REGULATING CRYPTOCURRENCIES – LEGAL CHALLENGES AND RISKS

Abstract

Bitcoin and Ethereum have become the centre of public attention in recent years. Both are cryptocurrencies, decentralised digital assets, it means, a set of codes that can be used as a currency. Their value is generated by the public agreement. The attractiveness of crypto assets is the safe and simple transactions between two parties without intermediaries. These digital currencies based on blockchain technology, always containing all transactions. Unfortunately, cryptocurrency is being a target for fraudsters and criminals because of the spread4 of the transaction. In addition to the technological innovations and financial opportunities by digital currencies raised without considering the ethical dimension, especially the ethics of money, because not everyone gets the same profit they generate. Anonymity of digital currencies can facilitate money laundering, terrorist financing and other illegal transactions. We are not concern about the energy consumption and environmental impact of cryptocurrencies. It is therefore necessary to effectively regulate cryptocurrencies in the fight against fraud and abuse and at the same time to protect participants of this market. The use of cryptocurrencies can make it difficult to identify which parties are involved (anonymity and pseudonyms), which encourages fraud, if it contains money laundering and other illegal activities. The price of cryptocurrencies can fluctuate significantly (volatility), which can also cause significant financial losses to investors. Cyberattacks, hacking incidents and technical errors can ultimately lead to the loss of crypto-assets (technological-security risks).