Rethinking Virtual Currency Regulation in the Bitcoin Age

77 Pages Posted: 24 Aug 2014 Last revised: 19 Jul 2015

See all articles by Kevin V. Tu

Kevin V. Tu

University of Maryland Francis King Carey School of Law

Michael Meredith

United States District Court for the Western District of Texas

Date Written: August 22, 2014


This Article investigates an increasingly important yet under-developed body of law: regulation of virtual currency. At its peak in March of 2014, the daily volume of Bitcoin transactions in United States dollars exceeded $575,000,000. The growing mainstream acceptance of Bitcoin, however, is best illustrated by the growing number of leading merchants that have decided to accept Bitcoin payments. While Bitcoin’s rise as an alternative payment method is well-chronicled, Bitcoin’s impact extends further due to its use as an investment vehicle and its ability to spur the growth of an industry of Bitcoin-based businesses. Despite increasingly widespread use, Bitcoin (and other virtual currencies) have largely operated without the burden of regulation. Why? Like the potentially transformative innovations that preceded Bitcoin, virtual currency raises unique challenges for which existing legal models may be unprepared. As policymakers struggle to catch-up, the effort to develop an appropriate regulatory regime for virtual currency is at a critical juncture.

The response in the United States has thus far involved regulatory bodies acting independently to clarify the treatment of virtual currency under a variety of different laws designed to regulate traditional payment systems, financial services, and investments. This Article argues, contrary to this approach, that a narrow focus on the technical application and extension of existing law creates a deficient regulatory regime. Instead, we suggest that policymakers should: (1) engage the various agency stakeholders to promote cross-communication; (2) think more globally about the wide spectrum of issues arising from virtual currency; and (3) embrace the unique and distinct characteristics of virtual currency. In support of this proposition, we show that refocusing on the collection of policy goals advanced by existing law offers policymakers an additional tool to aid in the development of a comprehensive, cohesive, and appropriately-scaled virtual currency regulatory model.

Keywords: Virtual currency, digital currency, cryptocurrency, decentralized, money laundering, payments, payment systems, regulation, financial services, financial institution, bank, banking, consumer protection, money transmission, money transfer, money, Bitcoin, law and technology

Suggested Citation

Tu, Kevin V. and Meredith, Michael, Rethinking Virtual Currency Regulation in the Bitcoin Age (August 22, 2014). Washington Law Review, Vol. 90, 271-347, 2015, UNM School of Law Research Paper No. 2014-28, Available at SSRN:

Kevin V. Tu (Contact Author)

University of Maryland Francis King Carey School of Law ( email )

500 West Baltimore Street
Baltimore, MD 21201-1786
United States

Michael Meredith

United States District Court for the Western District of Texas

200 W. 8th St
Austin, TX 78701
United States

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