As the use of cryptoassets and, in particular, cryptocurrency, has grown it has seemed inevitable we would see more disputes arising from transactions involving this kind of asset.
In recent months the English Court has considered cases arising from allegations of cryptocurrency fraud and the approach of the Courts has started to develop. Recent case-law has clarified that cryptocurrency is “property” for the purposes of English law and remedies, including punitive worldwide freezing orders, are available to those who have fallen victim to this category of fraud. It seems very likely that this area will continue to evolve as claims arise.
However the rise in the use of cryptocurrency has given rise to concern in some circles from those who fear an influx of cryptoasset-related fraud. The reduced regulation that controls cryptocurrency transactions, allowing for easier transfers of the digital asset, is attractive to some investors.
This characteristic of cryptocurrency, while appealing to some, is also arguably its more dangerous feature. By its very nature as a digital asset, cryptocurrency is susceptible to cyber-crime. As the world sees instances of carrying out cyber-crime becoming more sophisticated and widespread, together with the growth of cryptocurrency, this has the potential to cause real difficulties in the financial sphere.
So is an increase in regulation in the cryptocurrency market inevitable or even necessary, and how would new regulation be effectively implemented given the global nature of cryptocurrency dealings?
The position is unclear but regulatory changes certainly cannot be ruled out. As warnings about the use of cryptoassets continue to come from those including the EU Commission and the FCA, it seems likely changes will be proposed. As the English Courts continue to deal with cases in this area of law in the meantime, the future of this market will be interesting to follow.
Cryptocurrencies need regulation as a "matter of urgency", according to Bank of England deputy governor Sir Jon Cunliffe. Crypto technologies do not pose a risk to financial stability at the moment, he said. But there are "very good reasons" to think that this might not be the case for much longer, Sir Jon said in a speech.