Regulation of cryptocurrencies

Cryptocurrencies and the Distributed Ledger Technology (DLT) are redesigning transaction, payments systems and the transfer of information and value. They also raise new policy challenges for regulators and policymakers. The purpose of the paper is twofold. First, the paper takes stock of the arguments put forward by regulators to justify the regulation of cryptocurrencies. Second, the paper exposes the two most frequently mentioned regulatory options -obliged entities and the sandbox approachand assess their applicability to cryptocurrencies. It will appear that they may engender significant detrimental side-effects. We then consider two alternative options race to the bottom and self-regulationas potential candidates to prompt significant positive effects. Decentralized exchange platforms (DEXs) and dark pools may play a pivotal role in the evolution of the regulation of cryptocurrencies.