Shaping Cryptocurrency Gatekeepers with a Regulatory 'Trial and Error'

4th Workshop on Coordination of Decentralized Finance

21 Pages Posted: 5 Apr 2023 Last revised: 7 Apr 2023

See all articles by Marilyne Ordekian

Marilyne Ordekian

University College London - Department of Computer Science; University of Cambridge - Computer Laboratory

Ingolf Becker

University College London

Marie Vasek

University College London - Department of Computer Science

Date Written: February 1, 2023

Abstract

In the past fifteen years, cryptocurrencies have grown from a whitepaper released on a mailing list to an ecosystem supporting millions of transactions a day using a whole host of technology never imagined before. However, governments have been slow to keep up. We present an analysis of regulatory developments from within the EU and by the Financial Action Task Force (FATF). These regulatory responses focus on intermediaries such as cryptocurrency exchanges, and wallet providers. We trace the AML/CFT policy recommendations made by the FATF, and examine the EU’s Fifth Anti-Money Laundering Directive and upcoming Markets in Crypto-Assets (MiCA) regulation. Here we find a natural tension: the pace of regulation is slower than the pace of technology, so the scope is non-comprehensive, yet current trials to accelerate this pace are leading to subtle conflicting errors. These findings present a deeper understanding of the ongoing regulatory dilemma, its essence, and suggest directions for the future of cryptocurrency regulation.

Keywords: cryptocurrency, regulation, FATF, AMLD5, MiCA

Suggested Citation

Ordekian, Marilyne and Becker, Ingolf and Vasek, Marie, Shaping Cryptocurrency Gatekeepers with a Regulatory 'Trial and Error' (February 1, 2023). 4th Workshop on Coordination of Decentralized Finance, Available at SSRN: https://ssrn.com/abstract=4398362 or http://dx.doi.org/10.2139/ssrn.4398362

Marilyne Ordekian (Contact Author)

University College London - Department of Computer Science ( email )

United Kingdom

University of Cambridge - Computer Laboratory ( email )

15 JJ Thomson Avenue
William Gates Building
Cambridge, CB3 0FD
United Kingdom

Ingolf Becker

University College London ( email )

London
United Kingdom

HOME PAGE: https://ibecker.eu

Marie Vasek

University College London - Department of Computer Science ( email )

United Kingdom

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