Cryptocurrency Transfers in Distributed Ledger Technology-Based Systems and Their Characterisation in Conflict of Laws

Justin Borg-Barthet, Katarina Trimmings, Burcu Yüksel Ripley and Patricia Živković (eds), From Theory to Practice in Private International Law: Gedächtnisschrift for Professor Jonathan Fitchen (Hart, Forthcoming)

15 Pages Posted: 25 Jan 2023

Date Written: July 31, 2022

Abstract

In modern payment systems that are used today, non-cash payments are predominantly executed by banks, acting as an intermediary between payers and payees, in the form of bank-to-bank (interbank) funds transfers through bank accounts. A fundamental structural change has been introduced to this method of making payments with the emergence of cryptocurrencies underpinned by distributed ledger technology (DLT). This has enabled that non-cash payments can be made outside of the banking system directly from payer to payee and secure digital records can be held independently of the usual central trusted authorities such as banks. This global paradigm shift, starting with the possibilities of cryptocurrencies in payments, has introduced new challenges for private international law. The issue of characterisation of cryptocurrency transfers in DLT-based systems is at the heart of the some of the key private international law questions, including the determination of the law applicable to cryptocurrency transfers. The efforts have thus far mainly focused on characterising cryptocurrencies themselves as money, property or claims and a discussion around the application of the lex situs as the predominant connecting factor in international property law and the consideration of the relevant conflict of laws rules regarding the transfer of intangibles for cryptocurrency transfers. The purpose of this chapter is to offer a new perspective on the characterisation of cryptocurrency transfers taking place within DLT-based cryptocurrency systems by utilising an analogy to electronic funds transfers and funds transfer systems under unitary and segmented approaches and consider the potential effects of both approaches on the law applicable to cryptocurrency transfers.

Keywords: Cryptocurrency transfer, electronic funds transfer, distributed ledger technology, blockchain, characterisation, conflict of laws, private international law, applicable law

JEL Classification: G10, G15, K33, O33

Suggested Citation

Yüksel Ripley, Burcu, Cryptocurrency Transfers in Distributed Ledger Technology-Based Systems and Their Characterisation in Conflict of Laws (July 31, 2022). Justin Borg-Barthet, Katarina Trimmings, Burcu Yüksel Ripley and Patricia Živković (eds), From Theory to Practice in Private International Law: Gedächtnisschrift for Professor Jonathan Fitchen (Hart, Forthcoming), Available at SSRN: https://ssrn.com/abstract=4336222 or http://dx.doi.org/10.2139/ssrn.4336222

Burcu Yüksel Ripley (Contact Author)

University of Aberdeen, School of Law ( email )

Taylor Building
King's College
Aberdeen, Scotland AB24 3UB
United Kingdom

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