THE EVOLUTION OF THE TERMS “CRYPTOCURRENCY”, “VIRTUAL ASSETS”, AND “CRYPTO-ASSETS” IN MODERN LEGAL DISCOURSE

Abstract

The article examines the emergence and transformation of the fundamental concepts in the field of crypto-finance. It is observed that the advent of bitcoin and its rapid proliferation gave rise to analogous crypto-products, whose crypto-tokens exhibited a digital representation of value and turnover, which were designated as “cryptocurrencies.” The evolution of the crypto industry has led to the emergence of novel crypto products with technical and financial characteristics distinct from those of cryptocurrencies (investment tokens, utility tokens, non-fungible tokens, stablecoins, etc.). These products have been positioned by their developers as cryptocurrencies. In 2018, the Financial Action Task Force (FATF) proposed the use of “virtual assets” as an alternative to “cryptocurrency.” Over time, the concept evolved to encompass all crypto-products whose cryptotokens exhibited both a digital expression of value and negotiability. In 2023, the EU adopted Regulation (EU) 2023/1114 of the European Parliament and of the Council on cryptoasset markets and amending Regulations (EU) No. 1093/2010 and (EU) No. 1095/2010 and Directives 2013/36/EC and (EU) 2019/1937 (MiCA Regulation) at supranational level, which was designed to harmonize the regulation of the cryptocurrency asset sector across the EU. This Regulation employs the term “cryptoassets” as a general definition for various crypto products whose crypto tokens possess a digital value and turnover (investment tokens, utility tokens, non-fungible tokens, stablecoins, etc.). It is posited that there has been a transformation of concepts, from cryptocurrencies to virtual assets, and then to cryptoassets. At this point in time, cryptocurrencies may be defined as a type of virtual asset. It could be argued that the concepts of “virtual assets” and “cryptoassets” are in fact identical.