The Legal Status of Virtual Currencies: An Analytical Study

Abstract

The emergence of virtual currencies has disrupted traditional financial systems and introduced new ways of transacting value, such as through peer-to-peer networks and decentralized platforms. They operate independently of central banks and governments and have gained popularity as an alternative to traditional fiat currencies. This absence of a central authority supporting virtual currencies raises concerns regarding their value and stability as a viable currency. Overall, the status of virtual currencies as money remains questionable and doubtful in the eyes of many experts. The main objective of this research article is to assess the legal status of virtual currencies. This article attempts to find a very clear answer to the question of whether virtual currencies meet the legal criteria to be considered as money. This question is addressed by conducting a comprehensive evaluation and discussion of the economic and legal principles related to the concept of money. In the end, the article concludes that virtual currencies cannot be regarded as money in a legal context. The full potential of virtual currencies will undoubtedly be realized only when the legal aspects of virtual currencies are fully developed and acknowledged. The regulation of virtual currencies by state institutions, or the issuance of virtual currencies by those same institutions are the possible ways to achieve this goal.