Bitcoin Redux explains what’s going wrong in the world of cryptocurrencies. The bitcoin exchanges are developing into a shadow banking system, which do not give their customers actual bitcoin but rather display a “balance” and allow them to transact with others. However if Alice sends Bob a bitcoin, and they’re both customers of the same exchange, it just adjusts their balances rather than doing anything on the blockchain. This is an e-money service, according to European law, but is the law enforced? Not where it matters. We’ve been looking at the details.Source: Bitcoin Redux: crypto crime, and how to tackle it | Light Blue Touchpaper Also interesting to note is that most of the regulation required is already in place and just needs to be enforced. In most cases there isn’t any need for radical rethinking of laws, just apply the current laws about treating consumers fairly and Know-Your-Customer to this new technology.