Model Framework for Consumer Protection and Crypto-Exchanges Regulation

Abstract

Cross-border insolvency of crypto-exchanges, cyber-risks, transnational character of activities with cryptocurrencies, and financial frauds on the Internet are among the key threats for individuals who use Bitcoin as an investment. Moreover, crypto-exchanges impose consumer agreements containing provisions limiting their liability for hacker attacks and other clauses promoting inequality in relations with investors. All the named obstacles highlight the vulnerability of unsophisticated individuals investing in digital assets and have pointed out the necessity to adopt an internationally recognized model of rules for crypto-exchanges, otherwise, it will be impossible to effectively protect the rights of investors engaged in the activities of intermediaries exchanging and keeping decentralized cryptocurrencies. The purpose of the study is to elaborate on the fundamentals for constructing an international legal framework protecting consumers from risks arising from the activities of crypto-exchanges dealing with decentralized cryptocurrencies. Based on the methodology of comparative legal study, this paper examines the judicial practice of various countries and the legislation of jurisdictions popular among crypto-exchanges. The research explores the nature of Bitcoin, describes the types of crypto-exchanges and discusses the main approaches to crypto-exchanges regulation. It argues that an international framework on crypto-exchanges should be based on understanding Bitcoin as a commodity which is situated in the place of crypto-exchange incorporation, licensing of crypto-exchanges, and self-regulation.

Unveiling the Confirmation Factors of Information System Quality on Continuance Intention towards Online Cryptocurrency Exchanges: The Extension of the Expectation Confirmation Model

“…Johnson et al [12] used a qualitative approach and provided insights regarding the conditions leading the users to stay engaged in trading, the positive and adverse impacts of trading on cryptocurrency traders, and the ways cryptocurrency traders cope with harm reduction. A recent study by Aleksandr et al [13] was also related to the risk and safety of online cryptocurrency platform users. According to Aleksandr et al [13], cryptocurrency traders incur several risks while using online cryptocurrency platforms.…”

“…A recent study by Aleksandr et al [13] was also related to the risk and safety of online cryptocurrency platform users. According to Aleksandr et al [13], cryptocurrency traders incur several risks while using online cryptocurrency platforms. The risks include financial fraud, cyber risks, and hacking.…”

“…These kinds of risks are initiated because of the decentralization of all the online cryptocurrency platforms. Hence, Aleksandr et al [13] propose that all cryptocurrency platforms should have a global set of regulations implemented for the safety of cryptocurrency traders. Another previous study by Sakas et al [14] also targeted online cryptocurrency platform users.…”