Crypto Currencies: Current Realities, Philosophical Principles and Legal Mechanisms

Abstract

This article is based on several years of practical legal advice provided to entities issuing and administering cryptocurrencies, mostly domiciled in Switzerland but active worldwide. It observes that new legal instruments and concepts are not necessary to correctly and efficiently deal with cryptocurrencies and smart contracts as regards issues of private law (contractual aspects, corporate structures); in contrast, some questions of administrative law may require decisions or clarifications of the legislator. The article emphasizes that the provision of legal advise benefits from a good understanding of the technical realities as well as of the philosophical approaches that motivate promoters of cryptocurrencies, including those that are critical of monetary policies followed by central banks. The practical advantage of cryptocurrencies is their purpose as a tool for implementing so-called “smart contracts”. A smart contract is a consistent programming method that allows a transaction to be executed automatically. In legal systems, cryptocurrencies are not difficult to understand the handling of cryptocurrencies and «smart contracts». Payment in cryptocurrency is legally valid. The importance of digitalization for the modern economy cannot be overestimated. Most companies around the world are digitizing what they do. New digital assets are generated daily: innovative applications are being created and existing competencies are being improved. The totality of various measures for digitalization affects the evolutionary development of the world economy as a whole. Therefore, the most discussed topic in the field of digital technologies is the rapid spread of cryptocurrencies and blockchain technologies. Cryptocurrency is included in the system of everyday use at the user level as a means of ensuring payment transactions, a means of accumulation and financial speculation. Since the appearance of the cryptocurrency, the question is legitimate: whether it should be banned or not and what its nature is. However, due to the novelty of the cryptocurrency, the ambiguity of its legal and economic essence, various practices have developed to determine the legal status of the cryptocurrency, while in most subjects of international law, legislation has not regulated this phenomenon. The purpose of this study was to solve several problems: knowledge of the history of the development of cryptocurrencies; definition of the concept of «cryptocurrency»; determination of the legal status of cryptocurrencies in developed foreign countries; comparative legal analysis of the cryptocurrency market in a number of States; detection of features of bitcoin distribution in developed countries; analysis of the practice of legalizing bitcoin in foreign countries.