It is entirely legal to conduct virtual asset transactions in many countries around the world, subject to regulation; however, such assets are recognised as legal tender only in the Central African Republic and El Salvador.

Nonetheless, many countries are considering the possible merits of adopting digital currencies. ‘The European Central Bank, in coordination with the central banks of Canada, Japan, Switzerland, Sweden and the UK, is currently studying the merits of a central bank digital currency,’ notes Pamela Cross TEP,[1] Committee Member on the STEP Public Policy Committee.

Leigh Sagar TEP,[2] a member of the STEP Digital Assets Special Interest Group (SIG) Steering Committee, agrees that the conversation is just beginning: ‘I believe that more countries will recognise some form of crypto‑asset as legal tender. There is increased interest from some countries in the establishment of their own digital currencies, which do not use decentralised blockchain technology and which operate in parallel with their own fiat currencies. Other countries, such as the UK and the US, have expressed interest in adopting some of the existing stablecoin technologies as national digital currencies, but with increased oversight, in the form of added security and regulation.’

He warns, however, that ‘current initiatives to recognise bitcoin are unlikely to be sustainable’, due to both the instability of the cryptocurrency and the lack of infrastructure for it to be used as a financial token, enabling such activities as borrowing and lending. Moreover, any usage of crypto‑assets, whether as legal tender or not, requires a regulatory system that can cope with the challenges posed in terms of money laundering and tax evasion.