10 Financial Regulation in the New World

Subject(s):

Electronic money — Financial regulation — Monetary system

This chapter argues that although financial regulation touches almost every aspect of the financial industry, the one thing that it carefully avoids regulating is the use of money itself. The basis of financial regulation is permissioning, accompanied by some sort of prohibition of non-permissioned individuals engaging in the activities concerned. Since more or less everybody needs to use money on a regular basis, the use of money cannot be made a regulated activity. Thus, those items of virtual currency which are characterised as money will fall outside the scope of financial regulation altogether. However, the chapter points out that there are a number of different types of virtual currency unit, and these are by no means always clearly ‘money’ even for regulatory purposes.