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“Soft law” and innovations: empirical analysis of ICO-related statements

Victor Dostov (Saint Petersburg State University, St. Petersburg, Russian Federation, and Russian Electronic Money and Remittance Association, Moscow, Russian Federation)
Pavel Shust (Saint Petersburg State University, St. Petersburg, Russian Federation, and Russian Electronic Money and Remittance Association, Moscow, Russian Federation)
Anna Leonova (Russian Electronic Money and Remittance Association, Moscow, Russian Federation)
Svetlana Krivoruchko (Financial University, Moscow, Russian Federation)

Digital Policy, Regulation and Governance

ISSN: 2398-5038

Article publication date: 13 August 2019

Issue publication date: 23 September 2019

Abstract

Purpose

The purpose of the paper is to explore the initial coin offering (ICO) statements as “soft law” instrument used to regulate disruptive innovations.

Design/methodology/approach

The research is based on the qualitative content analysis of 40 ICO statements issued by regulators in 37 countries by applying a custom-made coding table.

Findings

The research shows that “soft law” is used predominantly by high-capacity jurisdictions. “Soft law” allows for more flexibility and less technological and business neutrality. The findings also show the contradiction between empirical evidence and public sentiment: it seems that the widespread notion that virtual currencies have connotations with money laundering/financing of terrorism (ML/FT) is not shared by the regulators, who are more concerned by the fraud. Finally, it was found that the standard-setting bodies are lagging behind in providing guidance on the emergence technologies.

Research limitations/implications

The content analysis is based on 40 statements, which is a limited set of data. The method might be subject to interpersonal bias, although arrangements were made to ensure the uniformity of coding process.

Practical implications

The findings imply that soft law is an attractive risk-mitigation tool when the object of regulation is still evolving but the risks are present. Soft law also might contradict with the “technology and business neutrality” principle which requires further research. Finally, the findings show the need for more active involvement of the standard setting bodies.

Originality/value

This is the first in-depth research of the ICO-related statements as “soft law” instruments. It also offers a new perspective on the issue of financial innovations regulation.

Keywords

Citation

Dostov, V., Shust, P., Leonova, A. and Krivoruchko, S. (2019), "“Soft law” and innovations: empirical analysis of ICO-related statements", Digital Policy, Regulation and Governance, Vol. 21 No. 5, pp. 476-493. https://doi.org/10.1108/DPRG-03-2019-0018

Publisher

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Emerald Publishing Limited

Copyright © 2019, Emerald Publishing Limited