Legal Regulation of Digital Currencies

Abstract

This paper examines the legal and conceptual status of digital currencies and analyzes how different legal systems have addressed their regulation, with particular reference to the German and United Arab Emirates (UAE) models. While several jurisdictions have developed structured legal frameworks governing the issuance, circulation, and use of digital currencies, others, including Jordan, still lack comprehensive regulation, resulting in legal uncertainty and regulatory gaps. The study is divided into two main parts. The first part explores the definition, origin, legal nature, and economic significance of digital currencies, while the second part focuses on their legal regulation at both national and international levels. Adopting a descriptive-analytical methodology, the research examines comparative legislative approaches and judicial practices to assess the feasibility of integrating digital currencies into existing monetary and legal systems. The findings indicate that some jurisdictions recognize digital currencies as financial instruments or lawful contractual means of payment, subject to licensing and regulatory oversight, while others impose restrictions or prohibitions due to concerns related to money laundering, consumer protection, and monetary sovereignty. The study concludes that the legal use of digital currencies is acceptable when supported by a clear regulatory framework that balances financial innovation with public-interest protection. Based on the comparative analysis, the paper proposes the adoption of a hybrid regulatory framework in Jordan, drawing on the German model of legal classification and licensing, as well as the UAE model of institutional supervision and regulatory oversight. Such a framework would enhance legal certainty, promote financial transparency, reduce the risk of abuse, and support sustainable economic development within a secure and controlled legal environment.