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We study a microfounded search model of exchange in the laboratory. Using a within-subjects design, we consider exchange behavior with and without an intrinsically worthless token object. While these tokens have no redemption value, like fiat money they may foster greater exchange and welfare via the coordinating role of having prices of goods in terms of tokens. We find that welfare is indeed improved by the presence of tokens provided that the economy starts out with a supply of such tokens. In economies that operate for some time without tokens, the later surprise introduction of tokens does not serve to improve welfare. We also explore the impact of announced changes in the economy-wide stock of tokens (fiat money) on prices. Consistent with the quantity theory of money, we find that increases in the stock of money (tokens) have no real effects and mainly result in proportionate changes to prices. However, the same finding does not hold for decreases in the stock of money.

This paper aims to focus on the need for an enhanced anti-money laundering (AML) regulation for decentralised finance (DeFi) to protect the integrity of global financial systems against illicit activities. Research highlights the requirement for a robust regulatory strategy for the fast-paced DeFi evolvement.

This study used doctrinal legal research by analysing legislation, which involved creating use cases to illustrate different aspects of potential illicit activities via the DeFi ecosystem. Various DeFi applications were assessed for the potential regulatory responses and outcomes.

This paper offers valuable insight into the regulatory challenges presented by DeFi. This study addresses the blind spots leveraged by criminals afforded by the DeFi’s decentralised nature. This paper offers a comprehensive examination of DeFi regulatory challenges based on use-case scenarios and provides recommendations for regulators on how to address them effectively.

This paper proposes measures for regulatory authorities to minimise money laundering risks through new channels such as decentralised exchanges, non-custodial wallets and cross-chain bridges. This study concludes with the future directions for DeFi regulation and AML compliance.

This chapter differentiates between centralized and decentralized exchanges (DEXs), emphasizing the importance of regulations and compliance related to the market’s development and expansion for cryptoasset trading and investment. It also explains the pros and cons of using different methods to trade cryptocurrencies or virtual currencies and their tradeoffs. The chapter discusses how centralized and DEXs emerged, their history and potential future, and the possible role of future regulations and regulatory clarity around how they may operate. Additionally, it compares cryptoasset markets to other more traditional markets such as equities, real estate, and foreign exchange.

As decentralized finance (DeFi) has collected substantial promotion, investment and cryptographic development as a new model for numerous financial operations over the last months. As DeFi models and technology are quite unique, authorities have not been engaged much yet. However, these non-regulated financial markets will be overlooked for no long by the regulators. Therefore, the purpose of this paper is to analyse and evaluate the new challenges for financial crime compliance which need to be tackled very soon.

The research relied on secondary sources of data, using secondary research to collect archival data in the form of documents. Content and thematic analyses were used to synthesize the collected data

DeFi is considered to be one of the major steps towards adopting crypto masses. It is expected that DeFi will play a significant role in future and provide the present banking system with a feasible alternative. Therefore, it is crucial that the DeFi industry must address the main risks to ensure its “user” full compliance.

This research is the first to analyse the emerging challenges of fighting financial crime in the DeFi ecosystem.

Cryptoassets are an asset class recorded in a digital form that does not represent a financial claim or liability for an issuer or a custodian. This chapter provides a detailed review of various cryptoassets by comparing different characteristics, products, and listing exchanges and discusses criticisms of the crypto ecosystem. It also discusses cryptoasset features, methods of tokenization, and advances in decentralized, peer-to-peer exchanges. Another topic examined is the criticisms of cryptoasset exchanges and ongoing regulatory implications due to cryptocurrency’s open-source nature. The chapter evaluates numerous types and trends of cryptoassets, including currency, utility, platform, and transactional tokens.

Utility tokens are digital currencies that serve as the only accepted means of payment for services and products provided through a blockchain-based platform. They finance the development of their product or service, reward and incentivize early adopters and network promoters, align economic incentives between supply, demand, and the marketplace, and enhance network effects among all participants. Their tokenomic design consists of the rules and regulations governing a token’s issuance, distribution, allocation, and potential destruction. The chapter describes utility tokens, compares them with other types of cryptoassets, and discusses their value creation process and role in network economics. It also reviews common tokenomic designs, discusses different regulatory approaches, and provides examples of current utility token applications in decentralized applications such as decentralized finance and virtual reality platforms (metaverses).

This chapter examines the current state of crypto exchange-traded funds (ETFs). It focuses on issues preventing wider implementation and specific products. ETFs have become a popular investment vehicle that investors use to help achieve their long-term goals. A recurring theme is that regulators protect individual investors from direct exposure to cryptocurrency, which many view as highly speculative investments. Pressure from institutions and investors for a bitcoin-based ETF made progress in 2021 when Proshares, an ETF specialized investment company, debuted the first-ever bitcoin futures ETF in the United States. This event is the first-time investors could buy a fund on the New York Stock Exchange that tracks derivative futures contracts of bitcoin. This occurrence pushed this digital asset’s spot price to all-time highs, serving as a breakthrough in cryptocurrency history.

This paper aims to explain the architecture and design choices of the exchange. Lykke is a FinTech company based in Zurich that has launched the global marketplace for all asset classes and instruments digitized on the blockchain. The authors discuss how the exchange will evolve over time. They explore the macroeconomic benefits of the new blockchain technology. The Lykke exchange is compatible with any type of public blockchain.

The authors present the architecture of an exchange for colored coins. By colored coins, they mean issuer-backed securities on the Bitcoin blockchain. Orders are collected and matched by a semi-trusted exchange. Matched orders are settled on the Bitcoin blockchain, where each successful trade between parties appears as a set atomic-colored coins swap transactions. Unfilled and expired orders are discarded. The exchange does not take possession of the traded coins, but needs to be trusted to match trades correctly.

Lykke has launched the exchange initially for the main currencies, cryptocurrencies and Lykke coin (entitlement to the shares of Lykke company). Perspective asset classes include futures and options on digital assets, crowd-funded loans for retail and private equity financing for small and medium-sized enterprises, contracts for difference, zero coupon bonds and other fixed income and natural capital bonds.

Lykke exchange and all its tools and services are open source; the transparency of technology is ideal for research. The paper provides a high-level overview of the exchange and concludes with a research agenda.