Cryptocurrencies and Market Abuse Risks: It's Time for Self-Regulation

Abstract

The beginning of 2018 has been marked by a high price volatility on crypto-currency markets, where even the price of dominant market share crypto-currencies like Bitcoin, Ripple and Ether has fluctuated substantially.

While quite a bit of emphasis has been given to the reasonableness of the value of the crypto-currencies (or some would say, the lack thereof), and the regulatory oversight on the offering of such crypto-currencies to the public, namely the process called Initial Coin Offering (ICO), the risks of market abuse have been far less discussed, not to say properly dealt with.

Market abuse risks have not been eliminated by distributed ledger technology (DLT), and, given the nature of unregulated ICOs or crypto-currencies investments, such risks are, in many ways, far greater.

However, as analyzed in this paper, the application of market abuse regulations to crypto-currencies in the European Union and in Israël appears to be unclear.

Special Counsel Roy Keidar, of Israeli law firm Yigal Arnon & Co, and Stephane Blemus, legal counsel in French law firm Kalexius, examine the regulatory difficulties in the burgeoning cryptocurrency markets, and call for the adoption of self-regulatory measures by market participants.

Keywords: Cryptocurrencies, CryptoAssets, Market Abuse, Blockchain, Distributed Ledger Technology, DLT, Token, Initial Coin Offering, ICO, ITO, Bitcoin, Ethereum, FinTech, Securities Law

JEL Classification: D23, D78, E40, G28, K11, K12, K42, L86, O33