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

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.

Beyond the Hype: Evaluating the Real Impact of News on Cryptocurrency Market Volatility

“…Historically, cryptocurrencies operated in a largely unregulated environment, celebrated for their potential to democratize finance and reduce transaction costs (Bourveau et al, 2018;European Banking Authority, 2013). However, as the market matured and attracted a broader audience, concerns around illicit activities, fraud, and market manipulation intensified (Arner et al, 2023;Dupuis et al, 2023;Johnson, 2021;Sotiropoulou & Ligot, 2019). Scholars have documented instances where the lack of clear regulatory guidelines led to significant market vulnerabilities (Ferrari, 2020).…”

Exploring the Assetisation and Financialisation of Non-Fungible Tokens (NFTs): Opportunities and Regulatory Implications

“…146 In relation to service providers for NFTs and fractionalised NFTs, there is a need to consider extending the tenets of financial regulation designed to protect users benefiting from custodial services. 147 An NFT custodial services provider may be regarded as outside of the scope of financial regulation such as MiCA. However, as providers offer the same wallets that can be used to pay out cryptocurrency and receive NFTs in exchange, it is arguably contrived to draw a firm line between custodial services for NFTs and those for fungible crypto-tokens.…”

Cryptocurrency; the new unleashed financial instrument, should it be regulated

“…In 2023; however, it is still growing in value and influence. These currencies could be considered a digital representation of value (Ligot, 2019: 3) besides; they may be characterized as securities, commodities, and currencies payment systems. Yet, they function as money in many markets and platforms.…”