Proposal for a legal framework

Here is a detailed proposal for a legal framework for digital currencies for a country or an economic area such as the euro zone:

Department of digital currencies
  • The management of digital currencies is the responsibility of the Department of Digital Coins (DDC) attached to the country or economic zone central bank
  • The DDC recognizes the EURT (or another national digital currency according to the country or economic zone) as well as three types of digital currencies: decentralized digital currencies, usually called “cryptocurrencies”, governmental digital currencies and enterprise digital currencies, also labeled “private”, “consortial” or “corporate”
  • DDC has the right to deny the issue or collection of one or more digital currencies by a private organisation provided the reasons for rejection are made explicit to the organisation
  • The DDC is responsible for providing free of charge on national territory a “wallet” (digital currency management application) to citizens as well as a customer service for those who have lost their private keys for one or several governmental digital currencies or the EURT
  • The DDC may inspect a shared digital ledger used by any authorized CDC or GDC.
Digital currencies
  • Any digital currency is associated with a use, technical characteristics, a ticker in capital letters (like USD for the US dollar) and possibly a territory
  • A digital currency can also be pegged to another currency or a financial asset; in this case it is a stable digital currency
  • A governmental digital currency (GDC) is a digital currency issued by a public administration for tax, social benefit or basic income purposes
  • A central bank digital currency (CBDC) is a digital currency issued by a central bank to be used as legal tender on a given territory
  • A corporate digital currency (CDC) is a digital currency issued by a private organisation
  • A cryptocurrency is a digital currency which is decentralized and the issuer of which is not necessarily identified (for example: Bitcoin).
The digital euro
  • The official currency in the euro zone is the digital euro, which is a CBDC and the ticker of which is EURT
  • EURT is created and managed by the European Central Bank (ECB), which retains its monopoly on the euro issuance
  • Any organisation under private law having profit making or non-profit making activities in the euro zone (hereinafter “entity”) must accept the EURT as the currency of settlement of its goods, claims and services as well as for donations.
Issuance of governmental digital currencies

The central bank of a particular country is the only emitter of governmental digital currencies (GDCE). The public administration is empowered to issue stable digital currencies through the central bank which must meet the following criteria:

  • they must replicate the value of the EURT
  • they must always be convertible into EURT
  • they must be managed on public permissioned blockchains
  • they must be dedicated to well-defined uses known to all such as tax or fine settlement, social benefit or base revenue remittance.
Issuance of corporate digital currencies

Corporate digital currencies are issued by providers known as “corporate digital currencies emitters” (CDCE) registered with the DDC on behalf of private organisations. A certain amount of CDC may be offered by the issuing entity, in particular when the currency is being launched, provided that the counterparts are clearly explained to the recipients, for example subscription to a newsletter, purchase of certain products or services or disclosure of wallet content and transactions. Any holder of CDC must be informed by email and any other means deemed necessary by the issuing entity in the event of the exceptional issuance or destruction of tokens or change of the issuance or consensus rules. Any organisation is empowered to have one or more private digital currencies issued by a CDCE, subject to the following conditions:

  • they must notify in their issuance request to the DDC the planned currency name and ticker, its technical features, its intended use, its planned launch date, the number of issued units (tokens), the CDCE name, the consensus algorithm, the type of digital register, the planned price span of a token at launch date, its variability (stable or not), its territoriality (area where it can be used), the mechanisms for the periodic creation and destruction of tokens
  • they must obtain an issuance authorization from the DDC
  • they must inform the DDC in particular in the event of a change in the rules or the issuance rhythm, token issuance or destruction not planned in the protocol, interruption of currency activity, change of consensus algorithm, hacking
  • the digital currency issued must be convertible into EURT
  • a cash compensation equivalent to the issued capital must be deposited in EURT with the country central bank. For example, if 1 million tokens worth each 0.20 EURT are issued, the issuing entity will have to deposit 200,000 EURT at the central bank, which will remain locked until these tokens are “burnt”
  • the initial market capitalization of the issued currency must be greater than or equal to 10,000 EURT
  • the issuing entity provides for measures to ensure the right to be forgotten, in particular in the event of the loss or theft of private keys by a user
  • the issuing entity provides, in agreement with the CDCE, a mechanism and possibly conditions or a date for the cessation of issue or deactivation of digital currency
  • Unlike GDC, CDC do not have to be stable, can be managed by private blockchains, and can be listed on trading platforms.
Paying with digital currencies
  • Any natural or legal person who makes a payment on national territory can choose from the currencies offered by the provider in which they wish to pay and accepts the price offered by the provider in the currency they have chosen.
  • Any organisation is free to set the price of its goods and services in EURT and in the currencies of their choice which the DDC granted them to collect, including if this results in a price difference for the same service/the same product depending on the chosen currency
  • Any payment manager handling digital currencies must obtain the authorization of the DDC and declare the digital currencies they manage on behalf of their customers.
  • Collection of digital currencies
    • No entity may impose a currency other than the EURT as the sole currency for the settlement of its goods, claims and services, but it may accept other currencies
    • Any public administration, on the other hand, is empowered to impose the exclusive use of a GDC for the payment of taxes or the remittance of social benefits or base income
    • Consumer taxes due when purchasing a good or service on national territory are instantly transferred by the payment manager to the corresponding tax administration in the GDC determined by the latter
    • Any entity that accepts CDC in addition to the EURT must declare them to the DDC: they can be CDC issued by themselves and CDC issued by other entities and authorized by the DDC
    • Any GDC authorized by the DDC is a legal means of payment but cannot be exclusive on national territory, provided that the recipient accepts this means of payment: it is therefore the recipient and not the payer who determines the currencies accepted to settle a service, given the EURT must always be part of it when recipients are private organisations
    • No entity can be forced to accept a CDC, a GDC or a cryptocurrency if it does not wish to, except the EURT (in the euro zone)
    • Cryptocurrencies are not official means of payment on national territory but are tolerated provided that the receiver converts them by their own means into EURT immediately after receipt of payment
    • The costs of converting and transferring digital currencies, which are provided by the payment manager instantly during the transaction, are the responsibility of the payee, unless a commercial discount is explicitly offered by the recipient.
    Privacy and right to be forgotten
    • Any natural or legal person is responsible for their private keys and therefore their funds
    • Any natural or legal person who loses their private key also permanently loses the associated funds
    • Any entity or public administration issuing GDC or CDC must provide via its issuer the creation of a new account with a new private key to a user who has lost access to their private key or wishing to change account without the latter having to justify their request
    • It is the central bank, as exclusive GDCE on national territory, which provides this service in the case of GDC
    • The currencies used by a natural or legal person when making payments are an element of their private sphere which can only be disclosed to third parties by virtue of their express authorization. This information can however be disclosed voluntarily by this person in exchange for financial or material benefits
    • The entity or administration issuing a digital currency has the right to inspect transactions that take place in their currencies.

    Summary of the main principles

    • One currency = one emitter = one use case
    • The payment recipient determines which currencies can be used to pay for his services, knowing that the EURT must always be part of it in the case of private organisations
    • Any private organisation can create one or more CDC subject to compliance and declaration to the DDC
    • The issuer of the EURT is the ECB
    • The country central bank is the only issuer of GDC (GDCE)
    • Companies called CDCE (corporate digital currencies emitters) and registered with the DDC are empowered to issue CDC on national territory
    • GDC must be stable, CDC not necessarily
    • Users are responsible for their private key: if they lose it, they lose their funds
    • EURT is a legal means of payment for any service offered by a private organisation
    • A private organisation must accept EURT, the CDC it issues, and CDC from other organisations provided they declare them to the DDC
    • If a private organisation accepts at least one other currency than EURT, it can offer different prices for the same service/product depending on the currency chosen by the payer
    • The conversion and transfer costs are charged to the payer, unless offered by the recipient
    • The payment of all the parties involved in a transaction, including the tax administration, is made instantaneously upon paying in the currencies required by the recipients
    • Cryptocurrencies are means of payment tolerated on national territory provided that the recipient converts them immediately after the purchase in EURT by their own means
    • The public administration may require citizens and organisations subject to taxes and fines to settle them exclusively in a specific GDC
    • Information on the currencies used by a natural or legal person is part of his private sphere but can be sold to third parties for material or financial benefits
    • The entity or administration issuing a digital currency has the right to inspect transactions that take place in in their currencies.
    • An issuing organisation may grant amounts from a CDC issued by them in exchange for explicit services
    • The DDC has a right to inspect the digital ledger of any CDC or GDC that it has authorized or emitted.