INTEGRATION, ASSESSMENT, CONCLUSIONS, AND RECOMMENDATIONS
INTEGRATION OF RESEARCH FINDINGS
FIRST RESEARCH QUESTION – This section will summarize and integrate the findings of the previous chapters. The goal is to answer the first main research question, inquiring to what extent virtual currencies are currently regulated as money, or under the legal frameworks regarding e-money, payment services, anti-money laundering, and investment services in the EU. In doing so, the aim is to expose the gaps and incompatibilities following from the current position of virtual currencies under the legal frameworks analyzed in this research.
Typology – Before going into the analysis of whether the analyzed legal frameworks can apply to virtual currencies, it is reminded that a typology has been established for the purposes of this research. The typology is based on two financial flows: (1) the flow of legal tender or similar means of payment into virtual currency, and (2) the flow of virtual currency into legal tender or similar means of payment. As a result, three main types of virtual currencies can be distinguished. First, there are closed scheme virtual currencies, where neither financial flow is present. Second, there are unidirectional scheme virtual currencies, where only the first financial flow is present. Third, there are bidirectional scheme virtual currencies, in which both financial flows are present. Those three types serve to classify all practical examples analyzed for the purposes of this research. For bidirectional scheme virtual currencies, it is additionally remarked that they can serve both as means of payment and as means of investment. A number of risks were identified for virtual currencies, amongst which the risks posed by the relative anonymity and volatility of virtual currencies. If those risks are not properly mitigated by regulation, it can be argued that such a lack of regulation constitutes a derivative risk. Applying the risks to the typology, the conclusion is that closed scheme virtual currencies pose little, if any, risks to users, markets, investors, or service providers. Unidirectional scheme virtual currencies pose moderate risks to users and service providers, but principally do not affect investors or the market. Last, bidirectional scheme virtual currencies pose risks to all four of those actors.
Trust – Like any relationship or transaction, the use of virtual currencies requires a certain degree of trust from users in the virtual currency issuer or in the underlying system – such as the blockchain in cryptocurrencies.