The study group concluded in its recent meeting that any regulation needs to consider the legal nature of a cryptocurrecy depending on its design and characteristics. The group addresses economic analysis of fintech's impact on the financial system and central bank policy, the design of legal and regulatory frameworks, and, the robustness of these technologies.

Crypto as money

The group noted the legal aspects of a cryptocurrency not only involve private law issues that deal with the relations between individuals or institutions, but also regulatory issues, such as those introduced in Japan for cryptocurrency exchanges. As regards private law issues, they stated it is difficult to say that Bitcoin currently has general acceptability and is legally regarded as ‘money’ and ‘therefore, it seems natural to consider a delivery of a Bitcoin merely as a fulfilment of an obligation to transfer Bitcoin, rather than a fulfilment of a monetary obligation.’ One hotly debated topic they highlighted is ‘whether a holder of a cryptocurrency is entitled to a real right, a claim, or another right. Some argue that cryptocurrency has characteristics that give rise to a real right, since it has a generally assertable property value. It should be noted, however, that the transfer of a cryptocurrency is realized not by the transfer of the value itself but by the disappearance and emergence of value.’

Payment claim

The group said this is similar to that of a means of payment based on claims. Thus, ‘in considering the legal nature of cryptocurrency, it is necessary to consider whether desirable protection would be achieved by granting a real right to the holder of a cryptocurrency whereby eliminating competing rights towards the cryptocurrency. In addition, granting a real right could lead to a possible cost increase for the entire payment system. Further, from the  viewpoint of safe conduct of transactions, a receiver of a cryptocurrency would be more strongly protected if the receiver can obtain the cryptocurrency free from past payment histories.’ A record of the group meeting can be found here.