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11 King's Student L. Rev. 26 (2020-2021)
Legal Regulation of Virtual Currencies: Illicit Activities and Current Developments in the Realm of Payment Systems

handle is hein.journals/kinstul11 and id is 26 raw text is: Legal Regulation of Virtual Currencies: Illicit Activities and Current Developments in the Realm of Payment Systems Ilias Ioannou Since Bitcoin was invented a decade ago, the phenomenon of Virtual Currencies has been hailed as an ingenious innovation and decried as the preferred transaction vehicle for illicit actors. Despite the numerous headlines discussing the virtues and vices of virtual currencies, heretofore there has been no comprehensive legal response. The present contribution elaborates on the regulation of virtual currencies in the European Legal Area. Starting with a conceptual analysis of virtual currencies and their promising potential, it identifies the financial crime risks posed by the intersection between legitimate and illegitimate users. The research shows that a fragmentary regulation would be ineffective; this promising technology will either be integrated into the lawful economy or it will be exploited by criminals. The paper attempts to fill the regulatory gap by providing a recommendation for the embeddedness of Virtual Currencies into the financial system. It achieves that by redirecting regulation towards the uniqueness of their underlying technology. Introduction Virtual Currencies (VCs) present exceptional opportunities for innovation and development in international payment and remittance systems. They offer 'a version of electronic cash' that allows 'online payments to be sent directly from one party to another without going through a financial institution. Ongoing initiatives, such as Facebook's Libra, aspire to bring cryptocurrency to the masses by providing 'a reliable digital currency and infrastructure that together can deliver on the promise of the internet of money.'2 However, VCs are also uniquely tailored to facilitate illegitimate activities. Starting with an analysis of the applicability and suitability of the current European Union (EU) legal concepts, this inquiry will re-examine the statutory framework for the regulation of companies engaging in virtual currency business 1 Satoshi Nakamoto, 'Bitcoin: A Peer to Peer Electronic Cash System' (Bitcoin, 2008) <https:/ itcoin-ot-/bitcoimpdf> accessed 16 December 2019. 2 Libra Association, 'An introduction to Libra', (Libra, 2019), 4 <hops: /iibra.or;/en-US/white- paer/?noredirect=en-US#introdu ction> accessed 16 December 2019. 26

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