1/ Legal regulation of MEV extraction is one of the largest threats to decentralized, permissionless crypto that almost no one is talking about. This is not just about “🥪 > straight to jail”. Imagine compulsory licensing for block producers or prosecutions of validators…

2/ It may be a blessing in disguise that MEV hasn’t received much attention from the law/policy world. Yes, it means that many in crypto face legal risks that are hard to assess. But it also means that there may still be time to front-run the law. How?

3/ The big legal question is not about whether there will be new rules for MEV extraction, but how to apply e.g. the anti-market manipulation rules that already exist in the U.S. or the EU. Because this is unclear, it can still be influenced with good arguments.

4/ I tried to sketch what sort of arguments should be considered and what consequences they may have in my new paper “MEV on Ethereum: A Policy Analysis” ( ssrn.com/abstract=4332703 ). Have a look, it’s not just for lawyers.

5/ First, we know so little about net social welfare effects of MEV extraction, that we really need to study them more before we conclude what the law should do. Researchers eg @nikete @tarunchitra @barnabemonnot are on the case, but more is needed especially in empirical econ

6/ Second, we need to be careful about labels like “toxic” MEV as they may influence intuitions of lawyers/policymakers, despite being simplistic and unhelpful. I discuss @sxysun1 ‘s Mafia/Moloch/Monarch model to show that more nuance is useful.

7/ Third, effects of different kinds of MEV extraction and its infrastructure on the broader ecosystem (Ethereum and beyond) should be treated as seriously as effects on any single transaction. This argument may work both for and against regulatory action. It’s complicated.

8/ I have much more to say in this paper and in new work coming out soon. If you want to discuss this issue, I’m doing a Twitter space with @EuCInitiative today (25 Jan)

9/ If you want to dive even deeper into MEV & law, read this draft (only 72 pages!) that I wrote with @should_b_workin and @NatashaVasan (the paper is still open to revision):
papers.ssrn.com/sol3/papers.cfm?abstract_id=4187752