Regulation Of Cryptocurrencies Research Articles

Free banking theory: literature review and relevance to the regulation of cryptocurrencies debate

PurposeFree banking theory, as developed in Adam Smith’s 1776 treatise, “The Wealth of Nations” is a useful tool in determining the extent to which the “invisible hand of the market” should prevail in regulatory policy. The purpose of this study is to provide a timely review of the literature, evaluating the theory’s relevance to regulation of financial technology generally and cryptocurrencies (cryptos) specifically.Design/methodology/approachThe methodology is qualitative, applying free banking theory as developed in the literature to technology-defined environments. Recent legislative developments in the regulation of cryptocurrencies in the UK, European Union and the USA, are drawn upon.FindingsParticipants in volatile cryptocurrency markets should bear the consequences of inadvisable investments in accordance with free banking theory. The decentralised nature of cryptocurrencies and the exchanges on which these are traded militate against coordinated oversight by central banks, supporting a qualified free banking approach. Differences regarding statutory definitions of cryptos as units of exchange, tokens or investment securities and the propensity of these to transition between categories across the business cycle render attempts at concerted classification at the international level problematic. Prevention of criminality through extension of Suspicious Activity Reporting to exchanges and intermediaries should be the principal objective of policymakers, rather than definitions of evolving products that risk stifling technological innovation.Originality/valueThe study proposes that instead of a traditional regulatory approach to cryptos, which emphasises holders’ safety and compensation, a free banking approach combined with a focus on criminality would be a more effective and pragmatic way forward.

Into the ether or the state? Legibility theory and the cryptocurrency markets

AbstractThere is substantial cross-national variation in the level of regulatory clarity surrounding cryptocurrencies. What explains these differences? And, more broadly, what drives the divergent historical development of market regulation in different jurisdictions? To answer these questions, we present a new conceptual framework centered on the concept of market legibility. This term, inspired by the sociological literature, refers to the extent to which markets are made legible to the state through standardization. We contend that state supply of, and market demand for, legibility drives the primary political-economic dynamics of market regulation. Specifically, these factors combine to produce ideal type states of legibility that correspond to both distinct stages of market development and the relative level of regulatory clarity in any one jurisdiction. This framework is utilized to conduct a comparative historical analysis of cryptocurrency regulation in the EU, US, UK, and Japan. By performing these tasks, this article corrects the common assumption that states are constantly striving to impose their authority on unwilling markets. It demonstrates instead that state and private actor preferences to make markets legible vary, conditioning, in turn, the political economy of regulatory governance.

Do cryptocurrency investors in the UK need more protection?

PurposeThe existing literature offers various perspectives on integrating cryptocurrencies into investment portfolios; yet, there is a gap in understanding the behaviours, attitudes and cross-investment links of individual investors. This study, grounded in the modern portfolio theory and the random walk theory, aims to add empirical insights that are specific to the UK context. It explores four hypotheses related to the influence of socio-demographics, digital adoption, cross-investment behaviours and financial attitudes on cryptocurrency owners.Design/methodology/approachThis study uses a logistic regression model with secondary data from the Financial Lives Survey 2020 to assess the factors impacting cryptocurrency ownership. A total of 29 variables are used, categorized into four groups aligned with the hypotheses. Additionally, hierarchical clustering analysis was conducted to further explore the cross-investment links.FindingsThe study reveals a significant lack of diversification among UK cryptocurrency investors, a pronounced inclination towards high-risk investments such as peer-to-peer lending and crowdfunding, and parallels with gambling behaviours, including financial dissatisfaction and a propensity for risk-taking. It highlights the influence of demographic traits, risk tolerance, technological literacy and emotional attitudes on cryptocurrency investment decisions.Originality/valueThis study provides valuable insights into cryptocurrency regulation and retail investor protection, underscoring the necessity for tailored financial education and a holistic regulatory approach for investment products with comparable risk levels, with the aim of minimizing regulatory arbitrage. It significantly enhances our understanding of the unique dynamics of cryptocurrency investments within the evolving financial landscape.

Some aspects of legal regulation of cryptocurrency circulation in Ukraine

The impact of modern information technology has led to the emergence of a new form of currency – cryptocurrency, based on blockchain technology. This study aims to analyze the existing legal framework and delve into potential ways of legal regulation of activities related to the circulation of cryptocurrencies, in particular bitcoin. To achieve this goal, the study used a comprehensive set of both general scientific and specialized cognitive methods, including the comparative legal method, the systemic and structural method, methods of generalization, analysis and synthesis.
 The study clarifies the essence of blockchain-based cryptocurrencies as an alternative to traditional fiat currencies based on the fundamental principle of decentralization. It is noteworthy that among the many cryptocurrencies, bitcoin stands out with a distinctive feature called “hardness,” which gives it the properties of “digital gold.” This quality makes bitcoin a powerful means of preserving value, like precious metals, strengthening its status in global finance.
 In addition, the study outlines the current state of legal regulation of relations related to the circulation of virtual assets. A thorough analysis of the existing legal framework and its effectiveness in addressing the unique challenges posed by decentralized currencies has also been conducted.
 The study pays considerable attention to the prospects for the development of legal regulation of cryptocurrencies, which will consider the dynamic nature of virtual assets.
 To summarize, this study contributes to the understanding of the economic intricacies inherent in blockchain-based cryptocurrencies, with a special emphasis on the “hardness” of bitcoin as a distinguishing factor. In addition, the study sheds light on the current state of legal regulation of virtual assets, paving the way for insightful predictions of the future regulatory landscape. This work not only adds to the academic discourse around cryptocurrencies, but also serves as a valuable resource for policymakers, practitioners and academics grappling with the challenges and opportunities presented by this new financial paradigm.

Analysis of U.S. and Hong Kong Cryptocurrency Regulation Approach

Cryptocurrencies have been defined and regulated differently in all corners of society. Much research has been made on countries' institutional measures to consummate regulations toward cryptocurrencies further. This paper explores the definition and nature of cryptocurrencies through a literature review method. The nature of cryptocurrencies has directly led to their benefits and misuse. This paper also explores the regulatory measures made by the U.S. and the flaws revealed in the Coinbase Case and Ripple Case. The ambiguous definition between regulatory departments and overlapping law enforcement power has made investors not knowing what course to take. New measures are taken in Hong Kong through a compulsory licensing system and laying major responsibility on platform service providers. This paper examines the new efforts and proposes some potential flaws under the new regulatory system. The Hong Kong regulatory approach is believed to provide insight and reference for other markets that would like to include cryptocurrencies into regulation.

The Regulation of Cryptocurrencies in the United States of America

The Regulation of Cryptocurrencies in the United States of America

REGULATION OF CRYPTOCURRENCIES IN THE EU AND UKRAINE: CHALLENGES AND PROSPECTS

In Ukraine, the regulation of cryptocurrencies is still in the formative stage. Over the past few years, significant steps have been taken toward legalizing the cryptocurrency market, including the adoption of the "On Virtual Assets" law, which has been a crucial step toward regulating this segment of the financial market. However, despite considerable progress, challenges remain. It is necessary to ensure the harmonization of national legislation with international standards, which is essential for Ukraine's integration into the global financial system and for attracting investment. The development of cryptocurrencies and financial technologies has a significant impact on traditional financial systems. They open up new opportunities for investors and businesses by reducing the costs of financial transactions and increasing access to financial services. However, these innovations also create new challenges related to security, fraud, and maintaining financial stability. The growing popularity of cryptocurrencies forces regulators to adapt their approaches and implement new control mechanisms. Regulating cryptocurrencies in the EU and Ukraine is a complex and multifaceted process that requires consideration of financial stability, security, and regulatory requirements. On the one hand, EU countries strive to create a unified legal framework for cryptocurrencies that will ensure transparency and reliability in the market. On the other hand, Ukraine is taking its first steps toward regulating this new financial instrument, focusing on integrating with international standards and adapting to new challenges associated with the development of financial technologies. However, to succeed in regulating the cryptocurrency market, a number of key issues need to be addressed. One of the most important aspects is ensuring the proper protection of consumer and investor rights. This includes the implementation of effective mechanisms to protect against fraud, illegal financial transactions, and abuses related to cryptocurrencies. Another important issue is the taxation of transactions involving virtual assets, which requires government agencies to develop clear rules and procedures.

Cryptocurrency Regulations: The Indian Scenario

Cryptocurrency Regulations: The Indian Scenario

Crafting the Future of Finance: A Comparative Analysis of Cryptocurrency Regulation in the Global Economy

Crafting the Future of Finance: A Comparative Analysis of Cryptocurrency Regulation in the Global Economy

CRYPTOCURRENCY DALAM KACA MATA HUKUM ISLAM DAN HUKUM NEGARA INDONESIA

<p><em>In The digital era, cryptocurrency is one of the innovations created from human dissatisfaction with the existing financial system, thus giving birth to a digital currency that has the same function as other currencies, but does not have a physical form like currency in general, but in the form of a digital currency data blocks, and is able to document transactions directly without the help of third parties through a network called Blockchain. Although it is considered a substitute for future digital currencies and provides many benefits to its users, the regulation and legality of cryptocurrencies are still questioned, especially in Islamic economic principles. This study aims to find out more about the description, regulation and legality of cryptocurrencies in Indonesia and what the perspective of cryptocurrency in Islamic financial principles. The research model used is library research, by collecting data in the form of journals, books, websites, and other objects that are considered relevant and then carried out an in-depth study through descriptive qualitative analysis methods.</em></p>

Digital currencies and their regulation: current challenges and monetary policy analysis

The article thoroughly investigates the topic of development and regulation of digital currencies. Considering the global spread of digital assets, particularly cryptocurrencies, the article analyzes current challenges arising in the context of monetary policy and financial stability. The article examines the main concepts of digital currencies, including blockchain technologies and decentralized finance, as well as the characteristics of the approach to regulating these new assets in view of potential challenges for lawmakers, regulators, and central banks. The impact of digital currencies on monetary policy is analyzed in terms of potential effects on macroeconomic development: inflation, currency control, and financial stability. Also, the challenges and opportunities that digital currencies present for the traditional banking system are discussed. Monetary regulation of cryptocurrencies is a critically important aspect within the broader regulatory spectrum, involving supervision and control of digital currencies by central authorities, both from the perspective of fiat currencies and in terms of the processes of digitization overall. Cryptocurrencies, such as Bitcoin, typically have a capped supply, distinguishing them from traditional fiat currencies. This impacts monetary policy instruments like interest rates and money supply control, as there is no central authority regulating these parameters. Digital assets seamlessly operate across borders, challenging traditional structures of monitoring and controlling international transactions, making them vulnerable to cyber attacks and fraud. Especially in the early stages of development, cryptocurrencies may lack clear foundations or intrinsic value, unlike traditional assets such as stocks, often evaluated based on quarterly reports, earnings, and transparent financial indicators. Cryptocurrencies may be subject to more subjective influences, such as the impact of social media or the media, potentially leading to the formation of a phenomenon known as the ‘cryptocurrency bubble,’ driven by unjustified fluctuations in the prices of Bitcoin and other altcoins. This phenomenon resembles economic bubbles in traditional financial markets, characterized by sharp increases in asset prices driven by speculation and excessive buying rather than fundamental factors like underlying value or utility. The article provides general recommendations and practices for the regulation of digital currencies, supporting the innovative nature of digital assets in contemporary realities. With a primary focus on digital assets and their regulation, particularly cryptocurrencies, the article examines current challenges in the realm of monetary policy and financial stability, as well as fundamental concepts related to digital assets.

TRENDS AND PERSPECTIVES IN CRYPTOCURRENCIES RECOGNITION ACCORDING TO INTERNATIONAL ACCOUNTING REGULATION

In this paper, the topic of accounting treatment of cryptocurrencies is examined through the lens of International Financial Reporting Standards (hereinafter: IFRS). An overview of the current body of research in this area is presented, along with recommendations for further improvements in cryptocurrency accounting records. This paper is based on a systematic review of scientific and professional literature as well as the current IFRS framework. Specifically, the systematic review is designed to investigate the issue of recognizing cryptocurrency and evaluate its confirmation and evidence in the available literature and IFRS framework. While crypto markets grew rapidly initially, they have enjoyed great investor interest over the past decade, despite the high risk and volatility of earnings, which raised the issue of institutional regulation of cryptocurrencies. The paper attempts to identify the most appropriate accounting treatment of cryptocurrency transactions under existing IFRS, as there is no specific regulation in place.

Cryptocurrency Regulation in a Robust Market

Cryptocurrency Regulation in a Robust Market

CURRENT TRENDS OF THE CRYPTOINDUSTRY DEVELOPMENT IN UKRAINE

The article analyzes the modern crypto industry market, examines its role, significance, dynamics and possibilities of further application in our country. The history of the cryptocurrency concept is presented. The development path of the domestic cryptoindustry from complete non-recognition to attempts to regulate this sphere by law is illustrated. The advantages and disadvantages of cryptocurrency as a payment were studied, the trends of its development in Ukraine and in the whole world were considered. The research identified three main groups of digital currencies and assets: cryptocurrencies, stablecoins, and digital currencies of central banks. The first group includes traditional cryptocurrencies, that is, those that are not backed by other assets and have a decentralized register of owners (Bitcoin, , Ripple, Ethereum). The second group of digital currencies and assets includes stablecoins — cryptocurrencies backed by one asset or a basket of some assets. The third group includes digital currencies of central banks, which are currently issued in a limited way as part of pilot projects, or government-issued cryptocurrencies. An analysis of the cryptocurrency market was conducted; a conclusion about the positive dynamics of the use of cryptocurrency in our country was made. The dynamics of the ratio of the cryptocurrency market capitalization to the indicators of GDP are estimated. The impact of military events on the cryptoindustry development was studied. The contribution of the global crypto-community to Ukrainian charitable foundations was studied. The advantages of the latest technologies in the war conditions are indicated, in particular, the speed and efficiency of transaction processing, the absence of restrictions inherent in classical finance. The domestic and global experience of cryptocurrency regulation is analyzed. It is noted that it is necessary to develop further measures to regulate the cryptocurrency market in a legislative manner. It is proposed to create associations consisting of IT lawyers, cyber police and blockchain developers. This stimulates the emergence of new methods of combating terrorism and the development of a new legislative model. Possible directions of cryptocurrency development and prospects for their development are proposed.

Regulatory constraints, responsibilities and consultation (CRC) for legal institutionalization of cryptocurrencies in Pakistan

PurposeThis study aims to synthesize the existing literature with insights gained from interviews conducted with regulatory experts. The objective is to analyse the challenges associated with incorporating cryptocurrencies into regulatory frameworks and to explore constraints in the regulatory institutionalization of cryptocurrencies.Design/methodology/approachThe study methodology consists of two steps. The first step is to identify regulatory constraints in the literature review and in the next step, interviews are conducted with officials of the State Bank of Pakistan (SBP). The study used a qualitative case study methodology, in which a single case (regulatory constraint) was selected as a unit of analysis.FindingsThe findings show that lack of traceability, legal status, lack of governmental control due to decentralization, difficulty enforcing laws, volatility, lack of skills with regulators and difficulty integrating cryptocurrencies into the current financial system are the main obstacles to the introduction of a regulatory framework. Thus, on a broader conceptual level, the findings can be grouped into opportunism, lack of strategic capability and fragmented global laws.Research limitations/implicationsThis study could inform global cryptocurrency regulation discussions, sharing a developing country’s views on balancing the government, central banks, the financial sector and public interests. This could guide countries to consider cryptocurrency adoption in similar situations. This could affect the cryptocurrency market, impacting demand, supply and investor trust in Pakistan.Practical implicationsThe study has implications for policy making officials. The research aims to offer valuable insights to the SBP and other regulatory authorities, helping them identify potential risks and create an effective regulatory framework for cryptocurrencies.Social implicationsThe study has implications for society in knowing about the volatile nature of cryptos and anonymity of their issuers, which poses regulatory constraints. This then implies its harmfullness to its traders and the huge losses that may arise from their trading due to its volatile nature.Originality/valueThis study contributes to the literature on the constraints, responsibilities and consultation framework of cryptocurrency regulations.

CRYPTOCURRENCY: SOME ASPECTS OF CRIMINAL LAW PROTECTION

The article discusses certain features of the legal regulation of cryptocurrency, taking into account the specifics of building a model for the functioning of blockchain networks, which consists in combining various tools, technologies and principles that form a logical and secure structure for distributed data storage. The problems of criminal law protection of digital currency are highlighted and the most common scientific approaches are identified, on the basis of which the author indicates that the use of the concepts of “digital currency” and “cryptocurrency” as synonyms does not correspond to the legislative definition of digital currency, since the concept of cryptocurrency is wider in content than the concept of digital currency. As a result of a comprehensive analysis of the norms of the Federal Law of July 31, 2020 No. 259-FZ On Digital Financial Assets, Digital Currency and Amendments to Certain Legislative Acts of the Russian Federation, the author comes to the conclusion that digital currency is exclusively a “domestic” currency. Based on the study of judicial practice, it is shown that the broadest possible interpretation of the concept of “other property”, which includes digital currency and cryptocurrency, is allowed. It indicates the presence of judicial acts in criminal cases, in which the subject of a crime are such cryptocurrencies as, for example, bitcoin. Attention is focused on the importance of civil law regulation of cryptocurrencies for their criminal law protection and the range of social relations that develop regarding cryptocurrencies subject to protection by means of criminal law is determined.

Forecasting Bitcoin prices using artificial intelligence: Combination of ML, SARIMA, and Facebook Prophet models

In recent years, investors, corporations, and enterprises have shown great interest in the Bitcoin network; thus, promoting its products and services is crucial. This study utilizes an empirical analysis for financial time series and machine learning to perform prediction of bitcoin price and Garman-Klass (GK) volatility using Long Short-Term Memory (LSTM), Seasonal Autoregressive Integrated Moving Average (SARIMA), and Facebook prophet models. The performance findings show that the LTSM boost has a noticeable improvement compared to SARIMA and Facebook Prophet in terms of MSE (Mean Squared Error) and MAE (Mean Average Error). Unlike Long Short-Term Memory (LSTM), a component of Deep Learning (DL), the finding explains why the bitcoin and its volatility forecasting difficulty has been partially met by traditional time series forecasting (SARIMA) and auto-machine-learning technique (Fb-Prophet). Furthermore, the finding confirmed that Bitcoin values are extremely seasonally volatile and random and are frequently influenced by external variables (or news) such as cryptocurrency laws, investments, or social media rumors. Additionally, results show a robust optimistic trend, and the days when most people commute are Monday and Saturday and an annual seasonality. The trend of the price and volatility of bitcoin using SARIMA and FB-Prophet is more predictable. The Fb-Prophet cannot easily fit within the Russian-Ukrainian conflict period, and in some COVID-19 periods, its performance will suffer during the turbulent era. Moreover, Garman-Klass (GK) forecasting seems more effective than the squared returns price measure, which has implications for investors and fund managers. The research presents innovative insights pertaining to forthcoming cryptocurrency regulations, stock market dynamics, and global resource allocation.

Does banning cryptocurrencies affect stock markets?

Purpose This paper aims to investigate the impact of banning cryptocurrencies on stock markets. Design/methodology/approach The paper uses an event study approach and data from stock market indices in nine countries that imposed a ban. It uses the constant mean model and the market model, with two different benchmarks for global returns, to analyze if any of the stock indices show abnormal returns on or around the announcement of a cryptocurrency ban. Findings The analysis shows that banning cryptocurrencies did not affect the returns of stock markets in any of the countries studied, indicating that the cryptocurrency market and stock markets are decoupled from each other, or the ban was not effectively implemented. Originality/value To the best of the author’s knowledge, this paper is the first to explore the potential spillover effect of a cryptocurrency ban on stock markets. It also bridges two strands of literature: the relationship between cryptocurrencies and traditional assets, and the impact of cryptocurrency regulation on their returns.

Regulasi Cryptocurrency dan Hak Asasi Manusia

This study aims to evaluate the impact of cryptocurrency regulations on human rights, with a particular focus on digital rights, privacy, and security. Cryptocurrencies, such as Bitcoin and Ethereum, have rapidly evolved as a new form of decentralized digital finance. However, this growth has raised questions about how cryptocurrencies affect individuals' rights, especially in terms of privacy and the security of personal data. This study employs a normative legal approach and conceptual analysis to explore existing regulations and trends related to cryptocurrency in various jurisdictions. Additionally, the research incorporates a theoretical perspective on human rights to identify potential implications of cryptocurrency regulation on privacy and digital security. The study's findings should shed light on how human rights are affected by the way cryptocurrencies are currently regulated and set the stage for any future legislative adjustments that would be required to strike a balance between personal safety and technological innovation. This research can also assist policymakers and regulators in tightening legal work practices, which will enable advancements in cryptocurrency while upholding individual rights. With the continuous growth in cryptocurrency usage and the growing concerns about privacy and security, this study is relevant in supporting ongoing discussions on how the law can accommodate this innovative technology without compromising human rights.

New Cryptocurrency Regulation in Lithuania and the European Union

The paper examines the major threats and related legal challenges posed by activities based on blockchain technology, such as cryptocurrencies, smart contracts, Decentralised Autonomous Organisations (DAOs), the Decentralised Finance System (DeFi), and Non-Fungible Tokens (NFTs). In the light of practical findings, the provisions of the Lithuanian Law on prevention of money laundering and terrorist financing and MiCA regulation are being analysed. The paper arrives at the conclusion that the new national law should effectively contribute to the prevention of cybercrimes, money laundering, terrorist financing, and violation of international sanctions. Nevertheless, a number of other issues typical for cryptocurrencies and other forms of utilisation of the blockchain technology remain unaddressed. Certain loopholes will be partly filled in by MiCA regulation. However, it will not create the required scope of legal certainty for other than cryptocurrencies forms of technology utilisation. On the basis of these findings, the paper puts forward proposals for the further development of the regulation of activities based on the blockchain technology.