Legal Risks of Owning Cryptocurrencies

Research output: Chapters, Conference Papers, Creative and Literary Works (RGC: 12, 32, 41, 45)12_Chapter in an edited book (Author)peer-review

4 Scopus Citations
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Author(s)

Detail(s)

Original languageEnglish
Title of host publicationHandbook of Blockchain, Digital Finance, and Inclusion
Subtitle of host publicationCryptocurrency, FinTech, InsurTech, and Regulation
EditorsDavid Kuo Chuen Lee, Robert Deng
Place of PublicationLondon
PublisherAcademic Press
Chapter10
Pages225-247
Volume1
ISBN (Electronic)9780128104422
ISBN (Print)9780128104415
Publication statusPublished - 2018
Externally publishedYes

Abstract

Cryptocurrencies like Bitcoin have matured from being associated exclusively with techies and radicals to being considered by central banks as a technology to implement digital money. Cryptocurrencies exist only in digital form and can be transferred completely between digital addresses. This is both unlike conventional electronic money as understood by laypersons which acts as a debt claim on a deposit with a trusted financial institution such as a private bank and unlike conventional corporeal money which may be physically possessed. This means that any legal rights associated with holding cryptocurrencies must be different despite it being remaining open to interpretation. In this chapter, we look at the various treatments of money in the legal sense and discuss the risks associated with each by drawing on real life examples. We conclude that fraud through hacking could potentially pose a problem to widespread adoption of cryptocurrencies as the absence of recourse against a third party such as a bank concentrates risk in holders of cryptocurrencies. Users should thus exercise caution and understand the risks before investing in cryptocurrencies. This warning requires emphasis as many parties misapprehend the cryptography within the technology as protecting them from such fraud when in fact it does no such thing.

Research Area(s)

  • Cryptocurrencies, Bitcoin, Electronic money, Digital money

Citation Format(s)

Legal Risks of Owning Cryptocurrencies. / Low, Kelvin F.K.; Teo, Ernie.

Handbook of Blockchain, Digital Finance, and Inclusion: Cryptocurrency, FinTech, InsurTech, and Regulation. ed. / David Kuo Chuen Lee; Robert Deng. Vol. 1 London : Academic Press, 2018. p. 225-247.

Research output: Chapters, Conference Papers, Creative and Literary Works (RGC: 12, 32, 41, 45)12_Chapter in an edited book (Author)peer-review