Cryptocurrencies and the Regulatory Challenge, ALLAN C. HUTCHINSON, London: Routledge, 2021, 156 pp., £120.00
| Published date | 01 September 2022 |
| Author | OONAGH MCDONALD |
| Date | 01 September 2022 |
| DOI | http://doi.org/10.1111/jols.12383 |
DOI: 10.1111/j ols.12383
BOOK REVIEW
Cryptocurrencies and the Regulatory Challenge
ALLAN C. HUTCHINSON
London: Routledge, 2021, 156 pp., £120.00
Cryptocurrencies undoubtedly represent a regulatory challenge to many jurisdictions, not all of
which have decided what the regulatory framework should look like and which agencies should
take responsibility for the appropriate regulations, supervision, and enforcement. In that sense,
Allan C. Hutchinson’s book is timely,given his argument that
[the] mission of developing a new and appropriate regulatoryframework for handling
the complex challenges of a techno-world is fraught with both risk and opportunity
.. . [T]he rise of cryptocurrencies .. . will oblige theorists and policy-makers to re-
examine the nature of law, technology and social ordering in order to recommend a
more compelling understanding of the nature of their relationship. (pp. 3–4)
However, to discern the extent and nature of the challenge, it is necessary to begin by con-
sidering cryptocurrencies apart from the rapidly developing new technology.The cryptocurrency
community sometimes argues that regulation will stifle innovation. First of all, it is possible to
develop blockchain technology, which should be distinguished from general distributed ledger
technology (DLT), for uses other than with cryptocurrencies. Blockchain is a form of DLT with
specific features. It is a series of blocks, forming a chain, each of which is closed by a crypto-
graphic signature, the ‘hash’. The next block begins with the same hash, designed to verify that
the encrypted information has not been manipulated. This is the ‘proof of work’ (PoW) carried
out by the ‘miners’. It is time consuming, which is part of the reason why Bitcoin is unlikely to
develop as a global currency.1Itis not scalable, and transfers are too slow. DLT,on the other hand,
refers to a decentralized database, managed by various participants without a central authority or
arbitrator.As such, it is more transparent and more difficult to hack. For example, the Hong Kong
Monetary Authority conducted a pilot project using DLT with a consortium of five banks.2DLT
enabled all of the banks to have their own database, and whenever one bank made an update,
a copy was made and saved to the records of all participants. The advantage is that each bank
knows if, for example, the same company applies for the same trade finance loan from more than
1The President of El Salvador decided to introduce Bitcoin as legal tender in June 2021, but so far,in my view, the signs
are not encouraging for others to follow suit.
2Hong Kong Monetary Authority, ‘Trade Finance’ Hong KongMonetary Authority,at<https://www.hkma.gov.hk/eng/
key-functions/international-financial-centre/fintech/research- and-applications/trade-finance/>.
© 2022 The Author.Journal of Law and Society © 2022 Cardiff University Law School.
J. Law Soc. 2022;49:623–628 . wileyonlinelibrary.com/journal/jols 623
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