Regulating Decentralized Cryptocurrencies Under Payment Services Law: Lessons from European Union Law

35 Pages Posted: 27 Mar 2018 Last revised: 15 Jul 2018

See all articles by Asress Adimi Gikay

Asress Adimi Gikay

Brunel University London; Scuola Superiore Sant'Anna di Pisa, Department of Law, Politics and Development (DIRPOLIS)

Date Written: March 1, 2018

Abstract

Several years after the inception of the most dominant cryptocurrency, bitcoin, the European Central Bank in 2015 indicated the need for establishing legal clarity by relevant authorities through explaining how the current legal framework applies to cryptocurrencies. Three years later, no meaningful step has been taken by any of the European Union (EU) institutions including the parliament. By examining the EU’s legal framework governing payments services, including the Single Euro Payment Area (SEPA) Regulation, the Electronic Money Directive, the Payment Services Directive and the proposed AML/CTF Directive, this article concludes that (a) because the existing payment services laws apply to payments effected in currencies (legal tenders) and cryptocurrencies are not defined as currencies under the EU law or the laws of member states, they do not cover cryptocurrencies. It also argues that it is impossible to design sui generis payments services law for cryptocurrencies without curbing their essential features, especially decentralization. Lastly, the article proposes centralization and the creation of state cryptocurrency as possible solutions moving forward and examines their strengths and challenges.

Keywords: Cryptocurrency, Bitcoin, Blockchain, Payment Services, Technical Deficiency, Decentralization, State Cryptocurrency

Suggested Citation

Gikay, Asress Adimi, Regulating Decentralized Cryptocurrencies Under Payment Services Law: Lessons from European Union Law (March 1, 2018). 9 Case Western Reserve Journal of Law, Technology & the Internet 1 (2018) . Available at SSRN: https://ssrn.com/abstract=3142317

Asress Adimi Gikay (Contact Author)

Brunel University London ( email )

Kingston Lane
Uxbridge, Middlesex UB8 3PH
United Kingdom

Scuola Superiore Sant'Anna di Pisa, Department of Law, Politics and Development (DIRPOLIS) ( email )

Pisa
Italy

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