The Strengthening Case to Prohibit Cryptocurrencies by Law

Abstract

What are cryptocurrencies? They are created (or mined) by the solving of complex mathematical problems that verify transactions – just a chain with data, no backing with real assets and no issuance as a medium of exchange by a central bank! Therefore, the word ‘cryptocurrency’ can be considered either an erroneous term or a well-devised marketing gimmick. In June 2022, Bill Gates, one of the titans in the IT world, dismissed crypto as an asset class 100% based on greater-fool theory. While I agree with him, the problem is that there are many who do not have proper understanding of what crypto ‘currencies’ are. For instance, the recent demise of Celsius Network left 1.7 million customers – attracted by promises for returns of up to 18% annually – unable to recover around $4.7 billion. Apart from ample opportunities for speculation and scams, the crypto zone offers criminals a haven for money laundering – and thus facilitates crime. This paper analyses the interests behind the crypto hype and argues that the use of cryptocurrencies should be prohibited by law – both internationally and within national borders.

Keywords: Cryptocurrencies, Speculation, Crime

JEL Classification: G10, G14, G18, G53, H26, K24, K33