How Are Cryptocurrency Systems Represented and Who is Liable for Misrepresentation?

26 Pages Posted: 1 Oct 2020

Date Written: August 16, 2020


Cryptocurrency systems are characterized by arcane technologies and complexity. They may be intended to replace existing infrastructures and assets, but they also serve ideological, political, and speculative agendas. Grand narratives, analogies, mathematical models, and fancy charts, among others, are used to represent their features. Stakeholders often rely on others' representations in their decision-making regarding involvement in cryptocurrency systems as, inter alia, investors, users, validators, and developers of services. Such representations may be misrepresentations for various reasons, such as bias from profit-motivated incentives, lack of understanding, or simply analogies and simplifications gone wrong. This paper addresses the representation of cryptocurrency systems and liability for misrepresentation. Many misrepresentations are likely to escape liability except when special duties to not misrepresent are present. However, by creatively exploring liability theories and causal concepts, inadequate liability gaps may be narrowed. Well-designed misrepresentation liability can serve as regulatory policy for cryptocurrency systems.

Keywords: Blockchain, Complex Systems, Cryptocurrencies, Decentralized Finance, Liability, Misrepresentation, Regulation

JEL Classification: E42, K24, L17

Suggested Citation

Østbye, Peder, How Are Cryptocurrency Systems Represented and Who is Liable for Misrepresentation? (August 16, 2020). Available at SSRN: or

Peder Østbye (Contact Author)

Norges Bank ( email )

P.O. Box 1179
Oslo, N-0107

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