The regulation of virtual currencies in comparative perspective: new private money or niche technological innovation?

Purpose - This paper aims to situate virtual currencies (VCs) in a landscape of regulatory questions that help orient the direction and purpose of a possible legal approach, vis-à-vis this relatively recent technological and financial phenomenon. Design/methodology/approach - The triangulation of historical overview and comparative examination of regulatory interventions allows to situate VCs in relation to a range of regulatory topics: from monetary policy, to fundraising and money laundering. First, the paper charts the emergence of VCs in time, and situates this innovation on a continuum with historically observed forms of private money. Second, it provides an overview of different regulatory approaches that can be observed on a comparative landscape. Findings - At present, several features of VC schemes (particularly their deflationary character and fixed supply) prevent them from working as private money, competitive with sovereign currency. Instead, three specific kinds of uses – as security tokens, utility tokens and currency tokens – offer a more realistic picture of the risks and potentials associated with different forms of use. Originality/value - The paper puts forth an integrated framework for devising a more sensitive regulatory approach towards VCs.