Regulating Virtual Currencies : a legal assessment of digital representations of value under financial and economic law
The development of e-commerce has not only given rise to new payment methods – for instance using mobile technologies – but has also resulted in the creation of various types of virtual currencies, such as cryptocurrencies. At the present moment, the legal status of these virtual currencies remains unclear, with different governmental entities holding rather divergent opinions on the matter. What is clear, is that there is currently no comprehensive legal framework in place that can fully regulate all aspects of virtual currencies. At the level of the EU, the potential application of existing legal frameworks regarding non-physical currencies and payment methods – the E-money Directive and the Payment Services Directive – to these developments remains unclear at best. This legal uncertainty can be held to pose clear risks to all stakeholders confronted with virtual currencies, be it consumers, merchants or service providers.
The goal of this research is to contribute to establishing legal certainty for all stakeholders involved. To achieve that goal, this research analyzes whether the aforementioned existing legal frameworks can apply or – where gaps are found in those frameworks – whether they should be amended to apply to virtual currencies. Where these options are unsuccessful, it will be analyzed whether avenues for separate regulation should be explored. Given the inherent cross-border nature of virtual currencies, the research maintains an international outlook by including, inter alea, functional comparative legal research.