9 Cryptocurrencies and Banking Law: Are There Lessons to Learn?

Subject(s):

Banker-customer relationship — Electronic money — Currency

This chapter considers whether the principles and practices employed by traditional banks may be reconciled with the trading and holding of Bitcoin and other cryptocurrencies. It examines three basic functions of traditional banking — storing value, making payments and lending — and the extent to which they can be performed through cryptocurrency transactions. In analysing the extent to which cryptocurrencies operate as stores of value, the chapter asks whether a cryptocurrency itself stores monetary value and how the economic value in cryptocurrencies is stored in digital wallets. It also discusses four duties that arise from drawing an analogy between digital wallets and bank accounts in the context of bank-customer relationships: the duty to act in accordance with one's mandate; the duty to keep information confidential; the duty to act with reasonable skill and care; and the fiduciary duties (or disabilities) relating to unauthorised conflicts of interest and profit-making.