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I want to create a new cryptocurrency as an experiment. Is this legal?

My cryptocurrency won't use a blockchain, so laws specifically regulating blockchains might not apply.

The system will be completely decentralized. Mining doesn't create any form of control over another user's transactions, so a majority of mining being done by one entity wouldn't be a problem at all other than the possibility of them disrupting operation by just ceasing to mine, so a "51% attack" is impossible.

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  • Just curious: what can be "crypto" about a digital currency that does not use a blockchain? Apart from the comms protocols / storage encryption of course.
    – Greendrake
    Jul 25 at 5:53
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    @Greendrake A number of models of encryption based digital currency were proposed, and at least one was implemented, before block-chain solutions became common. Most involved use of digital signatures to verify that a string was a valid carrier of value. Often a bank or some similar institution would,issue and sign such strings. This functioned more like a digital cashier's check. No "mining" was involved. Several possible models are discussed in Advance Cryptography by Bruce Scheiner. Jul 25 at 6:10
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    @Greendrake For example, GNU Taler is a payment system relying on blind signatures. It has some interesting design choices, such as affording anonymity to buyers but not sellers, thus facilitating proper taxation. Coins are held decentralized in wallets and are not registered on a blockchain – their validity is ensured through signatures instead. However, Taler is somewhat centralized through the role that exchanges play, though that's hardly different from the Bitcoing ecosystem.
    – amon
    Jul 25 at 8:14
  • Creating a crypto currency is by itself not illegal. You can do many thing with it that are illegal. If you follow this headline "US Court Convicts 'My Big Coin' Founder in $6 Million Fraudulent Cryptocurrency Scheme" the funny thing is that their "fraudulent cryptocurrency scheme" didn't actually involve any cryptocurrency but just a false claim that they had created a cryptocurrency. About the same as me offering Elbonian Dollars for sale. (Elbonian, not Albanian, stupid spelling checker).
    – gnasher729
    Jul 25 at 8:38
  • Note that if a cryptocurrency is actually decentralized, there's no reason anyone would ever know or care who the creator was. (See Bitcoin)
    – user253751
    Jul 25 at 10:35

2 Answers 2

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Yes

In general, the default is that it is legal to do anything unless it isn't. That's how cryptocurrencies happened in the first place.

Of course, you will have to follow laws that are applicable to cryptocurrencies and not do anything illegal with them or your business.

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  • And which laws are those?
    – user253751
    Jul 25 at 10:35
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    My system collects virtually no information (far more anonymous than even Bitcoin, probably even more so than Monero), so privacy laws shouldn't be an issue at all. Money laundering and tax evasion should only apply to me if I do them, right?
    – Someone
    Jul 25 at 22:43
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    @Someone no, they apply to you if you enable them. Also, you have to comply with “know your customer laws” which will conflict with your desire for privacy.
    – Dale M
    Jul 25 at 22:57
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    @DaleM I don't plan on running an exchange or anything like that. I'll write the code for the technology and publish it, and maybe use it in a few personal transactions, but it won't be a business in any way. I'll be in a position much closer to that of Satoshi Nakamoto than that of Coinbase.
    – Someone
    Jul 25 at 22:58
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    @so, no one will be putting any real world currency in?
    – Dale M
    Jul 25 at 22:59
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There are legal ways to create cryptocurrency, but it has to be done in a legal manner.

Creating a cryptocurrency is subject to various kinds of regulation.

In particular, an "Initial Coin Offering" is typically regulated in the United States as an offering of a security and regulated that way. Lack of proper regulatory compliance could constitute marketing an unregistered security. Consider, for example, this press release from the U.S. Securities and Exchange Commission:

Unregistered ICO Issuer Agrees to Disable Tokens and Pay Penalty for Distribution to Harmed Investors

Washington D.C., Sept. 15, 2020 —

The Securities and Exchange Commission today announced charges against Unikrn Inc., an operator of an online eSports gaming and gambling platform headquartered in Seattle, Washington, for conducting an unregistered initial coin offering (ICO) of digital asset securities. Unikrn agreed to settle the charges by paying a $6.1 million penalty, substantially all of the company's assets, to be distributed to investors through a Fair Fund.

There could conceivably be other regulatory requirements or violations of the law, depending on how the crypytocurrency was designed, was used, or its part in a larger plan, but this is highly fact specific and can't be answered in the general case.

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