pagos, su relevancia en la actualidad, y hasta la posibilidad de un futuro sin cheques.
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Según el Estudio de Pagos de la Reserva Federal el número de pagos de cheques en los Estados Unidos disminuyó por una tasa anual de 7.2% desde 2015 hasta 2018. Mientras que en el año 2000 se pagaron un total de 42,600 millones de cheques, en 2018 solo se pagaron 14,500 millones, lo que representa alrededor de un tercio de la cantidad de cheques pagados en el 2000. En cuanto a la proporción de cheques emitidos durante 2015 por entidades (corporaciones y gobiernos) e individuos, el volumen de cheques fue de un 60% y 40% respectivamente. Esto representó un total de 7,100 millones de cheques emitidos por individuos, del total de 17,900 millones de cheques emitidos.
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Particularmente, en el caso de los cheques emitidos por individuos, su proporción ha disminuido desde el 2000, cuando el 45% de los cheques fueron girados por individuos. Entre 2000 y 2015, el número de cheques emitidos por individuos disminuyó de 19,300 millones a 7,100 millones, lo que representa una caída del 63%. Ello lleva a cuestionar la relevancia del cheque y si se puede continuar atribuyendo a este la característica de ser el mayor documento en tráfico, tal como lo establece la exposición de motivos de la Ley de Transacciones Comerciales de Puerto Rico.
Este escrito explora el uso de cheques como método de pago a través del tiempo. Se persigue establecer la realidad de los cheques dentro del sistema de pagos en Estados Unidos y Puerto Rico. A su vez, se analizan los cambios realizados al Código de Comercio Uniforme (UCC, por sus siglas en inglés) en sus artículos 3 y 4 y los cambios realizados a la Ley de Disponibilidad Acelerada de Fondos, o Reglamento CC, para atender y remover las barreras legales que enfrentaba el cheque electrónico. De igual forma, se analiza el impacto de las tecnologías emergentes y cómo estas provocan que el cheque deje de ser un título para convertirse en una transferencia electrónica. Por último, este escrito esboza una propuesta para eliminar el uso del cheque en Puerto Rico, similar a lo sucedido en ciertos países de la comunidad europea, y plantea las ventajas que esto pudiera representar en nuestro sistema de pagos.
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THE ROLE OF TRANSNATIONAL PRIVATE REGULATION IN STANDARD SETTING AND THE CREATION OF DIFFERENTIATED MARKETS WITHIN THE COFFEE INDUSTRY
Author: Rocío Freytes Martín
Introduction
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Coffee is one of the most traded commodities in the world, with global production averaging over 160 million in 60 kg bags, and consumption over 175 million in 60 kg bags, as of 2021. However, since the 1980s, the international coffee market has been marked by declining and unstable prices, causing a heavy reliance on cheap production for large coffee corporations, and socioeconomic policy concerns for producer states. Meanwhile, consumers have become increasingly concerned with the sustainable and ethical practices of coffee corporations when deciding whether to buy a product. Differentiated concerns between producers and consumers, coupled with the geographical threshold between exporting and importing states have created a push-and-pull environment of opposing preferences within the industry for private and public regulatory systems. Hitherto production has largely taken place in the Global South, with exporters consisting of over 50 developing countries. Meanwhile, the largest consumer nations have typically belonged to the Global North, with the European Union, the United States and Japan being the largest coffee importers in 2021, according to the International Institute for Sustainable Development (“IISD”). While corporations in importing countries focus on the cost efficiency of social and environmental sustainability compliance, exporter countries are more concerned with addressing price instability and providing farmers with support in the face of low prices.
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For over 30 years, the rise of neoliberal ideologies and absence of coordinated state action to regulate the industry have led to the steady development of international private self-regulatory mechanisms and third-party standard-setting certification schemes. Pioneers among these are the Fair-Trade label, and the Rainforest Alliance, which have emerged as private, international initiatives, largely concerned with addressing sustainability issues within coffee’s agricultural production and supply chains. At a local level, intellectual property rights have emerged as tools to create differentiated markets, providing producers with alternative trading opportunities, and adding value to the product, a framework Colombia has been in the forefront of. As the coffee industry continues to be plagued by the whims of an unstable global market, private governance has emerged as a potential tool to address the issues of our global era. This paper compares and analyzes the intra-national and trans-national approaches to regulation within the coffee industry. By focusing on the emergence of an international reputation system through the creation of independent certification schemes, this paper seeks to contextualize the degree to which norms on sustainability practices have been reinstitutionalized and applied within the coffee industry.
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LAS CORPORACIONES ÍNTIMAS EN PUERTO RICO: EL SECRETO MEJOR GUARDADO
Autor: Luis A. Avilés Pagán
Resumen
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Las corporaciones íntimas, conocidas en el derecho anglosajón como close corporations, representan una alternativa atractiva para negocios de pocos socios con altas expectativas de control, participación directa y protección mutua. A pesar de que esta estructura legal moderna y robusta para las entidades jurídicas fue codificada en el Capítulo 14 de la Ley General de Corporaciones de Puerto Rico de 2009, la figura sigue siendo poco conocida y de poca utilización en la práctica jurídica local. Por ello, este artículo examina la naturaleza, ventajas y mecanismos protectores que ofrece este tipo de sociedad, contrastándolo con las corporaciones regulares y las Limited Liability Companies (LLC). Se demostrará que, en múltiples aspectos, las corporaciones íntimas bajo el Capítulo 14 superan en funcionalidad y estabilidad a las formas más comúnmente utilizadas, particularmente en contextos de negocios familiares o cerrados.
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GEOGRAPHICAL INDICATORS: WHAT PUERTO RICO CAN LEARN FROM HAWAIIAN GI PROTECTION OF KONA COFFEE
Author: Stephanie Surillo Rodríguez
Introduction
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I have a theory about what the future looks like for rural communities in the United States. It is a theory that sees a shift in what people want out of life. I believe that there is a growing unrest in the cities, as people desire to live closer to nature, closer to their families in smaller towns, or simply want out of the more fast-paced life that has resulted from forced city living. I say forced because the industrial revolution marked a change from an agrarian economy to an industrial one where our ancestors were driven towards the cities in droves in order to obtain work, and the United States was left with collapsing rural communities who saw dwindling populations and low job opportunities for those who chose to stay. My theory is that we may be witnessing a change. Propelled by the pandemic and the feelings of enclosure and isolation in large cities, more and more people have moved to smaller towns and even rural areas in search of a life of their own devising. With remote work becoming more common, as well as the desire to return to a more hands-on and agrarian way of life, there has been a reawakening where more and more people have chosen to escape the city and make a life for themselves and their families in midsize cities and towns and more rural areas.
The problem that those who would make the move face is the lack of job opportunities and access to nearby entertainment, hospitals, shopping, etc. With this problem as a backdrop, I argue that Geographical Indicators or certification marks can be a starting point in revitalizing rural and agriculture-based economies. When intellectual property law is used to protect the produce grown in rural areas, not only do the producers and their local communities benefit directly from these protections, but I argue that society as a whole benefits since providing space for rural communities to thrive economically is also a way to give the general population freedom of choice when it comes to deciding on where to live. When we have a strong rural economy, there is less pressure to live close to cities for the greater likelihood of employment, and those who desire to live in rural areas have better opportunities to do so because of the possibility of employment created by thriving rural communities that benefit from GI protections.
This paper focuses on Puerto Rico. This island holds a special place in the hearts of many who have had to leave because of the lack of job opportunities and economic growth. This is a problem that has outgrown rural towns and has become an island wide issue. If Puerto Rico could obtain a successful GI, or certification mark, particularly for specialty coffee, we could see a significant change in our rural communities, and down the road we could only hope to revitalize our economy by increasing the island population and work opportunities. With this background and dream of rural development in mind, for the purposes of this paper, the questions that guided my research were:
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What can Puerto Rico learn from Hawaiian coffee’s Kona certification mark in its implementation of its own specialty coffee certification mark?
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How can trademark protection for Puerto Rican coffee benefit the local rural economy?
The reason I look to Hawaii is because it’s Kona mark is one of the most effective and well-known certification marks in the United States. It shares the same federal legal framework as Puerto Rico and since this is the case, it can shine light on what can and cannot be implemented in Puerto Rico effectively and under similar conditions. Finally, I will study the legal framework in Puerto Rico and what can be learned from Hawaii when it comes to protecting its products under trademarks or certification marks.