Regulating Virtual Currency Payment Systems

Cambridge Law Review (2019) Vol IV, Issue ii, 29-67

University of Hong Kong Faculty of Law Research Paper 2021/017

39 Pages Posted: 29 Apr 2021 Last revised: 4 Jun 2021

Date Written: April 28, 2019

Abstract

This paper examines the functioning of virtual currencies as payment systems through crypto-currency exchanges and the likely impact their integration with traditional payment systems may have on the interdependent global payment systems. Being a potential global transformational phenomenon, should virtual payment systems be regulated like other traditional intermediaries to manage the risks from their operations? Which regulator has the requisite regulatory architecture to comprehend the fast-evolving dynamics of the innovative payment solution and better manage the risks? These are some of the questions attempted in this paper. The paper also examines the role played by central banks as the major regulator of payment intermediaries and their limitations on multinational financial institutions and payment activities. Finally, the paper suggests the adoption of international regulatory bodies as the major regulatory authority for the virtual exchanges in ensuring global cooperation and coordinated implementation of any developed action plan while fostering financial innovation.

Keywords: cryptocurrency, financial regulation, payment systems, systemic risks, bank regulation, Bitcoin, peer-to-peer payment system, virtual currency exchange, Mt Box, Fintech

JEL Classification: E42, E44, E58, F62, G01, G23

Suggested Citation

Animashaun, Sijuade, Regulating Virtual Currency Payment Systems (April 28, 2019). Cambridge Law Review (2019) Vol IV, Issue ii, 29-67, University of Hong Kong Faculty of Law Research Paper 2021/017, Available at SSRN: https://ssrn.com/abstract=3835762

Sijuade Animashaun (Contact Author)

The University of Hong Kong ( email )

Pokfulam Road
Hong Kong, Pokfulam HK
China

HOME PAGE: http://https://www.law.hku.hk/students/sijuade-thakib-animashaun/

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