From the Annual Review of Law and Social Science:
Cryptocurrency proclaims itself trustless—jettisoning the intermediaries, organizations, and legal authorities (what its creator called trust) upon which the traditional financial system relies. Instead, it offers “trustless trust,” distributing self-regulatory responsibility to software run by decentralized masses of volunteers and deploying a buzzword that denotes safety and privacy of transactions untethered to law, the state, or corporate intermediaries. But decentralization and distributed responsibility have proven difficult to sustain. At every turn, entrepreneurs and users of digital currencies have embraced centralization and new organizational forms, many able to dodge both crypto self-regulation and conventional financial regulation entirely, while enjoying the benefits of their purported trustworthiness. This faux decentralization leaves crypto platforms vulnerable to wrongdoing, but also to the legal and regulatory interventions that mitigate risk in traditional financial instruments. Moreover, crypto technology provides a unique window into misconduct and new opportunities to forestall or regulate it, measures unavailable to conventional currencies.