The Regulation of Cryptocurrencies - Between a Currency and a Financial Product

39 Pages Posted: 13 Feb 2018 Last revised: 25 Jun 2019

See all articles by Hadar Yoana Jabotinsky

Hadar Yoana Jabotinsky

The Hadar Jabotinsky Center for Interdisciplinary Research of Financial Markets, Crises and Technology (HJC)

Date Written: February 7, 2018

Abstract

As cryptocurrencies gain popularity, the issue of how to regulate them becomes more pressing. The attractiveness of cryptocurrencies is due in part to their decentralized, peer-to-peer structure. This makes them an alternative to national currencies which are controlled by central banks. Given that these cryptocurrencies are already replacing some of the “regular” national currencies and financial products, the question then arises: should they be regulated? And if so, how? This paper draws the legal distinction between cryptocurrencies which are in fact currency and those which are securities disguised as currency. It further suggests that in cases where a token is indeed a security, regular securities regulation should apply. In all other cases anti-fraud measures should be in place in order to protect investors. Further regulation should only be put in place if the cryptocurrency starts increasing systemic risk in the general financial system.

Keywords: Cryptocurrencies, Financial Regulation, Securities Regulation, Systemic Risk, Disclosure

JEL Classification: K23, K22

Suggested Citation

Jabotinsky, Hadar Yoana, The Regulation of Cryptocurrencies - Between a Currency and a Financial Product (February 7, 2018). Hebrew University of Jerusalem Legal Research Paper No. 18-10, Available at SSRN: https://ssrn.com/abstract=3119591 or http://dx.doi.org/10.2139/ssrn.3119591

Hadar Yoana Jabotinsky (Contact Author)

The Hadar Jabotinsky Center for Interdisciplinary Research of Financial Markets, Crises and Technology (HJC) ( email )

29 Ha'Oren St.
P.O Box 80
Timrat, 23840
Israel

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