Who is Liable for Non-Compliant Cryptocurrency Transactions: Should Transaction Validators be Held Liable?
20 Pages Posted: 19 Apr 2021 Last revised: 10 May 2021
Date Written: April 13, 2021
Abstract
Cryptocurrencies are based on digitally signed updates to a ledger maintained in a decentralized manner according to consensus mechanisms in compliance with consented protocols. The ledger updates are often referred to as transactions and the participants in the consensus mechanisms can be called transaction validators. This paper analyzes whether holding transaction validators liable has a deterrent effect on non-compliant transactions and possible legal bases for enforcing such liability. It is argued that such a liability has a deterrent effect and seems indispensable in a world of mainstream cryptocurrency adoption.
Keywords: Blockchain, Compliance, Cryptocurrencies, Liability, Regulation
JEL Classification: G28, K23, K24, K42
Suggested Citation: Suggested Citation