The main objective of this magazine is to inform individuals about the potential impacts of cryptocurrency implementation in four primary areas – Environmental, Economic, Ethical, and Political. By presenting analyses on these factors, we aim to raise awareness about the drawbacks of using cryptocurrency. Furthermore, we will evaluate its current status in society, both compared to traditional currency and regarding the underlying value of money.

The magazine's in-depth analysis makes it suitable for high school and tertiary students who have an interest in current concerns arising around crypto-based transactions.

Forewords

The decentralized system of cryptocurrency has provided security in the integrity of services. However, its ambiguous legal nature has resulted in susceptibility to illegal misuse. The current dilemma lies in whether to legally recognize cryptocurrency as a currency, a commodity subject to property laws, or a non-documentary security for data assets.

This article aims to discuss this dilemma thoroughly and evaluate the current approach to policing cryptocurrency, reflecting back on its value as a form of money.

"Defining" Cryptocurrency

Cryptocurrency refers to a digital currency that is not typically regulated by the government. While the digital code holds no independent value, it gains significant value as a means of exchange and performs the same role as traditional currency.

The legal definition of cryptocurrency remains unclear due to its intangible form of digital security. It cannot be subject to civil rights and may also be considered a security or economic instrument, depending on how it is used.

The current stances that countries have towards cryptocurrency can be seen in Figure 1. While most European countries recognize cryptocurrency as a private means of payment, the extent differs by state. The US only regulates cryptocurrency via licensing but has no federal control, as seen in most countries. Countries like Ecuador and Bolivia have banned cryptocurrency usage, while Japan and Germany have fully regulated it as a digital asset. The Australian tax office does not categorize cryptocurrency as a financial product but instead as a cryptographic means in electronic form.

Nature of Cryptocurrency

The legal uncertainty surrounding cryptocurrency has resulted in the government's inability to provide a clear definition. Cryptocurrency's intangible nature complicates its legal status, especially regarding it as a legal property. Since cryptocurrency-based activities are not regulated, controlled, or tracked due to its undefined legal status, it can be easily misused for illegal activities.

Although governments attempt to integrate technology, Anti Money Laundering enforcement and validation of clients' identity remain challenging. The Initial Coin Offerings (ICO) concept has seen a rise in scams, often with the scam artist raising value through crowdfunding before dumping it to earn profit. Figure 2 highlights the extent of regulations and subsequent ICO scams, acknowledging the increasing scams.

Criminal liability can arise from the Initial Coin Offering. Catalini argues that new security policing issues arise, and protection for market and individual investors is critical.

Case study: China's Dual Policy

China has implemented cryptocurrency as it seeks to benefit financially from the technology. However, its highly centralized political system is directly against cryptocurrency's decentralized characteristics. China's unique response is the Dual Policy.

Despite being referred to as a cryptocurrency, digital currency cannot be considered a full implementation of cryptocurrencies due to various restrictions. According to Ekman, a researcher at a renowned institution, China's Dual Policy execution could further increase government control over the population. The state will no longer require customer information from companies as individual records can be collected, which raises concerns about privacy.

Cryptocurrency and Legal Regulation

After examining current policies and related issues, there is a need to improve the recognition of the legal nature of cryptocurrency. Authorities and legal entities have failed to establish a definite position on legally defining cryptocurrency, and the current efforts to regulate cryptocurrency and its turnovers are futile, as the fundamental nature of cryptocurrency is not thoroughly understood. New efforts are necessary for acknowledging the entirely new phenomenon of cryptocurrency and establishing it as a separate legal object.

It is inappropriate to compare the value of cryptocurrency with traditional currency since it cannot be attributed to money, individual property, or security. Instead, a new concept of a "digital commodity" should be introduced as a legal object. Investments in governmental efforts to understand the legal nature of cryptocurrency are necessary, prioritizing defining the scope of rights and security of individuals and legal entities. For now, there may be restrictions in legally recognizing cryptocurrency.

References

Bellavitis, C., Fisch, C., & Wiklund, J. (2021). A comprehensive review of the global development of initial coin offerings (ICOs) and their regulation. Journal of Business Venturing Insights, 15, e00213. https://doi.org/10.1016/j.jbvi.2020.e00213

Bolotaeva, O. S., Stepanova, A. A., & Alekseeva, S. S. (2019). The Legal Nature of Cryptocurrency. IOP Conference Series, 272(3), 032166. https://doi.org/10.1088/1755-1315/272/3/032166

Buchholz, K. (2022). Where the World Regulates Cryptocurrency [Digital image]. Statista. https://www.statista.com/chart/27069/cryptocurrency-regulation-world-map/

Catalini, C. (2018). Blockchain Technology and Cryptocurrencies: Implications for the Digital Economy, Cybersecurity, and Government. Georgetown Journal of International Affairs, 19, 36– 42. http://www.jstor.org/stable/26567525

Cherniei, V. V., Cherniavskyi, S., Babanina, V., & Tykho, О. (2021). Criminal Liability for Cryptocurrency Transactions: Global Experience. European Journal of Sustainable Development, 10(4), 304. https://doi.org/10.14207/ejsd.2021.v10n4p304

Cryptocurrency. (n.d.) In Cambridge Dictionary. https://dictionary.cambridge.org/dictionary/english/cryptocurrency

Ekman, A. (2021). CHINA’S BLOCKCHAIN AND CRYPTOCURRENCY AMBITIONS: The first- mover advantage. European Union Institute for Security Studies (EUISS). http://www.jstor.org/stable/resrep34058

Login Consent - Moneycontrol. (n.d.). https://www.moneycontrol.com/msite/wazirx-cryptocontrol-articles/a-beginners-guide-to-cryptocurrency-article/