Regulation of digital currencies: Taking heed of externalities

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Subject. This article discusses the analysis and consideration of positive and negative externalities in the development of an effective mechanism for regulating relations arising in the field of digital financial assets turnover. Objectives. The article aims to study and analyze foreign and Russian practices of regulating digital currencies, classifying the main approaches, and assessing the external effects of the introduction of digital currencies into the economy. Methods. For the study, I used a systems approach, critical analysis and statistical assessment. Results. Based on the analysis of foreign and domestic practices of regulating digital currencies, the article finds that regardless of the chosen approach to the legal mechanism, all national agencies first of all strive to protect investors from risks and reduce the likelihood of negative externalities. Conclusionsand Relevance. The most common approach to regulating digital currencies is the market-based one, which indicates the gradual adoption of cryptocurrencies by countries and the positive effects from their implementation. As for the states that create alternative instruments, namely central bank digital currencies, in this context, attention should be paid to the development of their own information technologies. The results of the study can be applied in the current work of public authorities, regulators and enterprises to build a system of settlements and payments based on innovative principles.