Document Type : Original Article from Result of Thesis
Highlights
Introduction
The growing prevalence of cryptocurrencies in commercial transactions has prompted subjects of international law, particularly states, to develop regulatory frameworks for digital currencies. While some countries have reacted negatively to cryptocurrencies, others have taken different approaches. The most common response, primarily from central banks, revolves around concerns regarding the potential use of cryptocurrencies for illicit activities such as money laundering, terrorism financing, and other organized crimes. As cryptocurrencies continue to evolve, the need for regulatory measures becomes increasingly significant.
An examination of the international regulatory environment for cryptocurrencies and their exchange highlights these actions. In addition to national initiatives, international organizations, as active subjects of international law, have also focused their attention on cryptocurrencies. The primary challenges in this context include legal obstacles, security concerns, and a limited understanding of cryptocurrencies, all of which warrant careful consideration.
Since the 19th century, the growth of interdependence among nations has gradually transformed bilateral and multilateral diplomatic relations between countries and international organizations. Consequently, organized cooperation has become essential in international affairs. As cryptocurrencies are seen as complementary factors in the economic system, both international organizations and countries are striving to develop this sector and establish its fundamental laws.
Given that the adoption of cryptocurrencies, like any economic phenomenon, has certain advantages and disadvantages, international organizations face unexpected challenges that were not anticipated in their charters or founding documents. This article seeks to answer the following question: What is the working mechanism of international organizations in drafting rules and regulations concerning cryptocurrencies? Grounded in international law, this paper posits that international organizations can develop financial regulations for cryptocurrencies by leveraging their founding documents and adapting them to the principles of cryptocurrency. Despite opposition from some countries, this rule-making process is expected to lay the groundwork for preventing and controlling criminal activities, which is deemed essential for the continued political viability and financial oversight of the members of international organizations.
Research Methodology
The methodology of this article is grounded in the approaches of international relations and international law. Data were collected through documentary research, encompassing books, articles, websites, and various online resources related to the research topic within these fields.
Findings
The subject of cryptocurrencies has become an integral aspect of the commercial activities of subjects in international law, necessitating the global community to formulate essential laws and regulations for transparency and control of transactions in this domain. International organizations, as active participants in rule-making, are not exempt from this requirement; they must develop new regulations to address unforeseen challenges within the cryptocurrency sphere.
This paper employs a descriptive-analytical method to examine the regulations of international organizations regarding cryptocurrencies. It seeks to answer the question: What is the role of international organizations in formulating the governing rules and regulations for cryptocurrencies? Considering the founding documents of these organizations and current practices, this study concludes that international organizations can leverage their founding documents to establish rules related to commercial transactions in the cryptocurrency field. Such regulations are essential for the political viability of international organizations.
Conclusion
In summary, cryptocurrencies, like any financial phenomenon, possess distinct advantages and disadvantages. However, international organizations face significant challenges in regulating them, as their foundational charters and establishing documents often lack solutions for these issues. The rapid development of cryptocurrencies has raised substantial regulatory concerns at both national and global levels, prompting national governments and international organizations to begin addressing these challenges, particularly the absence of an appropriate legal framework for oversight.
Today, cryptocurrencies represent a key challenge for subjects of international law in the 21st century, necessitating the formulation of laws and regulations to ensure transparency and control in commercial exchanges within this domain. Considering the boundaries outlined in Article 1 of the GATT Agreement, any regulations regarding digital currency as a commodity could lead to its classification as an investment target. Article 6 of the GATT Agreement, along with paragraph (c) of Article 14, grants organizations the authority to monitor the domestic regulations of member states, which are obligated to enforce general rules concerning trade in services. This means that every commercial transaction must be managed in a reasonable, objective, and impartial manner, aligning with World Trade Organization regulations, particularly regarding the recognition of cryptocurrencies as national or international currency.
Furthermore, Section 12 of Article 5 of the World Bank's Articles of Agreement suggests that cryptocurrencies could be accepted as legal tender. Recognizing them does not violate the Bank's regulations, as the term "currency" can be interpreted to include cryptocurrencies and digital currencies. Additionally, Section 7 of Article 2, which pertains to the repayment and amortization of loans in the currencies disbursed, implies that governments' acceptance of cryptocurrencies for loan repayment might signal a revolutionary shift.
Article 1 of the International Monetary Fund's Articles of Agreement assigns the organization the responsibility of coordinating the global foreign exchange market. According to Section 2 of Article 1, the IMF is also tasked with regulating international economic transactions, including the foreign exchange market. The IMF is the only international financial institution that has acknowledged the nature of these currencies and proposed solutions for their development. Thus, the effective management of cryptocurrencies can best be achieved under the auspices of an international organization committed to the optimal development and equitable advancement of the global economy, rather than one representing competing interests.
International financial organizations, such as the World Trade Organization, the World Bank, and the International Monetary Fund, could play a crucial role in adopting regulations to oversee cryptocurrency transactions on a global scale, thereby mitigating risks to commercial activities, especially concerning money laundering and related criminal activities.
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