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Cryptocurrencies and the Evolution of Banking, Money, and Payments
Abstract
This chapter discusses cryptocurrencies in the context of a historical overview of the evolution of money, banking, and the payment system. The chapter is organized as follows. Section I introduces the topic. Section II addresses money, payment, and payment intermediation. Section III sets out the evolution of commercial banking to facilitate national and global networks for book-based payments. Section IV addresses both electronic banking as a form of payment intermediation and the availability to the public of central bank balances as a challenge to payment intermediation. Section V examines the challenge cryptocurrencies present to state-issued currency, payment intermediation, and the roles of banks in the payment systems. The conclusion points at an irony: even as a challenge to banking, cryptocurrencies emerged as an outgrowth of an enhancement to banking.
... Cryptocurrencies, such as Bitcoin, are often considered by some proponents as a form of "hard money" due to certain characteristics they share with traditional hard currencies like gold and silver (Ammous, 2016;Geva, 2019). However, it is important to note that the classification of cryptocurrencies as hard money is subject to debate and interpretation. ...
Purpose
This paper aims to derive a compatible Shariah opinion on the permissibility of using cryptocurrencies by Muslims by reviewing the opinions expressed by Shariah scholars on the permissibility of cryptocurrencies.
Design/methodology/approach
This is a qualitative desk review research where the opinions expressed by the Shariah scholars on the permissibility of cryptocurrencies and the issues related to it have been analyzed using the literature. All the Shariah parameters checked pertaining to currencies have been studied and assessed to derive the Shariah opinion.
Findings
The research findings suggest that cryptocurrencies do not fully meet the characteristics of money according to Shariah principles. Scholars debate their classification as a medium of exchange due to concerns about volatility, intrinsic value and governance. The treatment of cryptocurrencies varies, and their decentralized nature prevents monopolization. Governance and resistance to manipulation are facilitated by blockchain technology. Classifying cryptocurrencies as hard money and their recognition as the primary unit of account face challenges. While they can be a store of value, price volatility and regulations must be considered. The network effect is crucial for their success, and their supply is controlled through complex protocols. These findings have implications for policymakers in Islamic finance.
Originality/value
The differences in Shariah opinions on using cryptocurrencies have been a major debate in the Islamic financial industry. A clear and comprehensive study is not found on the differences in the Shariah opinions on their reasonings, which is important for researchers and professionals in the field. Therefore, this research provides valuable insights for policymakers, scholars and practitioners in Islamic finance, contributing to the understanding of applying Islamic principles to cryptocurrencies.
Distributed Ledger Technology (DLT) is a way of managing, storing, and sharing information over a distributed network. The position of DLT in banking can be seen as controversial as it is a rapidly evolving technology with both potential benefits and challenges. The Role of Distributed Ledger Technology in Banking presents a balanced assessment of both the opportunities and risks behind such recent innovations. Combining theory and practice, it explores the impact of DLT in the banking sector and offers the opportunity to exploit different points of view from different disciplines. It presents topics from both a theoretical and practical point of view, highlighting concrete applications. Written by a team of experts from academia and the banking sector, this book looks at DLT not as a threat but as an exciting opportunity to bring the banking/financial system in the future.
Cryptocurrencies are on the rise, purporting to perform one or more monetary functions. In this article I seek to determine how far the legal framework that is assumed by consumers and companies when using conventional monetary objects is applicable to cryptocurrencies and to what extent the Regulation on Markets in Crypto-Assets is likely to address the specific monetary risks posed by these new phenomena.
Objective : to assess the Russian legislation for its compliance with the international-legal approaches to shaping symmetrical regulation of crypto-assets and possibility to complement it with new internationallegal categories reflecting the in-depth changes in the global economy and structure of international finance, determined by the broad introduction of new financial technologies based on distributed ledger technologies.
Methods : the methodological basis of the research is a set of general scientific methods of scientific cognition, among which of utmost importance are special-legal (formal-legal and comparative-legal) methods, complemented with risk-oriented approach, legal modeling and juridical forecasting. Applied integrally, they allowed comprehending the architecture, “letter and “spirit” of the modern international financial law and national legislation in their conceptual-terminological correlation and to forecast further development and adjustment of the legal regulation of crypto-assets turnover.
Results : it was found that there appears a stable trend in the crypto-assets turnover regulation, according to which “soft” law dominates among the law sources (this is especially notable in the sphere of international financial law compared, for example, with conventions or international treaties); at the same time, there is a strengthening trend of “fragmentation” of international law with regard to crypto-assets turnover; the authors mark inconsistency of the conceptual framework contained in international acts and in the Russian legislation, as well as the gaps in the regime of crypto-assets turnover at the level of national law; the trends and forecasts are presented referring to the development of international-legal regulation of the sphere of crypto-assets.
Scientific novelty : consists, first of all, in a complex comparison, based on, among other aspects, the fundamentally new concepts of regulation of such progressive international-legal categories as cryptoasset, virtual asset, cryptocurrency, stablecoin, etc., some of them rarely used in the Russian legal discourse and actually never applied in legislation.
Practical significance : the scientifically grounded proposals are formulated, aimed at improving the conceptual-terminological framework of the Russian legislation in the sphere of crypto-assets turnover, implementation of which will allow constructing a common legal space with the technologically most advanced states, will help to improve investment climate and financial attraction of the state; will improve the national-legal regime of crypto-assets turnover from the viewpoint of not only actual market demands, but also state security interests and improving competitiveness of the Russian legislation.
O presente artigo aborda a evolução dos sistemas de pagamento contemporâneos em um contexto de crescente digitalização. Ao analisar as infraestruturas que dão suporte à realização de pagamentos digitais e as relações travadas entre os intermediários que nelas atuam, investiga como os sistemas de pagamento evoluíram conciliando objetivos e interesses privados dos agentes econômicos com a noção de que o bom funcionamento desses sistemas é um bem público a ser perseguido e protegido pela intervenção regulatória estatal. O artigo examina igualmente como o marco regulatório setorial procura garantir o adequado equilíbrio entre a promoção da concorrência no setor de pagamentos com a salvaguarda de outros princípios fundamentais como a segurança, a integridade e a confiabilidade. Em sua parte final, aborda inovações tecnológicas que têm o potencial de transformar ainda mais a indústria de pagamentos, criando novos modelos de negócio, alterando a estrutura do mercado e abrindo espaço para a entrada de novos participantes, viabilizando uma maior eficiência e concorrência no setor.
Digitalization of global economic processes requires a new means of value to be created instead of traditional fiat money. Thus, the concept of central bank digital currencies has been introduced. However, the creation of new financial instruments would not ensure changes in the world economy unless special platforms for digital currency had been created. While central banks have mostly solved the problem of creating platforms for their digital national currency, the issue of operating international transactions with CBDC has not been properly faced. Currently, there are a few projects led by the World Bank and Bank for International Settlements in cooperation with central banks of different states to create digital platforms for cross-border settlement of CBDC. One of the most intriguing experiments is the Project Jura which was held in November 2021. The attempts to develop a new high-tech market for CBDC created numerous financial and legal issues. Based on the conceptual features of CBDC and following the experience of implementing digital platforms by BIS and World Bank, the chapter is dedicated to the analysis of legal and regulatory issues of using such instruments for cross-border operations.KeywordsDigital platformsCBDCDigital currencyCentral bankCross-border settlementLaw
In recent years, the Indian Government has adopted potent measures to
expedite the transition from the cash-dependent to the cashless economy.
The introduction of ATMs enhanced the banking operations’ efficiency
and allowed the customers more convenient access to their money. Similarly,
funds transfer systems such as NEFT, RTGS and IMPS have enabled
more reliable and faster transfers. However, the next revolution has been
unleashed by applying transaction systems such as UPI (Unified Payment
Interface). India has been scaled by the 4G network, which has ensured
the availability of internet services in every part of the country. Hence
the UPI applications can be easily accessed and used by people. The
sudden announcement of demonetization has also provided an impetus to
adopting e-money as the mode of payment. The government has rightly
sensed this as an excellent opportunity to propagate Fintech tools among
the citizens to decrease the dependence on cash. This paper explores the
need for reducing the reliance on cash for the day-to-day transactions,
prospects and the challenges associated with initiatives adopted for India’s
drive in the direction of a Cashless economy
Cryptocurrency, operated through blockchain technology, is a new
form of digital currency which is used as a medium of exchange. It is
used in many countries but Bangladesh Bank, the central bank of
Bangladesh, halts a ban on its use and/or trading considering its
negative aspects. So, the perception towards virtual currency in
Bangladesh remains under shadow. Hence, the study investigates the
perception of a total 155 persons (having sound knowledge in this
new technology e.g., central bankers, bankers and finance and
accounting graduates) behind the intended use of cryptocurrency using
structural equation modelling. The study has four observed variables
(perceived ease of use, perceived usefulness, trust and perceived risk)
and one latent variable (behavioral intention to use cryptocurrency).
Finally, the result demonstrates that perceived usefulness and trust
have a significant impact, but perceived ease of use and perceived
risk have no significant impact on the intention to use cryptocurrency.
The paper enlightens the unexplored perception of the people of
Bangladesh towards cryptocurrency. The findings recommend that the
Bangladesh Bank may reconsider its decision regarding fintech
innovation considering cryptocurrency’s positivity and minimize the
dilemma keeping the deleterious sides under strict monitoring.
Keywords: Bangladesh Bank, Block chain, Cryptocurrency, Perceived
Ease of Use, Perceived Usefulness
JEL Classification: C51, C59, D40, G12
Cryptocurrency like Bitcoin, Ethereum and many others are closely affiliated with the financial technology (fintech) industry. These digital or virtual currencies are encrypted using cryptography and distributed on public ledger (blockchain) across decentralised peer-to-peer (P2P) networks. Since cryptocurrencies are issued by private entities and technically beyond the controls of any states, they may be exploited by criminals for illicit purposes such as money laundering, terrorism financing and many others. Thus, this article will examine whether cryptocurrency amounts to a new form of money under the existing rules on financial services and analyse how it should be regulated. This study is a qualitative research that adopts pure legal research methodology by analysing existing laws on national currency and digital currency. Further, the study analysed other secondary sources including academic books, journal articles, conference papers, and other materials in newspapers or reputable websites. The output of the research is expected to provide an overview on the regulatory framework for cryptocurrency in Malaysia. In conclusion, the government has favoured a minimalist approach so as not to stiffen the innovation and future development of cryptocurrency in the country.
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