Regulating Cryptocurrency: Legal Challenges and Compliance Frameworks in a Decentralized Economy

Abstract

Cryptocurrencies have revolutionized the financial market, offering prospects such as reduced transaction costs, increased transparency, and financial inclusion for underserved populations. However, their decentralized nature poses significant legal and regulatory challenges, including oversight, user protection, market stability, and risks associated with criminal misuse like money laundering and terrorism financing. The lack of global regulatory consensus exacerbates issues like jurisdictional conflicts and enforcement, particularly in cross-border transactions. This article examines these challenges, including consumer protection against market volatility, scams, and exchange failures. It highlights the necessity of a coordinated global regulatory framework to balance fostering innovation in cryptocurrencies and blockchain technology with mitigating risks. By analyzing current regulatory approaches, the discussion aims to propose an integrated legal framework that ensures growth and financial security in a decentralized economy.