Regulating crypto

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Notes

1 C Leuprecht, C Jenkins and R Hamilton, ‘Virtual money laundering: policy implications of the proliferation in the illicit use of cryptocurrency’ [2022] Journal of Financial Crime 12; C Cross, ‘Romance baiting, cryptorom and “pig butchering”: an evolutionary step in romance fraud’ in Current Issues in Criminal Justice. DOI: 10.1080/10345329.2023.2248670.

2 For example, House of Commons Treasury Committee, ‘Crypto-assets’ (HC 910) (September 2018), p. 33. See also F Panetta (member of the Executive Board of the European Central Bank), ‘For a few cryptos more: the Wild West of crypto finance’, Speech at Columbia University, New York (25 April 2022). Available at: https://www.ecb.europa.eu/press/key/date/2022/html/ecb.sp220425∼6436006db0.en.html

3 Regulation (EU) 2023/1114 of the European Parliament and of the Council of 31 May 2023 on markets in crypto-assets.

4 See, for example, Securities and Exchange Commission v Ripple Labs Inc (SDNY, 22 Dec. 2020) Judgment: 13 July 2023 considering, inter alia, whether XRP constitutes a security or not. Also, in January 2024, the SEC approved a number of bitcoin exchange-traded funds (ETFs), though only after legal challenge: see G Gensler, ‘Statement on the Approval of Spot Bitcoin Exchange-Traded Products’ (SEC Statement, 10 January 2024). In Grayscale Investments LLC v SEC, No.22-1142 (D.C. Cir. 2023), 2 the Court of Appeals for the District of Columbia had described the SEC’s initial rejection of the Grayscale ETF application as ‘arbitrary and capricious because the Commission failed to explain its different treatment of similar products.’

5 For wider consideration, see P Çağlayan Aksoy, ‘The Regulation of NFTs: Much Ado About Nothing?’ (2023) 44(4) Business Law Review 128. In the criminal law context, see S Hufnagel and C King, ‘Non-Fungible Tokens: Art and Crime in a Virtual World’ (2023) 5 Criminal Law Review 338.

6 These questions are explored in W Bossu et al, ‘Legal Aspects of Central Bank Digital Currency: Central Bank and Monetary Law Considerations’ (IMF Working Paper 2020).

7 A Savelyev, ‘Contract law 2.0: ‘Smart’ contracts as the beginning of the end of classic contract law’ (2017) 26(2) Information and Communications Technology Law 116. Cf. M Durovic and C Willett, ‘A Legal Framework for Using Smart Contracts in Consumer Contracts: Machines as Servants, Not Masters’ (2023) 86(6) Modern Law Review 1390.

8 Law Commission, 'Digital assets: Final report' (June 2023) 2: “most areas of residual legal uncertainty are highly nuanced and complex. That complexity remains, in part, because both the digital asset market and the technology in question is evolving and will continue to do so.”

9 For wider discussion on legal responses to technological change, see L Bennett Moses, ‘Agents of Change’ (2011) 20(4) Griffith Law Review 763. For consideration of the advantages and risks of early regulation, in the context of artificial intelligence (AI), see JM Bello y Villarino and R Vijeyarasa, ‘International Human Rights, Artificial Intelligence, and the Challenge for the Pondering State: Time to Regulate?’ (2022) 40(1) Nordic Journal of Human Rights 194.

10 K Georgieva (IMF Managing Director), ‘Leaving the Wild West: Taming Crypto and Unleashing Blockchain’, Speech delivered at the MOEF-BOK-FSC-IMF International Conference on Digital Money, Seoul, South Korea (13 December 2023). Available at: https://www.imf.org/en/News/Articles/2023/12/13/sp121423-leaving-the-wild-west[1]kordigitalmoney. Emphasis in original.

11 HM Treasury, Financial Conduct Authority and Bank of England, 'Cryptoassets Taskforce: final report' (October 2018).

12 Law Commission (n 8); Law Commission, ‘Smart legal contracts: Advice to Government’ (November 2021).

13 Recent examples include: House of Commons Treasury Committee, 'Regulating Crypto' (HC 615) (May 2023); House of Commons Culture, Media and Sport Committee, ‘NFTs and the Blockchain: the risks to sport and culture’ (HC 598) (October 2023). An All Party Parliamentary Group on ‘Crypto and Digital Assets’ was established in December 2021. See also s.69 of the Financial Services and Markets Act 2023 which provides a definition of ‘cryptoasset’.

14 H Jones, ‘Britain to push ahead with rules for cryptoassets’ (Reuters, 30 October 2023).

15 C Randell (Chair of the FCA and PSR), ‘The risks of token regulation’, Speech delivered at the Cambridge International Symposium on Economic Crime (6 September 2021). Available at: https://www.fca.org.uk/news/speeches/risks-token-regulation

16 HM Treasury, ‘Future financial services regulatory regime for cryptoassets: Consultation and call for evidence’ (February 2023) 7.

17 House of Commons Treasury Committee (n 13) 18.

18 CP Buttigieg and G Sapiano, ‘A critical examination of the VFA framework – the VFA agent and beyond’ (2020) 14(1) Law and Financial Markets Review 48.

19 H Nabilou, ‘The dark side of licensing cryptocurrency exchanges as payment institutions’ (2020) 14(1) Law and Financial Markets Review 39.

20 CP Buttigieg et al., ‘Anti-money laundering regulation of crypto assets in Europe’s smallest member state’ (2019) 13(4) Law and Financial Markets Review 211.

21 A Dahdal, J Truby and H Botosh, ‘Trade finance in Qatar: blockchain and economic diversification’ (2020) 14(4) Law and Financial Markets Review 223.

22 There were to be seven articles but one article was mistakenly published in an earlier issue. See D Broby, ‘Central bank digital currencies: policy implications’ (2022) 16 Law and Financial Markets Review 100.

23 This symposium was co-hosted by the QMUL Criminal Justice Centre and the IALS Centre for Financial Law, Regulation & Compliance (FinReg), funded by the Society of Legal Scholars (SLS) and the University of London Coffin Trust Fund.