Ideas de Peso |“Cryptoassets”: Is it Time for Regulation?

We invite you to read the new article on Ideas de Peso, a blog where economists working at the BCRA share their opinions:

In previous entries, we have posted the most significant aspects of cryptoassets, considering both their impact on financial stability and the risk exposure they entail from a microprudential approach. Likewise, we have dealt with topics related to the technology underlying these instruments. This time, we intend to bring to light the challenges faced by regulators, the answers posted by some selected jurisdictions regarding regulations, and recent trends on the subject by adopting a coordinated approach among countries.

Technological Innovation and Regulatory Challenges

The recent development of cryptoassets and their underlying technology raise unique regulatory challenges because cryptoassets are intangible (digital) assets supported by Internet-based technologies. Hence, their issuance, validation, transfer, registry, and storage are free from the control of a central authority, which poses difficulties to make them fit within traditional regulatory models.

On the one hand, these assets are difficult to monitor, as their obscure nature makes data collection hard for both statistics and operation assessment purposes. On the other hand, the scope of the web’s cross-border poses difficulties to determine the controlling jurisdiction over a transaction or parties involved. Likewise, given a payments processor—intermediary who usually acts as regulator—is no longer required with DLT technology, the relevant question is then who to regulate. Individual users or market’s participants (exchanges, wallets, brokers)?

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June 11th, 2018

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