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Abstract:

The virtual currency is a relatively new tool for making payments, which has appeared with the development of the Internet technologies. The rules for issuing and handling the virtual currency are determined by a decentralized (peer-to-peer) network. There is a substantial lack of a. the regulation and control of this currency; b. comprehensive legal research in this area, which makes it difficult for a government to take an important decision whether there is a need to regulate cryptocurrency or not. There are two opposing views on the subject. One states that the lack of regulatory and supervisory legal instruments is the advantage of the cryptocurrency, the other point of view on the contrary proceeds from the need to legislate the virtual currency in order to maintain the financial stability of the state and the world itself. We will present the discussion and formulate our own point of view based on the research made.

Key words: virtual currency regulations; cryptocurrency transactions; decentralized e-money; anti-money laundering law; fraudulent currency schemes

JEL Classification: F33; K10; K22; K24.

Introduction

A study released in April 2017 by the Cambridge Centre for Alternative Finance, which gathered data from more than 100 cryptocurrency companies, estimated that there were up to 5.8 million active users of cryptocurrencies in the world, with Bitcoin taking a 72pc share of the market (Rees 2017). As the cryptocurrency gains significant global popularity, the question arises whether its regulation should be considered. Unlike traditional money, digital currency does not have a single emission center, it's a tool for private, anonymous transactions, and its blockchain is free from the government control and verification. According to the Chairman of the Bank of Russia Elvira Nabiulina, regulators of almost all countries do not know what to do about it. We are used to being a monopoly emission center (the Central Bank of Russia 2017). It is important to note that the introduction and use of a virtual currency is seen as a financial risk that could undermine the stability of the entire world monetary system and global economic transformations (Akbari 2012). Besides it has been seen as the payment of choice for drug deals and other illegal purchases.

The origin of virtual currencies goes back to the time the...

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