We have narrowed our focus on blockchain’s legal issues to cryptocurrencies. Tokenizing is a recent capital innovation and its legal landscape is hazy and nuanced at this time. This week, we will hone our focus further to shed light on this new technology, its economic and social benefits, and its legal implications so that its use may be optimized. There is no legal constant for virtual currencies. Instead, legal characterizations vary with the currency’s implementation.
In general, virtual currencies can be acquired and used in numerous ways. Simple purchases with real money, to gambling, to sweepstakes, allow users to exchange it for other real-world products and services. Furthermore, there are “dual currency” models which limit the conditions regarding how the currencies may be spent and earned.
As we discussed in the previous post, jurisdiction often becomes a key issue. Sometimes, simply offering a virtual currency to someone within a given jurisdiction is enough to trigger the application of that jurisdiction’s laws. There are a number of areas of law that can be triggered jurisdictionally.