Designing an appropriate regulatory framework for cryptocurrencies is a difficult task for government agencies. The heart of the problem lies in trying to understand what cryptocurrencies actually entail. To date, there is no clear and authoritative definition of a cryptocurrency. Cryptocurrencies are quite alien to existing legal concepts and this makes it difficult for regulators to determine which aspects (if any) require regulation and, if so, how to control and monitor these activities. For the reasons outlined in this article, China has prohibited the issuing of initial coin offerings (ICOs), prohibited financial institutions engaging in transactions involving cryptocurrencies and effectively banned trading in cryptocurrencies. In addition to China, which provides the “testing” standard, three nations have been selected for analysis in this article, namely, New Zealand, Australia and South Africa. All have to date chosen not to ban ICOs, trading or payment transfers in cryptocurrencies. New Zealand has maintained that it will apply its existing regulatory frameworks. Australia and South Africa have waivered and South Africa looks like it is in the process of introducing a specialist regulatory framework. Ultimately, it will be contended that South Africa has taken an appropriately cautionary approach, asserting that its initial policy position is based on the “existing landscape and current [low] levels of adoption, acceptance and use”, reserving the right to amend its policy stance if the use of cryptocurrencies for money laundering and/or illegal activities proves to be too risky.
|Number of pages||27|
|Journal||New Zealand Journal of Taxation Law and Policy|
|Publication status||Published - Sep 2020|
- Digital currency
- regulation framework