Legal Challenges of Cryptocurrencies: Isn’t It Time to Regulate the Intermediaries?

Sotiropoulou Anastasia () and Ligot Stéphanie ()
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Sotiropoulou Anastasia: Professor of Private Law at the University ofOrléans, Labex-Refi. The author has presented a summary version of this article at ESMA, on January 29, 2019. France
Ligot Stéphanie: PhD in Management at the UniversityParis1 Panthéon-Sorbonne, PRISM Sorbonne and Labex-Refi, France.

European Company and Financial Law Review, 2019, vol. 16, issue 5, 652-676

Abstract: In only one decade, cryptocurrencies have witnessed significant growth, with Bitcoin being the most dominant one. They are not efficient payment methods, although they bring some benefits linked to the underlying technology they use (Blockchain). In reality, they function more as investment assets than as payment instruments and pose various risks, which are very similar to those encountered on capital markets (price volatility, fraud, market manipulation). In order to deal with these risks, regulation should apply to intermediaries who provide services in relation to cryptocurrencies, such as crypto wallets, operation of crypto exchanges and brokerage. To this end, the European legislator should consider two options. It could, on the one hand, bring cryptocurrency service providers within the scope of the existing financial services regime and thus modify MIFID II in order to include cryptocurrencies in the list of financial instruments. The European legislator could also, on the other hand, aim at creating a new appropriate and proportionate regime that draws on the existing one. Insofar as the existing regulatory framework was not designed with cryptocurrencies in mind and as some of the current rules may not be tailored to the specificities of these assets, the second option is preferable.

Date: 2019
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DOI: 10.1515/ecfr-2019-0023

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