Crypto-currencies are a relatively knew concept, and many financial institutions and law firms are only just discovering a growing need for legal experts in this new field as it becoming robustly regulated.
But what does this new type of investment mean for those about to embark on an LLM in Finance Law?
What are crypto-currencies?
All crypto-currencies are basically virtual accounting systems that allow people to transfer money between each other without using a bank or other third party that has no centralised control. These currencies are exchangeable for traditional currencies or can be earned (known as mining) and the accounting systems are encrypted to guarantee that people can only spend their crypto-currency once.
How are crypto-currencies monitored legally?
The G20 in December of 2018 announced that they wished to regulate crypto-currencies globally as currently there are no agreed international rules or regulations. Many countries in the G20 have created their own legal systems and with the encouragement of some nations, such as Japan and the US, who have large crypto-currency markets, international regulation may remain light. Many countries, such as the UK and the rest of the EU, have implemented or are implementing regulations that will allow investors and customers to have protection and access to compensation similarly to other more traditional financial investments.
How has the financial world has changed as a result of crypto-currencies?
Many countries, like the UK and France, are attempting to attract Financial Technology (known as fintech) companies who invest in crypto-currencies by creating attractive regulation. The rapid growth of crypto-currency, since its invention in 2008, has created a need for legal advisors with knowledge and understanding of the growing regulation. Many countries are beginning to allow traditional banks to invest in crypto-currencies and some nations with currencies that are unstable, such as Zimbabwe, have found that crypto-currencies have become popular as a form of daily financial transactions for large sections of the population. The value of crypto-currencies is currently quite volatile and this is attractive to high-risk investors and the stories of investors making large profits attracts attention, however, traditional investment and financial companies are yet to significantly change the way they operate in response to crypto-currencies. The impact of crypto-currencies on the financial world is the possible future potential of changing how people can invest and exchange their own money.
What new relevant modules have been introduced to LLMs in Finance Law?
Most taught LLMs in Finance Law are yet to add substantial elements of crypto-currency law to their module offerings. This is perhaps due to the lack of regulation and law governing the sector. Some law schools, such as the online course at the London School of Economics, are offering short courses on crypto-currencies aimed at those already working in financial industries. If you wish to study crypto-currencies, then you should look for a course with lecturers and professors who are becoming specialists in this area when you are choosing a course to apply for. The LLM in International Banking and Finance Law at the University of Edinburgh currently has an international expert on their academic staff rather than a specific module on crypto-currency. As the impact of crypto-currency grows along with its regulation at the national and international level there will be a growing need for legal specialists and law schools will offer more modules on their LLM courses in Finance Law.
Whether they have plans to launch their own crypto-currencies or already have tax laws in place for crypto-currencies, here is the state of play for crypto-currencies around the world.