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Regulating virtual currencies

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  • Hofert, Eduard

Abstract

Distributed ledger technology especially in the form of publicly coordinated validation networks such as Ethereum and Bitcoin with their own monetary circles provide for a revealing litmus test for current financial regulatory schemes. The paper highlights the interrelation between distributed coordination and the emission of virtual currency to make sense of the function of the new monetary phenomenon. It then argues for the regulation of financial services on the ground of the technology to ensure integrity standards. In this respect, it is useful to gear the development of a regulatory scheme towards the existing financial regulatory principles. However, future measures of the regulators must take the distributed nature of the platforms into account by relying on a "regulated self-regulation" of the community. Finally, the article focuses on the shortcomings of the current EU regulatory regimes, especially the regulation frameworks regarding financial services, payment services and electronic money.

Suggested Citation

  • Hofert, Eduard, 2019. "Regulating virtual currencies," IMFS Working Paper Series 130, Goethe University Frankfurt, Institute for Monetary and Financial Stability (IMFS).
    • Handle: RePEc:zbw:imfswp:130
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    References listed on IDEAS

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    1. De Filippi, Primavera & Loveluck, Benjamin, 2016. "The invisible politics of Bitcoin: governance crisis of a decentralised infrastructure," Internet Policy Review: Journal on Internet Regulation, Alexander von Humboldt Institute for Internet and Society (HIIG), Berlin, vol. 5(3), pages 1-28.
    2. Dwyer, Gerald P., 2015. "The economics of Bitcoin and similar private digital currencies," Journal of Financial Stability, Elsevier, vol. 17(C), pages 81-91.
    3. Lerch Marcus P., 2015. "Bitcoin als Evolution des Geldes: Herausforderungen, Risiken und Regulierungsfragen," Zeitschrift für Bankrecht und Bankwirtschaft (ZBB) / Journal of Banking Law and Banking (JBB), RWS Verlag, vol. 27(3), pages 190-204, June.
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    Cited by:

    1. Böhl, Gregor, 2021. "Efficient solution and computation of models with occasionally binding constraints," IMFS Working Paper Series 148, Goethe University Frankfurt, Institute for Monetary and Financial Stability (IMFS).

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