Evolution of Legislation in the Field of Cryptocurrency: Historical Background and Ethical Aspects of Criminalization (Kherson State University Herald Series Legal Sciences)

Summary

• The development of cryptocurrency legislation is a natural state response to the transformation of social relations under the influence of digital technologies.p.3
• Criminalization should target specific socially harmful acts associated with cryptocurrency, not cryptocurrency as a technological or property-related phenomenon.p.3
• The ethical principles identified for criminalization are the social danger of the act, fairness, proportionality, legal certainty and the principle of ultima ratio.p.3
• One of the first official attempts to define the legal status of cryptocurrency in Ukraine was a National Bank of Ukraine clarification of 10 November 2014, which treated Bitcoin as a 'money surrogate'.p.4
• Law No. 361-IX (2019) introduced the concept of 'virtual asset', a significant step in the normative recognition of digital assets.p.5
• The optimal model of criminal-law protection of cryptocurrency should balance protecting the property interests of digital economy participants with the freedom of lawful use of digital technologies.p.5

Key insights

1. Cryptocurrency can be used in mechanisms for committing socially dangerous acts, in particular fraud, unlawful appropriation of property and money laundering.p.3
2. A timely regulatory response should not lead to an unjustified expansion of criminal law prohibitions.p.3
3. The National Bank of Ukraine viewed Bitcoin as a monetary surrogate without real-value backing that could not be used as a means of payment in Ukraine.p.4
4. Rising cases of fraud and unlawful appropriation of property involving cryptocurrency indicate a need for proper criminal-law assessment.p.4
5. Criminal law must define the permissible limits of criminal-law intervention, not only react to new forms of socially dangerous behavior.p.4
6. The definition of 'virtual asset' showed that the development of the relevant social relations outpaces the formation of the legal framework.p.5