Regulatory Issues and Challenges Presented by Virtual Currencies

4 Pages Posted: 20 Jun 2017

See all articles by Joanna Caytas

Joanna Caytas

University of Oxford, Nanotechnology for Medicine and Health Care

Date Written: May 30, 2017

Abstract

There is little doubt that virtual currencies are here to stay in one form or another, and as means of payment, they invite if not require regulation and standardization to avoid abuse. Stakeholders of virtual currency regulation are companies involved in the blockchain economy, both new entrants and those already controlling part of the market; governments regulating both economic activity and consumer protection; and consumers. The interests of those parties naturally conflict, and given governmental regulatory powers, it is understandable that, faced with the significant risks and difficulties in coming up with a comprehensive regulatory concept, governments take a precautionary stance of wait and see, while in some cases leaning towards a prohibition of virtual currencies. But if regulators could start, more modestly, by finding ways to monitor virtual currency transactions and reliably identify their counterparties, the problem of money laundering and terrorist finance would be considerably easier to resolve than if conspirators were openly using bank wires and accounts in their own names. The problem, then, is not that it is impossible to control decentralized virtual currencies, but that state actors lack tools to decipher digital currency networks and gain access to the full measure of information contained therein. That, however, is more a question of cryptography and general computer science than of alien decentralized structures where traditional surveillance methods, such as wiretapping, simply will no longer work.

Keywords: bitcoin, blockchain, cryptocurrencies, digital currencies, distributed ledger, fintech, virtual currencies, ethereum

Suggested Citation

Caytas, Joanna, Regulatory Issues and Challenges Presented by Virtual Currencies (May 30, 2017). Columbia Business Law Review, May 2017, Available at SSRN: https://ssrn.com/abstract=2988367

Joanna Caytas (Contact Author)

University of Oxford, Nanotechnology for Medicine and Health Care ( email )

Oxford
United Kingdom

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