Money has been with us for a long time.1 However it was only in 1938 that the first full-scale English law analysis of ‘money’ was published with FA Mann’s magisterial work The Legal Aspects of Money.2 Cryptocurrencies burst onto the public consciousness as late as 2009 when the programmer(s)3 Satoshi Nakamoto launched the technology that enabled the public to trade in ‘Bitcoins’, which remains the best known of the many thousands of alternative cryptocurrencies that are traded today. Happily we have not had to wait nearly so long to have a detailed guide to the legal aspects of cryptocurrencies with the publication of the present volume.
What are cryptocurrencies? My working description is that they are digital or virtual assets that use high-level cryptography through a decentralized system for trading purposes and to keep those assets secure. Cryptocurrencies are not organized by any nation State and they are largely outside state control for the present. They represent a revolutionary new way to create and guard an ‘asset’ and to make payments for other assets. The advocates of cryptocurrencies argue that they have emerged as a result of a growing distrust or cynicism in so-called ‘trusted third party’ financial institutions, following the apparent inability of banks and even States worldwide to master the financial crisis of 2008. Financial institutions, thought to be sound and trustworthy, failed, or were only saved at a huge cost to tax payers. Many individuals lost personal assets during or after the crisis. Since then ‘centralized’ and so-called ‘trusted’ third parties, whether banks, credit agencies, or social media networks or companies, have had millions of peoples’ personal data stolen from them by internet hackers. The use of cryptocurrencies, cutting out ‘the middleman’ and using high-standard cryptography for security, is a reaction to all these events. They enable people to transfer assets directly between two people without any need for a ‘trusted’ third party like a bank. It is even argued that cryptocurrency technology enables those who have no access to banks of similar institutions to have financial freedom, so that cryptocurrencies enable everyone to ‘take back control’ of their money or assets.
(p. vi) It is estimated that the total value of all cryptocurrencies in the world today is in the region of US$350 billion, although this figure fluctuates rapidly. The daily sale and purchase of cryptocurrencies is about US$17 billion. They seem likely to be an increasingly important part of the worldwide financial scene, despite attempts by several States, including China, to ban or restrict their use.
The huge growth in the use of cryptocurrencies requires lawyers to tackle the issues of how they fit into legal frameworks. Although there have been a large number of articles and reports about different legal issues thrown up by cryptocurrencies, this is the first volume that makes a national, international, and comparative law study of the many difficult legal challenges that cyrptocurrencies present. The most basic question for any system of law which encounters a cryptocurrency, whether it be municipal or international, or private or public law, is how a cryptocurrency to be characterized. Is it to be treated, for legal analysis, as being equivalent to ‘money’, or is it an ‘asset’, or what English law calls a ‘chose (or thing) in action’ or some other form of property? Depending on the answer to that question, issues about the nature of ownership, possession, and other possible legal (or equitable) rights in cryptocurrencies can then be analysed. Given that cryptocurrencies are virtual and that anyone anywhere in the world who has access to the necessary cryptographic keys and a computer can trade in them, it is obvious that cross-border legal issues such as how to decide which courts have jurisdiction in any dispute and which is the applicable law will be of fundamental importance. Although the originators of cryptocurrencies and many of its users would like to imagine that they are outside national and international regulatory control and the criminal law, that cannot be so. So the way the regulatory and criminal law deals with them also needs attention. So do issues of whether or how cryptocurrencies and trading in them or with them might be taxed. On a more philosophical and sociological level it is also pertinent to enquire into whether, if cryptocurrencies are not state-backed currencies or assets, they fulfil some kind of ‘community currency’ role and if so, what are the legal consequences of that?
The meteoric rise in the use of cryptocurrencies necessitates that all these difficult legal and sociological questions be urgently examined. This book does so. It is not confined to English law, nor even European legal systems, but considers the problems from the viewpoint of Asian law systems as well. The distinguished authors, all specialists in the topics they address in each of the ten substantive chapters, explain the problems and suggest solutions in a clear and concise way. For any lawyer, like me, who is having to grapple with the legal aspects of cryptocurrencies for the first time, this book is a godsend. And for those who are not tyros, the deep and careful analyses that are given in each chapter will provide answers to problems or leads to further study.
This book is very timely and I warmly welcome it.