TY - JOUR

T1 - Model Framework for Consumer Protection and Crypto-Exchanges Regulation

AU - Alekseenko, Aleksandr P.

N1 - I am grateful for the support I have received from the Russian Science Foundation within grant No 22-28-01031 of, https://rscf.ru/en/project/22-28-01031/ . Публикация для корректировки.

PY - 2023/7

Y1 - 2023/7

N2 - Cross-border insolvency of crypto-exchanges, cyber-risks, transnational character of activities with cryptocurrencies, and financial frauds on the Internet are among the key threats for individuals who use Bitcoin as an investment. Moreover, crypto-exchanges impose consumer agreements containing provisions limiting their liability for hacker attacks and other clauses promoting inequality in relations with investors. All the named obstacles highlight the vulnerability of unsophisticated individuals investing in digital assets and have pointed out the necessity to adopt an internationally recognized model of rules for crypto-exchanges, otherwise, it will be impossible to effectively protect the rights of investors engaged in the activities of intermediaries exchanging and keeping decentralized cryptocurrencies. The purpose of the study is to elaborate on the fundamentals for constructing an international legal framework protecting consumers from risks arising from the activities of crypto-exchanges dealing with decentralized cryptocurrencies. Based on the methodology of comparative legal study, this paper examines the judicial practice of various countries and the legislation of jurisdictions popular among crypto-exchanges. The research explores the nature of Bitcoin, describes the types of crypto-exchanges and discusses the main approaches to crypto-exchanges regulation. It argues that an international framework on crypto-exchanges should be based on understanding Bitcoin as a commodity which is situated in the place of crypto-exchange incorporation, licensing of crypto-exchanges, and self-regulation.

AB - Cross-border insolvency of crypto-exchanges, cyber-risks, transnational character of activities with cryptocurrencies, and financial frauds on the Internet are among the key threats for individuals who use Bitcoin as an investment. Moreover, crypto-exchanges impose consumer agreements containing provisions limiting their liability for hacker attacks and other clauses promoting inequality in relations with investors. All the named obstacles highlight the vulnerability of unsophisticated individuals investing in digital assets and have pointed out the necessity to adopt an internationally recognized model of rules for crypto-exchanges, otherwise, it will be impossible to effectively protect the rights of investors engaged in the activities of intermediaries exchanging and keeping decentralized cryptocurrencies. The purpose of the study is to elaborate on the fundamentals for constructing an international legal framework protecting consumers from risks arising from the activities of crypto-exchanges dealing with decentralized cryptocurrencies. Based on the methodology of comparative legal study, this paper examines the judicial practice of various countries and the legislation of jurisdictions popular among crypto-exchanges. The research explores the nature of Bitcoin, describes the types of crypto-exchanges and discusses the main approaches to crypto-exchanges regulation. It argues that an international framework on crypto-exchanges should be based on understanding Bitcoin as a commodity which is situated in the place of crypto-exchange incorporation, licensing of crypto-exchanges, and self-regulation.

KW - Bitcoin

KW - commodity

KW - consumer protection

KW - cryptocurrency

KW - jurisdictional risks

KW - liability

KW - litigation

KW - scam

UR - https://www.scopus.com/record/display.uri?eid=2-s2.0-85165979102&origin=inward&txGid=2ad7ccd2714b1394a08809056cdd189d

UR - https://www.mendeley.com/catalogue/0a794d2c-520d-356e-8c87-a2d6d56eb0d9/

U2 - 10.3390/jrfm16070305

DO - 10.3390/jrfm16070305

M3 - Article

VL - 16

JO - Journal of Risk and Financial Management

JF - Journal of Risk and Financial Management

SN - 1911-8074

IS - 7

M1 - 305

ER -