Regulating Virtual Currencies

Abstract

The prudential framework of virtual currencies features various elements of a Law of Global Digitality. The very subject matter, digital currencies, differs structurally from established sovereign currencies in their economic and technical characteristics as well as in their geographical distribution (Section 1). For the legal framework, this requires, on the one hand, adaptations in the classification of digital facts in the established categories of supervisory law, securities law and civil law. On the other hand, there is also a need for new, supplementary elements (Section 2.1). Finally, the technical possibilities and innovative business models in some cases harbour hitherto unknown risks, especially for investor and consumer protection and financial market stability. For this reason, the European Commission has proposed specific measures to regulate cryptographic values and in particular value-referenced tokens, so-called stablecoins (Section 2.2).