Cryptocurrencies and Cryptoassets: Regulatory and Legal Issues

298 Pages·2020·6.169 MB·English

by  Andrew Haynes, Peter Yeoh

.d
e
vre
s
e
r sth
g
ir llA
.w
a
L
a
m
ro
fn
I .0
2
0
2
©
th
g
iryp
o
C
CRYPTOCURRENCIES AND
CRYPTOASSETS
REGULATORY AND LEGAL ISSUES
ANDREW HAYNES AND PETER YEOH
.d
e
vre
se
r sth
g
ir llA
.w
a
L
a
m
ro
fn
I .0
2
0
2
©
th
g
iryp
o
C
CRYPTOCURRENCIES AND CRYPTOASSETS
REGULATORY AND LEGAL ISSUES
.d
e
vre
se
r sth
g
ir llA
.w
a
L
a
m
ro
fn
I .0
2
0
2
©
th
g
iryp
o
C
.d
e
vre
se
r sth
g
ir llA
.w
a
L
a
m
ro
fn
I .0
2
0
2
©
th
g
iryp
o
C
First published 2020
by Informa Law from Routledge
2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN
and by Informa Law from Routledge
52 Vanderbilt Avenue, New York, NY 10017
Informa Law from Routledge is an imprint of the Taylor & Francis Group, an informa business
© 2020 Andrew Haynes and Peter Yeoh
The right of Andrew Haynes and Peter Yeoh to be identified as authors of this work has
been asserted by them in accordance with sections 77 and 78 of the Copyright, Designs and
Patents Act 1988.
All rights reserved. No part of this book may be reprinted or reproduced or utilised in any
form or by any electronic, mechanical, or other means, now known or hereafter invented,
including photocopying and recording, or in any information storage or retrieval system,
without permission in writing from the publishers.
Trademark notice: Product or corporate names may be trademarks or registered trademarks,
and are used only for identification and explanation without intent to infringe.
British Library Cataloguing in Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging-in-Publication Data
Names: Haynes, Andrew, 1953– author. | Yeoh, Peter, author.
Title: Cryptocurrencies and cryptoassets : regulatory and legal issues /
Andrew Haynes and Peter Yeoh.
Description: Abingdon, Oxon ; New York, NY : Informa Law from Routledge, 2020. |
Includes bibliographical references and index.
Identifiers: LCCN 2019059794 (print) | LCCN 2019059795 (ebook) | ISBN 9780367472740
(hardback) | ISBN 9780367486365 (paperback) | ISBN 9781003034599 (ebook)
Subjects: LCSH: Cryptocurrencies—Law and legislation.
Classification: LCC K4433 . H39 2020 (print) | LCC K4433 (ebook) | DDC 343/.032—dc23
LC record available at https://lccn.loc.gov/2019059794
LC ebook record available at https://lccn.loc.gov/2019059795
ISBN: 978-0-367-47274-0 (hbk)
ISBN: 978-0-367-48636-5 (pbk)
ISBN: 978-1-003-03459-9 (ebk)
Typeset in Times New Roman
by Swales & Willis, Exeter, Devon, UK
.d
e
vre
se
r sth
g
ir llA
.w
a
L
a
m
ro
fn
I .0
2
0
2
©
th
g
iryp
o
C
CONTENTS
Table of Cases ix
Table of Statutes xi
Table of Regulations xiv
List of Abbreviations xvi
CHAPTER 1 INTRODUCTION AND OVERVIEW 1
CHAPTER 2 CRYPTOCURRENCIES AND ASSETS,
OPPORTUNITIES AND RISKS 7
2.1 Introduction 7
2.2 Cryptocurrencies and blockchain 10
2.3 Price variations relative to other geographic areas 16
2.4 Price variations relative to fiat currencies 17
2.5 Black-Scholes 17
2.6 Cryptoassets 18
2.7 Relevant risks 21
2.7.1 Regulatory risk 21
2.7.2 Security risk 21
2.7.3 Insurance risk 22
2.7.4 Fraud risk 23
2.7.5 Market risk 23
2.7.6 Tax risk 24
2.7.7 Legal risk 25
2.7.8 Scale risk 26
.d
e
vre
se CHAPTER 3 A DIGITAL GLOBAL CURRENCY 27
r sth 3.1 Introduction 27
g
ir llA 3.2 The case against 27
.w 3.3 The evolution of Bitcoin 29
a
L
a 3.4 Beyond currency functions 35
m
rofn 3.5 The multi-coin world 37
I .02 3.6 Digital fiat currencies 38
0
2 © 3.7 Different types of cryptoassets 41
th
g
iryp
o
C v
CONTENTS
3.7.1 Altcoins 41
3.7.2 Asset-backed tokens 41
3.7.3 Blockchain native tokens 42
3.7.4 Commodity tokens 42
3.7.5 Crypto fiat currencies 42
3.7.6 dApp tokens 43
3.7.7 Hybrid tokens 44
3.7.8 Internal tokens 44
3.7.9 Security token offerings (STOs) 44
3.7.10 Network tokens 44
3.7.11 Network value tokens 44
3.7.12 Non-native protocol tokens 44
3.7.13 Pure cryptocurrencies 45
3.7.14 Usage tokens 45
3.7.15 Utility tokens 45
3.7.16 Work tokens 45
CHAPTER 4 WHY ARE THE REGULATORS WATCHING? 47
4.1 Introduction 47
4.2 Practical issues with cryptoassets 49
4.3 Countries with weak currencies and weak democracies 54
4.4 Offshore countries positioning as global currency hubs 54
4.5 Countries with a tendency towards freedom and innovation 55
4.6 Superpowers that may set the de facto standards for regulation 56
4.7 Countries that have competing agendas 58
4.8 Government worries 59
CHAPTER 5 GLOBAL CRYPTOASSET HUBS 67
5.1 Introduction 67
5.2 Western advanced economies 71
5.2.1 The United States 71
5.2.2 The United Kingdom 71
5.2.3 Canada 74
5.2.4 Australia 74
5.2.5 Germany 76
.d 5.2.6 The Netherlands 77
e
vre 5.2.7 Finland 78
se
r sth 5.2.8 Denmark 78
gir llA .w 55..22..190 ESwsteodneian 8790
aL 5.3 Asian advanced economies 81
a
mro 5.3.1 Japan 81
fnI .0 5.3.2 South Korea 83
2
0 5.3.3 Singapore 85
2
©
th
g
iryp
o
C vi
CONTENTS
5.3.4 China and India 87
5.4 Offshore financial centres (OFCs) 90
5.5 Comparative note 94
CHAPTER 6 CRYPTOASSET POLICIES OF
INTERNATIONAL BODIES 96
6.1 Introduction 96
6.2 G20 economies 96
6.3 The Organisation for Economic Co-operation and
Development (OECD) 98
6.4 The International Monetary Fund (IMF) 105
6.5 The Financial Stability Board (FSB) 115
6.6 The Bank for International Settlements (BIS) 119
6.7 The International Organisation of Securities
Commissions (IOSCO) 123
6.8 Financial Action Task Force (FATF) 128
6.9 The challenge of Facebook’s Libra 128
6.10 A brief comparative note regarding multilateral
cryptoasset regulators 131
CHAPTER 7 CRYPTOASSET REGULATORY POLICIES IN
SELECTED ADVANCED WESTERN ECONOMIES 134
7.1 Introduction 134
7.2 Historical background 135
7.3 The US cryptoasset regulatory policy 137
7.4 Potential cryptoasset regulation in the US 152
7.5 The EU’s cryptoasset regulatory policy 162
7.6 The UK’s cryptoassets regulatory policy 175
7.7 Australia’s cryptoassets regulatory policy 186
7.8 Canada’s cryptoassets regulatory policy 189
7.9 Switzerland’s cryptoassets regulatory policy 191
7.10 The Cayman Islands’ cryptoasset regulatory policy 193
7.11 Malta’s cryptoasset regulatory policy 195
7.12 A comparative note 197
.d CHAPTER 8 CRYPTOASSET REGULATORY POLICIES IN
e
vre SELECTED ASIAN ECONOMIES 200
se
r sth 8.1 Introduction 200
gir llA .w 88..32 CInhdiinaa’s’s c crryypptotoaasssseet tr eregguulalatotorryy p poolilcicyy 220111
aL 8.4 Japan’s cryptoasset regulatory policy 213
a
mro 8.5 Singapore’s cryptoasset regulatory policy 220
fnI .0 8.6 South Korea’s cryptoasset regulatory policy 225
2
0 8.7 A comparative note 231
2
©
th
g
iryp
o
C vii
CONTENTS
CHAPTER 9 DISTRIBUTED LEDGER TECHNOLOGY 235
9.1 Introduction 235
9.2 Encryption 236
9.3 Overheads 237
9.4 Security offerings 239
9.5 Criminal factors 240
9.6 Downsides 243
9.7 The current situation 243
CHAPTER 10 CONCLUSIONS 248
10.1 Introduction 248
10.2 Cryptocurrency regulatory issues 249
10.3 General regulatory issues 251
10.4 Public opinion 253
10.5 Regulation – historical issues 254
10.6 Global co-operation 255
10.7 The essentials of good regulation 256
Index 261
.d
e
vre
se
r sth
g
ir llA
.w
a
L
a
m
ro
fn
I .0
2
0
2
©
th
g
iryp
o
C viii
TABLE OF CASES
Canada
PacificCoastCoinExchangevOntarioSecurities
Commission, [1978] 2 S.C.R. 112 (Pacific Coast) ..........................190n210
EU
Skatteverket v. David Hedqvist, 22 October 2015. C-264/14 .....................172
South Korea
CoinisExchangev.NongyupBank (2018) Central District Court’s
50th Civil Affairs Division ....................................................................231
UK
BalfourBeattyCivilEngineeringLtdvTechnicalandGeneral
Guarantee Co Ltd [2000] 68 Con. L.R. 108 ....................................238n13
Goodwin v Robarts (1876) 1 App. Cas. 476 ...............................25n103, 30n11
Kvaerner John Brown Ltd v Lear Siegler Services Ltd [2006]
EWCA Civ 1130 ...............................................................................238n13
Moss v Hancock [1899] 2 Q.B. 111 ...............................................................39
United City Merchants v Royal Bank of Canada [1983]
1 A.C. 168 (HL) ................................................................................238n13
US
Dunn v. Commodity Futures Trading Commission, 519 U.S. 465 (1997) ......159
.d FloridavEspinoza (22 July 2016) ................................................................31
e
vre Reevesv.Ernst&Young 494 U.S. 56,57 (1990) .........................................159
se
r sth SECvTrentonTShaversandBitcoinSavingsandTrustCo (2014)
gir llA 4:13-CU-416 ...........................................................................................160
.w Securities&ExchangeCommissionv.W.J.HoweyCo.
a
L a 328 U.S. 293 (1946) ..............................................................32n26, 159n87
m
ro ShawmutWorcesterCountyBankv.FirstAmericanBank&
fn
I .0 Trust, 731 F. Supp. 57, 61 (D. Mass. 1990) .............................................157
2
02 Spain v. Union Trust, 674 F. Supp. 1496, 1500 (D. Conn. 1987) ................157
©
th
g
iryp
o
C ix