Pros and cons of cryptoassets
Produced in partnership with Puesan Lam and Tony Katz of DLA Piper LLP
Pros and cons of cryptoassets

The following Financial Services practice note produced in partnership with Puesan Lam and Tony Katz of DLA Piper LLP provides comprehensive and up to date legal information covering:

  • Pros and cons of cryptoassets
  • What are cryptoassets?
  • Pros of cryptoassets
  • Lower transaction costs
  • Contribution to the economy and access to historically inaccessible markets
  • Faster and more efficient payments processing
  • Cons of cryptoassets
  • Consumer protection measures
  • Challenges to anti-money laundering and terrorist financing controls
  • Security problems
  • More...

Pros and cons of cryptoassets

What are cryptoassets?

One of the hurdles in relation to understanding non-traditional currencies and assets lies in the inconsistent use of language. Regulators and tax authorities, as well as commentators, refer variously to digital currencies, virtual currencies, cryptocurrencies, cryptoassets and crypto tokens, and it is not always clear whether they are using the terms interchangeably or with the specific meaning of each in mind. For more information about how these terms are defined, see Practice Note: cryptoassets—essentials.

This Practice Note examines the pros and cons in using cryptoassets.

There are a number of advantages to using cryptoassets which undoubtedly account for their rapid increase in popularity. However, these advantages need to be balanced against the risks associated with the cryptoasset.

Pros of cryptoassets

Below are some of the advantages of cryptoassets (in particular cryptoassets used as a fiat currency substitute):

  1. lower transaction costs as compared to real currency transfers

  2. transparency of costs and charges—hidden costs and additional charges which are common in transactions of other online payment modes are absent in Bitcoin transactions

  3. contribution to the economy and access to historically inaccessible markets

  4. faster and more efficient processing of payments

  5. high levels of privacy offered to users

  6. virtual currencies are not issued by a state or government and, therefore, have the potential to be global in scope without suffering from the poor monetary policy of

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