Regulating peer-to-peer network currency: Lessons from Napster and payment Systems

It was only yesterday when the central banks across the world shared a similar
concerns about the rise of e-money as a ‘new’ form of money. Theoretically, e-money as a network good has the potential to achieve a position necessary to replace traditional money. If this happens, the central bank’s task in conducting monetary policy will become more and more difficult. This phenomenon gives rise to a dilemma among the central banks as to whether or not to regulate e-money at its early stage. The recent emergence of Bitcoin, a peer-to-peer network currency that is totally different from e-money or many other payment
instruments has elevated the debate on whether to regulate new forms of money. How should the authorities react to this innovation then? This paper outlines the legal issues surrounding the rise of peer-to-peer network currency and the measures available in dealing with the rise of such cryptocurrency. Two lessons are provided by this paper, one from the case of peer-to-peer
network file sharing system, Napster, and the other from existing payment systems instruments.