Browsing by Subject "United States"

The anonymity of virtual currency allows for its misuse for criminal purposes. Of particular concern are transnational organized crime users of virtual currency platforms. The global regulatory response to virtual currency has been disparate, far from uniform, and until recently, fairly muted. In 2018, the European Union integrated virtual currency into a robust anti-money laundering legal regime by requiring the registration of all EU-based virtual currency providers to comply with the rules of the Fifth Anti-Money Laundering Directive. The United States has a messier, but equally stringent approach to virtual currency. However, American regulators struggle with fifty state courts issuing wildly varied interpretations, while virtual currency companies meet different conditions for licensing, described as ‘Frankenfinance’ or full of absurd contradictions and incongruities. China took an altogether different approach as it banned all cryptocurrencies in order for the People’s Bank of China to pave way for the introduction of its own cryptocurrency, the digital yuan. This decision was made after recent high profile security breaches, including thefts and fraud, warned the Chinese regulator of increasing risk to the financial market. The responses of these three jurisdictions demonstrate the different ways that regulators have begun to define and limit the use of virtual currency. Permissive and contentious regulators in the EU and the United States are normalizing the trade of virtual currencies if it complies with international anti-money laundering rules. However, the hostile Chinese approach suggests that this Western regulatory approach may not meet the demands of every global jurisdiction. This paper uses a vertical and horizontal comparative approach to identify both legal definitions and approaches to virtual currency regulation to answer the research question: is the harmonization of virtual currency regulation desirable, or even possible?