The regulation of virtual currencies in comparative perspective: new private money or niche technological innovation?

Hicham Sadok and Mohammed El Hadi El Maknouzi

Journal of Money Laundering Control, 2020, vol. 24, issue 4, 712-724

Abstract: Purpose - This paper aims to situate virtual currencies (VCs) in a landscape of regulatory questions that help orient the direction and purpose of a possible legal approach, vis-à-vis this relatively recent technological and financial phenomenon. Design/methodology/approach - The triangulation of historical overview and comparative examination of regulatory interventions allows to situate VCs in relation to a range of regulatory topics: from monetary policy, to fundraising and money laundering. First, the paper charts the emergence of VCs in time, and situates this innovation on a continuum with historically observed forms of private money. Second, it provides an overview of different regulatory approaches that can be observed on a comparative landscape. Findings - At present, several features of VC schemes (particularly their deflationary character and fixed supply) prevent them from working as private money, competitive with sovereign currency. Instead, three specific kinds of uses – as security tokens, utility tokens and currency tokens – offer a more realistic picture of the risks and potentials associated with different forms of use. Originality/value - The paper puts forth an integrated framework for devising a more sensitive regulatory approach towards VCs.

Keywords: Virtual currency; Regulation; Sovereignty; Private money; Tokens (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jmlcpp:jmlc-09-2020-0101

DOI: 10.1108/JMLC-09-2020-0101

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