Criminal Functions of Virtual Currencies: Criminological Analysis and Preventive Approaches

دانشنامه حقوق اقتصادی

Volume 27, Issue 18, June 2021, Pages 223-250   

Document Type: Scientific research

DOI: 10.22067/lowecon.2020.48879.0

Authors

َAli Saffary¹; Razieh Saberi^{* 2}; Aref khalili Paji³

¹Associate Professor, Department of Criminal Law and Criminology, Faculty of Law, Shahid Beheshti University

²PhD in Criminal Law and Criminology, Faculty of Law, Shahid Beheshti University, & Researcher of Shahr e Danesh Legal Research

³PhD student in Criminal Law and Criminology, Faculty of Law, Shahid Beheshti University

Abstract

 
Extended Abstract
Introduction
Money in the sense of a tool for exchange has a long history. The use of commodity money, mintage of metal coins, the printing of gold-backed banknotes, and finally the formation of unsupported banknotes can be considered as a summary of the evolution of money in national and transnational monetary systems. The current monetary system was established in all countries after the transition to the Bretton Woods system and the formation of "unsupported money". Despite the development of commercial and economic capacity in the area of the new order emerging from the global economy, this order has always been the focus of fundamental criticism by critics of the status quo because of its harmfulness. Inflationary nature of unsupported money, lack of intrinsic value, ill distribution policies and its transformation into a tool in the hands of governments to impose policies that have detrimental consequences for the middle and poor class people, mismanagement of existing regulators leading to economic crises, the negative consequences of which are also borne by the mentioned class, form the axis of criticism of the new monetary order. Altogether, these form a range of ideas, from reforming while maintaining the existing structure to transformational and revolutionary ideas to overthrow the existing order and to establish a new alternative. Hence, the provision of models to modify the status quo or to replace it, at least at the academic level, has been a topic for debate. The economic crisis of 2008 and the introduction of the new technology of "Bitcoin" as an alternative or virtual currency, with the function of money or payment system, paved the way for the creation of new dimensions that a year later, i.e. in 2009, with the beginning of its use, has attracted more and more attention which necessitate the need to change the current situation.
 
Theoretical frame work
Virtual currencies can be considered as influential actors and messengers of fundamental developments and changes in the field of technological exchanges, which with the completion of the independent financial chain, on the basis of blockchain technology, has rung the alarm for a new stage of democracy in the context of financial democratization. Consequently, the various dimensions of this technology, obvious and hidden features of Bitcoin and its various capacities have been the subject of political, economic, legal and criminological discussion. In each of these fields, thinkers have evaluated this emerging technology from their own point of view and expertise, in terms of its different use, functionality and capacity.
In this context, the unique features of virtual currencies intriguing different criminal activities have been considered by researchers in criminal law and cyber criminology. Traditionally, research on cyberspace from a legal and criminological point of view indicates the existence of features that have always made this space a suitable platform or an effective means of committing a crime. Virtual currencies are also used as a technological tool in the virtual space context. In this regard, the unique features of this technology and its combination with some other technologies in the context of cyberspace have created additional attractions that have attracted the attention of criminals more than ever.
 
Methodology
The present paper tries to offer a comprehensive criminological analysis of the important dimensions of virtual currencies by a deep and critical review of the existing literature based on some existing theories with descriptive and analytical methods. The review includes studying the scope of criminal activities related to virtual currencies and attractive criminal features of this technology. An analysis of criminological etiology and providing preventive solutions against criminal risks of virtual currencies is another dimension of this study.
 
Results & Discussion
The salient features of virtual currency technology; such as flexibility and anonymity of identity, the potential to be used transnationally, in addition to facilitating exchanges and conventional uses, can lead to potential and actual criminal activities. To be concise, virtual currency as a service, facilitates delinquency, increases the number of ways by which delinquent activities can be committed and can create new types of delinquency. Thus, the benefits of virtual currencies, along with all their positive functions, can lead to significant challenges for those involved in, or in charge of the criminal justice system. In this context, the attractiveness of virtual currencies has created an opportunity for criminals to carry out their criminal activities with greater ease and security. Individuals identified as dangerous or high-risk in society can easily replace virtual currencies, as a technological tool that is outside the control of governments, by traditional financial services and instruments, which are explicitly included in the regulatory body, hence reducing the risk of crime detection and increasing the likelihood of a crime being committed successfully. This means that illegal funds or the purchase of goods and services from criminal markets will form easier and securer instruments which, in turn, provides grounds to improve criminal methods.
Therefore, despite all the benefits of using virtual currencies, one should not forget negative potential, particularly criminal risks associated with it. This is because cryptocurrencies along with some advantages, are also actively used in criminal activities.
 
Conclusions & Suggestions
Few suggestions are made to reduce the criminal effects of virtual currencies. These include legal recognition and determination of the nature of virtual currencies as an asset,  providing a specific tax model for virtual currencies, development of hardware and software infrastructure necessary for the safe and controlled presence of virtual currency operators, and finally, continuous monitoring of a system of informing, warning and raising public awareness of the criminal dangers of virtual currencies.
 

Keywords

Virtual currency; Bit coin; Criminological study; Legislation; prevention

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