Regulation of Crypto Assets

Abstract

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Jurisdictional arbitrage: combatting an inevitable by-product of cryptoasset regulation

“…Ultimately, it may be argued that there is no elixir for jurisdictional arbitrage (Nabilou, 2019) but, contrary to the somewhat extreme view that there is no legal solution in this context (Langenbucher, 2019), there, at least, two alternative remedies, suggested above, that may, in fact, limit it. While harmonisation of regulatory rules is, practically, a difficult task, commentators still propose a co-ordination approach at international level (Auer and Claessens, 2018; Cuervo et al , 2019; World Economic Forum, 2021) to minimize any differences of national regulatory frameworks, which lie at the core of the problem. Here, the FATF, a successful transgovernmental network, and its Recommendations could serve as an example setting a precedent for any future international discussion about harmonising, at least, certain aspects of cryptoasset regulation and calibrating appropriate legal instrument(s) for that purpose.…”

“…Though this scheme contains certain provisions related to AML/CTF and financial stability imposing, respectively, an obligation of adopting a robust AML Program and capital requirements, it clearly focuses on consumer protection by introducing certain disclosure and other protection requirements (Official Compilation of Codes, Rules and Regulations of the State of New York, 2020), disregarding, according to some market participants, other important aspects such as technological development and innovation (Syska, 2016). Since these early regulatory developments, some jurisdictions around the world have prohibited cryptoactivities, others have provided some kind of regulatory guidance, others have adopted bespoke regulatory frameworks, others have extended or amended their current financial legislation to fill the emerging regulatory gap and cover explicitly cryptoassets or, simply, they have done nothing (Cuervo et al , 2019; Blandin et al , 2019).…”

Crypto-asset market development: the role of country’s institutional quality

“…We consider the oldest and most widespread cryptocurrency: Bitcoin (Cuervo et al , 2020; Feyen et al , 2022). Following the approach of Caporale et al (2021), Yarovaya et al (2021), Bitcoin-related data are taken from www.cryptodatadownload.com website, which provides historical time series data of volume traded on crypto exchanges and, according to Alexander and Dakos (2020), is a reliable cryptocurrency data source.…”

“…Episodes of hacking crypto-trading servers and wallets happened and resulted in some exchanges taking cyber insurance or creating compensation funds. Moreover, some exchanges allow market manipulations with the volume of trade, such as the “wash trade” or “whale trade” and delude investors (Cuervo et al , 2020). In some countries, crypto exchanges and their servers are under the regulation of a security supervision regime, and these behaviors are prohibited.…”

Valuation of cryptoassets in EU insolvency: Challenges and prospects

“…Together with Bitcoin, Ether, Monero, Litecoin and Ripple are the leading cryptocurrencies in terms of market capitalization, user base, and popularity. 30 These traditional cryptocurrencies are designed and intended to function as an alternative to fiat currency, 31 that is, to function as a general-purpose medium of exchange, a store of value or a unit of account. 32 However, unlike fiat currency, cryptocurrencies are decentralised and their price is not set or backed by a central or monetary authority, while their use is not widely spread in the economy and especially in retail transactions.…”