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Model Framework for Consumer Protection and Crypto-Exchanges Regulation

Author

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  • Aleksandr P. Alekseenko

    (Laboratory for Analysis and Forecasting of Integration Processes in Modern Eurasia of Institute of Philosophy and Law, Novosibirsk State University, 630090 Novosibirsk, Russia)

Abstract

Cross-border insolvency of crypto-exchanges, cyber-risks, transnational character of activities with cryptocurrencies, and financial frauds on the Internet are among the key threats for individuals who use Bitcoin as an investment. Moreover, crypto-exchanges impose consumer agreements containing provisions limiting their liability for hacker attacks and other clauses promoting inequality in relations with investors. All the named obstacles highlight the vulnerability of unsophisticated individuals investing in digital assets and have pointed out the necessity to adopt an internationally recognized model of rules for crypto-exchanges, otherwise, it will be impossible to effectively protect the rights of investors engaged in the activities of intermediaries exchanging and keeping decentralized cryptocurrencies. The purpose of the study is to elaborate on the fundamentals for constructing an international legal framework protecting consumers from risks arising from the activities of crypto-exchanges dealing with decentralized cryptocurrencies. Based on the methodology of comparative legal study, this paper examines the judicial practice of various countries and the legislation of jurisdictions popular among crypto-exchanges. The research explores the nature of Bitcoin, describes the types of crypto-exchanges and discusses the main approaches to crypto-exchanges regulation. It argues that an international framework on crypto-exchanges should be based on understanding Bitcoin as a commodity which is situated in the place of crypto-exchange incorporation, licensing of crypto-exchanges, and self-regulation.

Suggested Citation

  • Aleksandr P. Alekseenko, 2023. "Model Framework for Consumer Protection and Crypto-Exchanges Regulation," JRFM, MDPI, vol. 16(7), pages 1-17, June.
    • Handle: RePEc:gam:jjrfmx:v:16:y:2023:i:7:p:305-:d:1177483
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    References listed on IDEAS

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    1. Peter Fratrič & Giovanni Sileno & Sander Klous & Tom Engers, 2022. "Manipulation of the Bitcoin market: an agent-based study," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 8(1), pages 1-29, December.
    2. Ozkan Haykir & Ibrahim Yagli, 2022. "Speculative bubbles and herding in cryptocurrencies," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 8(1), pages 1-33, December.
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    Cited by:

    1. Chhatwani, Malvika & Parija, Arpit Kumar, 2023. "Who invests in cryptocurrency? The role of overconfidence among American investors," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 107(C).
    2. Amrutha Muralidhar & Muralidhar Lakkanna, 2024. "Regulating Cryptocurrency and Decentralized Finance for an Inclusive Economy," Papers 2407.01532, arXiv.org.

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