Approaches to the complex world of cryptocurrencies

Approaches to the complex world of cryptocurrencies

The advance of cryptocurrencies is a clear and manifest reality. The development of cryptocurrencies has been driven by several factors, such as the need for a digital currency not controlled by a government or centralized entity, security and privacy of transactions, ease of use and the ability to conduct international transactions without the restrictions of fiat currencies. Many are the institutions and governments that, to date, have shown some concern or worry or have even considered and have come to incorporate cryptocurrencies into their economic activity.

However, the widespread adoption of cryptocurrencies still faces many challenges, such as lack of regulation, price volatility, general acceptance, and the security of so-called digital wallets.

To place the context for those less knowledgeable about this currency or assets, cryptocurrencies are decentralized digital currency that uses blockchain technology to record and verify transactions. Their development has been a disruptive process within the world of finance and has changed the way economic transactions are conducted. From the first and best-known example of cryptocurrencies, such as Bitcoin, created in 2009, to the present day, thousands of different cryptocurrencies have been made, some of which are alternatives to Bitcoin itself, while others have specific objectives, such as privacy or transaction speed.

In any case, cryptocurrencies have become a trend within the financial sector. Around them, there is a multitude of news, opinions and criticisms that need to be contextualized and pondered. In a research article with other colleagues, we tried to explain some of the leading legal issues related to cryptocurrencies in the financial market and to analyze the most salient aspects of one of the most recent regulatory proposals, such as MiCa. In the research, we motivate the need to know the fundamental legal and financial reality surrounding cryptocurrencies, without which they could not develop. We do the work in line with technology development, clarifying volatility’s negativity for the development of cryptocurrencies.

The conclusions that can be seen in the article highlight the need for consistent accounting legislation and the determination of cash principles and standards observed in the importance of the cryptocurrency portfolio and their implications on current and traditional cash-based and bank-based management.

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