Self-regulatory mechanisms of the cryptocurrency system

Abstract

This chapter presents the main mechanisms through which cryptocurrency systems self-regulate and self-govern. This is a necessary precursor to the core component of reflexive regulation, which is the redirection of internal self-regulatory mechanisms towards regulatory goals. With this in mind, the chapter identifies the two main internal governance mechanisms within the cryptocurrency system as ‘Code’ and ‘Consensus’. These mechanisms are described and analysed in turn, with a focus on their operational closure (functionality) and cognitive openness (regulability). This is done with an emphasis on highlighting not only the avenues and means for legal intervention within these internal governance structures, but also identifying the role of law and legal intervention in ameliorating these self-regulatory mechanisms in order to address the issues of regulatory concern related to cryptocurrencies.