An Overview of Legal Status of Cryptocurrencies Within Securities and Capital Markets Regulation: A Comparative Study of the United Kingdom and the United States Investment Laws

Transactions involving cryptocurrencies, dating back to the invention of Bitcoin
by Satoshi Nakamoto, have permeated various sectors of the financial markets.
They have become popular assets, serving as means of payment, operating as
interests, bonds, and collective investment schemes in blockchain-based markets. Players in the crypto-assets ecosystem, specifically issuers, investors, and crypto exchanges, have faced regulatory challenges regarding whether cryptocurrencies are regulated as money, commodities, or securities. These problems stem from the decentralised nature of the technologies and their polymorphic characteristics, resulting in the application of various national regulations. This article analyses the legal status of cryptocurrencies by exploring the application of securities and capital markets regulations to the technology with the objective of determining whether there are similarities in the legal classification of a cryptocurrency as a security. Particularly, a case study of the investment and securities laws in the United Kingdom (UK) and the United States (US) will be comparatively analysed to ascertain points of congruence. Ultimately, since the fragmentation of securities laws may not be suitable for establishing the legal status of cryptocurrency in cross-border markets, the adoption of an international legal framework drafted based on the possible reconciliation of applicable national rules is recommended as a prudent approach.