Developing the Right Regulatory Regime for Cryptocurrencies and Other Value Data

The idea advanced here is that cryptocurrencies are assets consisting of as rivalrous and excludable data recorded by a trusted technology (instead of being booked by a qualified intermediary). They are rivalrous in the sense that only one person can consume the data by using it in a transaction. Unlike many other forms of data, consumption of it cannot be shared with the world at large. They are excludable in the sense that the holder of the cryptocurrency data can exclude third parties from transacting with them. This manifestation allows cryptocurrencies to be treated as one of many types of what will be termed value data. The view advanced here is that any regime applied to them should be closely modelled on the set of rules governing entitlements to assets deposited with a prudentially supervised and, hence, trusted party. These rules would include segregation rights and the burden of bearing losses arising from the insolvency of a holder of other parties’ cryptocurrency. They should also be subject to the rules governing the transfer of money using instruction-based book entries in data records, and in that way treated comparably to the accounts used in conventional money transfer systems