An often overlooked hurdle in the formulation of legislative apparatus for cryptocurrency is the challenge of adapting cryptocurrency to the classifications and language of financial regulations.
Also Read: Research Paper Declares Bitcoin Compliant With Shariah Law
Language Barrier Between Regulators and Crypto Community
A recent article authored by Jonathan Chester, the chief executive officer of Bitwage, featured commentary discussing the hurdles posed by attempting to conform cryptocurrency to existing regulatory language and classifications from individuals experienced with cryptocurrency law.
Juan Llanos, the fintech and regtech lead at Consensys, alluded to the gap in the perceptual understanding of key terms between members of cryptocurrency community and the regulators tasked with overseeing the virtual currency markets.
Mr. Llanos stated “At this point in time, all token distinctions and definitions come from the emerging crypto industry, not regulators. In the eyes of regulators, there are no clear-cut token definitions, only ‘activities’ and ‘products’ regulated under existing law. That is to say, several regulators are claiming jurisdiction over crypto assets inasmuch as these emerging assets fit their subject matter focus.”
As a consequence of unique ways in which cryptocurrency phenomena sit within the regulatory purview of individual regulatory agencies, fundamental definitions pertinent to cryptocurrency often differ greatly between different governing institutions. “Some regulatory agencies have defined ‘virtual currencies’ as ‘monetary equivalents’ for purposes of money transmission and anti-money laundering; others have defined them as digital goods tradable in markets for purposes of ‘commodities’ regulation, yet others have defined them as ‘property’ for taxation purposes,” said Mr. Llanos.
Conforming Crypto to Language of Securities Law
Thus far, Mr. Llanos asserts that “the default position of securities regulators seems to be to consider them securities or investment contracts when they fit the conditions of
