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Regulation of digital currency is still at its infancy as authorities around the world grapple with its mechanics, and study its impact and the best method to regulate it. Significant increase in the use of digital cryptocurrency based on Blockchain technology post-Bitcoin phenomenon had challenged the conventional idea of central bank monopoly in currency issuance. This had also raised concern that digital currency being used as an instrumentality of crime given its anonymity feature that allows for the flow of funds without tracing and the fact that it is built on trustless system that provides security of transaction. This concern, plus other consideration including the prospect of issuing central bank digital currency, had driven some authorities around the world to adopt countermeasures either via an outright ban or a regulatory regime that suits the nature of digital currency, which is purely virtual and anonymous. However, in coming out with an appropriate legal regime, authorities faced multiple difficulties especially when the pace of legal development does not sync congruently with the rapid progress of technology. In addition, given the growing prominence of Islamic finance around the world, questions also arise pertaining to the legality of digital cryptocurrency from the Islamic perspective. Through a qualitative study of relevant literatures as well as legislations in different countries, this chapter discusses the various categories of digital currency, its position from the Islamic perspective, regulatory regimes of digital cryptocurrency in selected jurisdictions and challenges faced by authorities around the world in regulating this new medium of exchange.

This chapter attempts to clarify and describe the legal and regulatory framework for cryptocurrency with special focus on Malaysia and the threats that it poses from the anti-money laundering perspective. Currently, very few countries have legislations that regulate cryptocurrency. Nonetheless, the crazy surge in prices (to more than 20-folds at some point) has sent both legitimate investors and criminals flocking to cryptocurrencies. This chapter analyses and compares the official reports from various governments, writings of government officials, experts and scholars in journals and newspapers, interviews and draws conclusions on the legal framework of cryptocurrency, and money laundering challenges. The study notes that the decision of the US regulators in allowing Bitcoin futures to trade on major exchanges to be one of the reasons behind the sudden surge. The study also finds that the South Korean regulators’ approach in banning its financial institutions from dealing with virtual currency is a positive one. The chapter stresses that it is not adequate for regulators to warn the public to act with extreme caution and increase their understanding on the risks they take on if they choose to invest in cryptocurrencies. Instead, it is necessary to have comprehensive international and national laws and regulations for the control and management of cryptocurrencies. In addition, the anti-money laundering legal framework must be improved to cater to the new threats posed by cryptocurrency.

In this study, it is examined how to improve the effectiveness of bitcoin market. In this framework, firstly, a wide literature review is made, and different factors that may be effective in this regard are identified. Afterward, an analysis is performed with Hurst method to determine which of these factors are more important. The study of cryptocurrency volatility is important in terms of financial instruments for hedging traditional assets, as well as in terms of pricing. The above results would be particularly useful in terms of portfolio management and risk management. This study discusses various financial issues related to cryptocurrencies, as well as some problems associated with the problems of their forecasting. To solve the problems of forecasting, the authors have not only studied, but also improved the forecasting method based on the machine learning algorithm in the MATLAB system using the tree model. Most of the analysis in the document relies heavily on studies by authors studying this issue. They can help make more informed decisions regarding financial investments and avoid the risks of using cryptocurrencies. The results may also assist regulators in creating a favorable legal environment for the functioning of the cryptocurrency market.

The authors evaluate financial stability and capital flows management objectives of capital controls in the context of four capital control events: removing or imposing controls on capital inflows and removing or imposing controls on capital outflows. The authors use synthetic control method to solve the endogeneity problem stemmed from the timing of capital control implementation. The authors find new evidence that capital controls are not consistently effective in reaching financial stability outcomes but are consistent in reaching capital flows management outcomes. The authors compare our results to estimates using difference-in-difference (DID) and carry out placebo analysis. Finally, we use synthetic DID to correct for the parallel trend bias and show that the results still hold.

This chapter examines institutional investors’ considerations while investing or otherwise engaging in the cryptocurrency sector, whether exclusively in bitcoin or the broader universe of crypto or decentralized finance assets. Given the rapid change in legal and regulatory oversight and cryptocurrency and blockchain innovation, offering inviolable advice about due diligence and compliance during commercial engagement is exceedingly difficult. However, general guidelines and rules of thumb are available.

Blockchain technology is an extension of distributed ledger technology and it is used in cryptocurrencies. Many studies describe blockchain technology and cryptocurrency is an application of it in a very broad sense. Blockchain technology has several applications. Some of these applications could have direct or indirect relevance to either or both pillars of sustainability advocated by Crowther, Seifi, and Wond (2019). Extending to cryptocurrencies like bitcoin, one possible connection to sustainability may be the reduction of the use of paper for printing currency notes, which can save forests. Furthermore, the growing cryptocurrency market attracted the investors to focus on the price fluctuations but making them forget about the terrifying carbon problem associated with cryptocurrencies. However, this possibility has not been demonstrated anywhere so far. The issue examined here is how blockchain technology can be used for solving sustainability problems. We initiate a qualitative study of the blockchain technology/cryptocurrency and sustainability using the twin pillars of sustainability: (1) responsibility, (2) governance. An exploratory review linking blockchain technology/cryptocurrency and sustainability and its two pillars revealed many actual and trial applications by corporates as CSR initiatives and other novel programs by various agencies in various countries. In governance, corporates use the CSR route to address sustainability issues. However, no definition is an available linking cryptocurrency, blockchain technology, and sustainability and we developed a definition to fill the gap. This paper stresses that the sustainability perspective has not been used to develop the cryptocurrency definition, but rather technological and legal perspectives have employed.

One of the noteworthy developments in the world economy is the cryptocurrency in general and the bitcoin in particular. Although several types of cryptocurrency are in operation in the current digital economy, the most prevalent is the bitcoin, which was launched formally in 2009 by an individual or group known under the pseudonym Satoshi Nakamoto. The value of bitcoin has increased to such an extend that it reached 19.7 billion US dollars by January 2, 2018 (Statista, 2018). As the bitcoin price touches a new high day by day, various terrorist organizations are using this cryptocurrency to anonymously finance their grotesque terrorist activities around the world by bypassing the surveillance mechanism of the banking system of the respective countries. Against this backdrop, this chapter aims to understand the mechanism of cryptocurrencies in general and the bitcoin in particular. Finally, it also endeavors to identify the trend of the bitcoin economy and its impact on nefarious activities in general and terrorism financing in particular. It has been revealed from the study that cryptocurrency economy has become so popular across the world that it has created an alternative virtual economy devoid of regulations from a specific country or a group of countries. By using vector error correction model (VECM), it had been observed that there exists a statistically significant long-run association between terrorist incidences and bitcoin transaction/circulation in the panel of 12 countries for 2010–2016. However, there is a huge concern over its way of operation and its unholy nexus with terrorism financing.

This chapter differentiates between centralized and decentralized exchanges (DEXs), emphasizing the importance of regulations and compliance related to the market’s development and expansion for cryptoasset trading and investment. It also explains the pros and cons of using different methods to trade cryptocurrencies or virtual currencies and their tradeoffs. The chapter discusses how centralized and DEXs emerged, their history and potential future, and the possible role of future regulations and regulatory clarity around how they may operate. Additionally, it compares cryptoasset markets to other more traditional markets such as equities, real estate, and foreign exchange.

This chapter discusses legal considerations relating to digital assets. The legal aspects of tokenized and non-tokenized assets are evolving. Although some states have enacted specific laws or regulations for digital assets, Congress and federal agencies have been slower to craft specific rules and regulations for such assets. As a result, regulators, such as the Securities and Exchange Commission, Commodity Futures Trading Commission, and Internal Revenue Service, and market participants must apply existing guidance to digital assets. This chapter examines applying specific aspects of federal securities and tax law to digital assets. It also discusses general business law considerations for blockchain and cyber enterprises. The discussion of state law applications centers on the New York Virtual Currency License and Wyoming and Delaware crypto initiatives. This chapter does not provide a comprehensive review of all legal issues related to cryptocurrency. Each legal issue about cryptocurrency is complex and requires separate analyses.

Technology has changed the future of money. The need to foster innovation in banking has been instigated by a shift from traditional finance provided by incumbents to fintech companies, such as challenger banks and decentralized platforms, offering new forms of money and payments services. The Bank of England has responded to this shift with the exploration of a Central Bank Digital Currency (CBDC), which in its retail form, would give the public the opportunity for the first time to directly hold state central bank money. This CBDC proposal emerges in a landscape where private money such as cryptocurrencies are increasing in capacity of coins and in trading volume; in a crypto economy with an expanding market capital. This competition opens the possibilities to reform banking to adapt to new payments platforms such as blockchains with advanced features such as smart contracts. The proposed design of a CBDC can either compete or complement such innovations which is evaluated in this review chapter. The author argues that the plethora of public and private currencies on the market, once reached legal maturity in terms of governance, can provide the element of choice to consumers in an open, innovative, and competitive free market. The author put forward that the Bank of England must act to introduce a CBDC that is interoperable with innovative payment platforms including blockchains, accompanied by a user centric design, to participate in the ever adapting fintech economy.