Cryptocurrencies: New Rules for a New Technology?

CEPCI – Centre d'études pluridisciplinaires en commerce et investissement internationaux (Online). May 2018 [Link]

Abstract

In a time of macroeconomic uncertainty, the recent upswing in cryptocurrencies’ prices has raised many eyebrows. While its supporters see it as the way forward, many established economists and heads of financial institutions warn us of falling for an economic mirage. As the dust settled and Bitcoin is no longer on the front page of every newspapers, one question remains: what do cryptocurrencies mean for our modern financial system? Behind the speculative practices already common in stock markets, one can effectively wonder if cryptocurrencies are not posing a real challenge to the traditional actors of our financial system, such as banks, international organizations and states. The technical characteristics of the Blockchain technology behind the rise of cryptocurrencies effectively open avenues inconceivable in a world of fiat money. Minimally, cryptocurrencies offer new ways to store and transfer value. By doing so, they may limit the effectiveness of some tools employed by financial regulators and reinforce the power of private actors. In this context, this research note will reflect on the potential consequences of cryptocurrencies and their meaning for regulators around the world. After reviewing what’s really new with the technology behind cryptocurrencies, we discuss how regulators have responded to the threats and opportunities it may pose. This allows us to point out some trends in the regulation of the growing digital economy.