A cryptocurrency stakeholder group that can bring about change to current cryptocurrency regulation

Published: 29.12.2022 / Blog / Publication / Research

Currently, cryptocurrencies are mainly seen as a digital trading instrument as opposed to a currency or payment method. This holds true particularly in economically stable regions. However, one stakeholder group has the power to greatly influence the future adoption and direction of cryptocurrencies. This blog is based on a master’s thesis in the International Business Management MBA program at Arcada.

Cryptocurrencies: a brief explanation

Cryptocurrencies are virtual currencies that use cryptography to validate transactions, representing digital value issued by private developers and denominated in their own unit of account (He et al., 2016). A common feature for most cryptocurrencies is that they are not issued and controlled by a central bank or an individual entity. Additional units of cryptocurrencies are created through a mining process, and their supply is controlled by a cryptographic algorithm (Dwyer, 2015).

The first author of this blog has investigated various stakeholders’ viewpoints regarding cryptocurrencies including end-users, investors, businesses, researchers, market enablers, and financial regulatory authorities (Zekarias, 2022). In the thesis, end-users’ perceptions of cryptocurrencies have been examined in both economically stable and unstable regions. The focus of this text is on discussing how a particular stakeholder group, namely businesses, has the power to greatly influence the future adoption and direction of cryptocurrencies, at least in the short-term.

Future adoption and direction of cryptocurrencies

In politically and economically stable regions, cryptocurrencies are viewed by most users as a digital trading instrument as opposed to a currency or payment method. The major reason for this is the increase in market value of cryptocurrencies, combined with the development of easy online trading platforms. Consequently, tax authorities regard them as taxable capital income.

However, if the network externality of cryptocurrencies increases, meaning that more businesses recognize and accept them as a payment alternative, the nature of cryptocurrencies could dramatically change. Network externality refers to a phenomenon where an increase in use leads to further adoption. In practice, more businesses accepting cryptocurrencies would encourage competitors and peers to also adopt cryptocurrencies. Assuming the network externality of cryptocurrencies increases, end-users have the possibility to pay for services and products directly to the seller. In such cases, there is no need to switch to a legal currency, which in turn means that cryptocurrency users avoid tax on any potential increase in value. In addition to tax ramifications, this would also reduce the regulatory power of central banks as the economy would be less dependent on legal currency. Tesla, Microsoft, and others are already showing interest in cryptocurrencies, giving some credence to the above scenario (Economic Times, 2021; Reuters, 2022; Smith, 2014). If this trend continues, it will have big implications; there is little or no need to convert cryptocurrencies to legal currency. With more businesses accepting new forms of payment, financial regulatory agents would also need to change their view on cryptocurrencies.

As such, more businesses accepting cryptocurrencies will create a network externality that lessens the need for legal currency. This can have positive implications from an individual’s perspective, as an increase in value is not necessarily taxable income. Further, this can also decrease the regulatory power of central banks, prompting a response from regulatory authorities. Thus, businesses are a very influential stakeholder group that can significantly impact the future of cryptocurrencies.

For further reading, Mathewos Zekarias’ thesis is available is available here External link.

Mathewos Zekarias, Master of Business Administration, Arcada

Henrik Nyman, Principal Lecturer, Arcada


Dwyer, G. P., 2015, “The economics of Bitcoin and similar private digital currencies” J. Financial Stability, vol. 17, pp. 81–91.

Economic Times, 2021, Tesla to accept bitcoin again when greener”, available from: https://economictimes.indiatimes.com/news/international/business/tesla-to-accept-bitcoin-again-when-greener/articleshow/83503487.cms?from=mdr External link accessed 8.5.2022

He, D., Habermeier, K. F., Leckow, R. B., Haksar, V., Yasmin, A., and Mikari, K., 2016, “Virtual currencies and beyond. Initial considerations” International Monetary Fund (IMF).

Reuters, 2022, “Gucci jumps on the crypto bandwagon with U.S. project”, available from: https://www.msn.com/en-gb/money/other/gucci-jumps-on-the-crypto-bandwagon-with-us-project/ar-AAWW4XW External link accessed 8.5.2022

Smith, A., 2014, “Microsoft begins accepting Bitcoin”, available from: https://money.cnn.com/2014/12/11/technology/microsoft-bitcoin/index.html External link accessed 8.5.2022

Zekarias, M., 2022, “Stakeholder Viewpoints on Cryptocurrencies”, available from https://www.theseus.fi/handle/10024/744564 External link