45 lines
6.5 KiB
Markdown
45 lines
6.5 KiB
Markdown
# What consumer protections exist for crypto assets?
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There are little to no consumer protections for investing in crypto assets. This depends on jurisdiction but even in countries with advanced economies and regulatory institutions there is a lack of protection for investors because most [crypto asset](../concepts/cryptoasset.md) exist outside the [regulatory perimeter](../concepts/regulatory-arbitrage.md).
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Consumers are typically advised that all of their [crypto assets](../concepts/cryptoasset.md) can go to zero with no warning and with no recourse in the cause of fraud of [platform risk](../concepts/platform-risk.md).
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Most [crypto exchange](../concepts/crypto-exchange.md) are loosely regulated as[money services business](../concepts/money-services-business.md) which generally does not provide for any consumer protection even though the entities are acting as [bank](../concepts/bank.md)-like entities on behalf of their customers. There is no [deposit insurance](../concepts/deposit-insurance.md) on customer funds.
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[When crypto-exchanges go broke, you'll lose it all](https://pluralistic.net/2022/02/03/liquidation-preference/#we-live-in-a-society)
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## Risk Factors
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* [Exit scams](../concepts/exit-scam.md)
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* [Ponzi schemes](../concepts/ponzi-scheme.md)
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* [Money laundering](../concepts/money-laundering.md)
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* [Counterparty risk](../concepts/counterparty-risk.md)
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* [Platform risk](../concepts/platform-risk.md)
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* [Price risk](../concepts/price-risk.md)
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* [Market manipulation](../concepts/market-manipulation.md)
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* [Terrorism financing](../concepts/ctf.md)
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## References
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1. ‘Guidance on Cryptoassets’. 2019. Financial Conduct Authority. https://www.fca.org.uk/publication/consultation/cp19-03.pdf#page=11.
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1. Amenta, Carlo, E Riva Sanseverino, and Carlo Stagnaro. 2021. ‘Regulating Blockchain for Sustainability? The Critical Relationship between Digital Innovation, Regulation, and Electricity Governance’. Energy Research & Social Science 76: 102060. https://doi.org/10.1016/j.erss.2021.102060.
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1. Arjaliès, Diane-Laure. 2020. ‘“At the Very Beginning, There’S This Dream.” the Role of Utopia in the Workings of Local and Cryptocurrencies’. In Handbook of Alternative Finance. February. https://www.researchgate.net/publication/333755384_AT_THE_VERY_BEGINNING_THERE'S_THIS_DREAM_THE_ROLE_OF_UTOPIA_IN_THE_WORKINGS_OF_LOCAL_AND_CRYPTOCURRENCIES.
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1. Azgad-Tromer, Shlomit. 2018. ‘Crypto Securities: On the Risks of Investments in Blockchain-Based Assets and the Dilemmas of Securities Regulation’. Am. UL Rev. 68: 69.
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1. Barrett, Claer. 2021. ‘Why Young Investors Bet the Farm on Cryptocurrencies’. Financial Times, 28 May 2021. https://www.ft.com/content/162839aa-0437-478b-a4d4-4a8d7ab71458.
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1. Burilov, Vlad. 2019. ‘Regulation of Crypto Tokens and Initial Coin Offerings in the EU: De Lege Lata and de Lege Ferenda’. European Journal of Comparative Law and Governance 6 (2): 146–86. https://doi.org/10.1163/22134514-00602003.
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1. Cristina Cuervo, Anastasiia Morozova. 2020. ‘Regulation of Crypto Assets’. International Monetary Fund. https://www.imf.org/en/Publications/fintech-notes/Issues/2020/01/09/Regulation-of-Crypto-Assets-48810.
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1. Cumming, Douglas J., Sofia Johan, and Anshum Pant. 2019. ‘Regulation of the Crypto-Economy: Managing Risks, Challenges, and Regulatory Uncertainty’. Journal of Risk and Financial Management 12 (3): 126. https://doi.org/10.3390/jrfm12030126.
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1. Doody, Sean. 2020. ‘Reactionary Technopolitics: A Critical Sociohistorical Review’. Fast Capitalism 17 (1): 143–64. https://doi.org/10.32855/fcapital.202001.009.
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1. Eich, Stefan. 2019. ‘Old Utopias, New Tax Havens: The Politics of Bitcoin in Historical Perspective’. Regulating Blockchain: Techno-Social and Legal Challenges, 85–98.
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1. Eichengreen, Barry. 2021. ‘Financial Regulation in the Age of the Platform Economy’. Journal of Banking Regulation, 1–11. https://doi.org/10.1057/s41261-021-00187-9.
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1. Feinstein, Brian D, and Kevin Werbach. 2020. ‘The Impact of Cryptocurrency Regulation on Trading Markets’. http://ssrn.com/paper=3649475.
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1. Ferreira, Agata. 2021. ‘The Curious Case of Stablecoins—Balancing Risks and Rewards?’ Journal of International Economic Law 24 (4): 755–78. https://doi.org/10.1093/jiel/jgab036.
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1. Guadamuz, Andres, and Chris Marsden. 2015. ‘Blockchains and Bitcoin: Regulatory Responses to Cryptocurrencies’. First Monday 20 (12). https://doi.org/10.5210/fm.v20i12.6198.
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1. Hacker, Philipp, Ioannis Lianos, Georgios Dimitropoulos, and Stefan Eich. 2019. Regulating Blockchain: : Techno-Social and Legal Challenges. https://doi.org/10.1093/oso/9780198842187.001.0001.
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1. Herian, Robert. 2020. ‘Blockchain, GDPR, and Fantasies of Data Sovereignty’. Law, Innovation and Technology 12 (1): 156–74. https://doi.org/10.1080/17579961.2020.1727094.
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1. Ivaniuk, Viktoria. 2020. ‘Cryptocurrency Exchange Regulation – An International Review’. Magda Dziembowska, Robert Dziembowski, Apelacja w Postępowaniu, 67.
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1. Kapsis, Ilias. 2021. ‘Should We Trade Market Stability for More Financial Inclusion? The Case of Crypto-Assets Regulation in EU’. FinTech, Artificial Intelligence and the Law: Regulation and Crime Prevention, 85–104. https://doi.org/10.4324/9781003020998-9.
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1. Nabilou, Hossein, and André Prüm. 2019. ‘Ignorance, Debt, and Cryptocurrencies: The Old and the New in the Law and Economics of Concurrent Currencies’. Journal of Financial Regulation 5 (1): 29–63. https://doi.org/10.1093/jfr/fjz002.
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1. Rae, Shaela W, and Lorraine Mastersmith. 2019. ‘Crypto Asset Trading in Canada: Entering a New Era of Regulation’. Banking & Finance Law Review 35 (1): 153–85.
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1. Schneiders, Alexandra, and David Shipworth. 2021. ‘Community Energy Groups: Can They Shield Consumers from the Risks of Using Blockchain for Peer-to-Peer Energy Trading?’ Energies 14 (12). https://doi.org/10.3390/en14123569.
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1. Tozze, Arianna, Josh Kamps, Eray Arda Akartuna, Toby Davies, Florian Hetzel, and Shane D. Johnson. 2021. ‘Cryptocurrencies and Future Crime’. Crime Science 11 (1): 4. https://doi.org/10.1186/s40163-021-00163-8.
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1. Xie, Rain. 2019. ‘Why China Had to Ban Cryptocurrency but the U.S. Did Not: A Comparative Analysis of Regulations on Crypto-Markets between the U.S. and China’. Wash. U. Global Stud. L. Rev. 18 (2): 457–89. https://openscholarship.wustl.edu/cgi/viewcontent.cgi?article=1684&context=law_globalstudies.
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1. Yeung, Karen. 2019. ‘Regulation by Blockchain: The Emerging Battle for Supremacy between the Code of Law and Code as Law’. Modern Law Review 82 (2): 207–39. https://doi.org/10.1111/1468-2230.12399.
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