Legal and Regulatory Intervention in the Cryptocurrency Space: An Impossible Task?
Lau Chin Yang Joseph
(2021) 33 SAcLJ 50
It is often alleged that cryptocurrencies are “trustless”, “immutable” and “decentralised” and that these traits not only make them “self-regulating”, but also render legal and regulatory intervention in the cryptocurrency space impossible. The accuracy of such allegations is questionable. A closer examination of the mechanics behind several cryptocurrencies reveals that, while some cryptocurrencies display degrees of the aforementioned traits, cryptocurrencies are not completely “trustless”, “immutable” or “decentralised” in every case. Furthermore, with reference to incidents like the 2016 hack of “The DAO”, it will be shown that the degree of “immutability” possessed by some cryptocurrencies does not enable them to be “self-regulating”, in the sense that they are able to police themselves against illegal conduct which may otherwise occur on such networks. Finally, it will be demonstrated that while the degrees of “trustlessness”, “immutability” and “decentralisation” possessed by some cryptocurrencies undoubtedly generate challenges for legal and regulatory intervention in the cryptocurrency space, these challenges are not insurmountable. Substantiating this, several proposals are made which may enable courts and regulators to not only deal with the challenges presented by cryptocurrencies, but also to seize the opportunities presented by them.