DETERMINING THE LAW APPLICABLE TO RELATIONSHIPS BETWEEN PARTICIPANTS IN CRYPTOCURRENCY SYSTEMS
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Abstract
Increasingly popular cryptocurrency systems are creating global and virtual relationships that are not formalized in any way. The unique nature of these relationships complicates the determination of the law applicable to them, rendering it difficult both to classify such relationships (on which the choice of instrument for identifying the governing law depends) and to apply specific rules regarding the conflict of laws. The purpose of this article is to ascertain whether the choice of law rules adopted at the level of the European Union make it possible to determine the law applicable to the relationships between participants in cryptocurrency systems. This research revealed that such relationships are to be given a contractual characterization under the European Union’s private international law framework, and therefore the law governing them shall be identified by the Rome I Regulation. The author found that the law applicable to the relationships between participants in cryptocurrency systems may be determined by applying the closest connection test, considering such objective factors as: the place where the mining activity is centred; the location of the highest concentration of full nodes; and the place of habitual residence of the lead developer of the cryptocurrency system.
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