THE CONCEPT, IMPORTANCE AND CHARACTERISTICS OF ELECTRONIC CURRENCY

The article analyzes the legal nature of the electronic currency. It is of scientific research interest, since the main task of the state in the field of electronic payments is not only to create a legal climate, protect the participants in the settlement, increase transparency and legalization, but also create equal conditions for the development of electronic cash and virtual money. As well as, in the context of the global financial and economic crisis, the fall in public confidence in the banking system and state currencies, the ideas of creating new, alternative currency systems have become especially relevant. The most famous is an electronic currency protected by a cryptographic coding system, which is why it is called a crypto currency. A number of authors‘ publications have already discussed the features of electronic currency. Within the framework of this article, the legal foundations of the issue under study will be touched upon. For the World Bank, ministries of finance and central banks of different countries, the problem of the existence of virtual, or cryptocurrencies, is relevant.

VOLUME 3 ISSUE №1 E-ISSN: 2181-1024 A P R Volume I L1 (2022) 3, Issue 2022 TSUL Legal Report 1

12.00.02 – CONSTITUTIONAL LAW. ADMINISTRATIVE LAW. FINANCE AND CUSTOMS LAW

TSUL LEGAL REPORT INTERNATIONAL ELECTRONIC SCIENTIFIC JOURNAL

Rustambekov Islambek Rustambekovich Deputy Rector on Academic Affairs, Tashkent State University of Law, Doctor of Law, Professor

Salaev Nodirbek Saparbaevich Deputy Rector on Research and Innovations, Tashkent State University of Law, Doctor of Law, Professor

Latipov Samir Ildusovich Director of the Center for Legal Initiatives and Innovations, Tashkent State University of Law

Nematov Jasur Aminjonovich Professor of the Tashkent branch of the Russian University of Economics named after GV Plekhanov

Umarkhanova Dildora Sharipkhanovna Dean of the Faculty of International Law and Comparative Legislation, Tashkent State University of Law, Doctor of Law, Associate Professor

Abzalova Khurshida Mirziyatovna Acting Professor of the Department of Criminal Law, Criminology and Anti-corruption, Tashkent State University of Law, Doctor of Law

Nematov Jurabek Nematulloyevich Acting Professor of the Department of Administrative and Financial Law, Tashkent State University of Law, Doctor of Law

Akhmedova Guzalkhon Utkurovna Associate Professor of Criminalistics and Forensic Examination Department of Tashkent State University of Law, Doctor of Law

Ergashev Ikrom Abdurasulovich Head of Scientific Department, Tashkent State University of Law, Associate Professor, Doctor of Philosophy in Law.

Yusupov Sardorbek Bahadirovich Head of the Department of Administrative and Financial Law, Tashkent State University of Law, Associate Professor, Doctor of Philosophy in Law

Gafurova Nozimakhon Eldarovna Head of the Department of International Law and Human Rights, Tashkent State University of Law, Associate Professor, Doctor of Philosophy in Law

E-ISSN: 2181-1024 Volume 3, Issue 1 (2022) TSUL Legal Report 3

Khujaev Shokhjakhon Akmaljon ugli Head of Intellectual Property Law Department, Tashkent State University of Law, Doctor of Philosophy in Law

Uzakova Guzal Sharipovna Head of Environmental Law Department, Tashkent State University of Law, Associate Professor, Doctor of Philosophy in Law

Turdiev Khayitjon Usmonkul ugli Acting Associate Professor of the Department of Theory of State and Law, Tashkent State University of Law, Doctor of Philosophy in Law

Ramazonova Nargiza Abdirashidovna Head of the International Relations Department, Intellectual Property Agency under the Ministry of Justice of the Republic of Uzbekistan, Doctor of Philosophy in Law

Kurbanov Maruf Mamadaminovich Acting Associate Professor of the Department of Criminal Law, Criminology and Anti-corruption, Tashkent State University of Law, Doctor of Philosophy in Law

Narziev Otabek Sadievich Acting Professor of International Private Law Department, Tashkent State University of Law, Doctor of Philosophy in Law

Pirmatov Otabek Shavkatovich Acting Associate Professor of the Department of Civil Procedural and Economic Procedural Law, Tashkent State University of Law, Doctor of Philosophy in Law

Yakubova Iroda Bakhramovna Acting Associate Professor of Intellectual Property Law Department, Tashkent State University of Law, Doctor of Philosophy in Law

Shamsutdinov Behruz Sadriddin ugli Head of the Department of Commercialization of Scientific and Innovative Projects, Tashkent State University of Law

Saydakhmedov Umid Murodovich Judge for Economic Affairs, Tashkent Regional Court, Doctor of Philosophy in Law, Associate Professor

4 TSUL Legal Report Volume 3, Issue 1 (2022) E-ISSN: 2181-1024

Contacts Editorial office address: Tashkent, st. Sayilgoh, 35. Index 100047. Principal Contact Tel.: ([phone number hidden] Fax: ([phone number hidden] E-mail: info@legalreport.tsul.uz

© 2022. TSUL – Tashkent State University of Law. All rights reserved.

E-ISSN: 2181-1024 Volume 3, Issue 1 (2022) TSUL Legal Report 5

12.00.02 – CONSTITUTIONAL LAW. ADMINISTRATIVE LAW. FINANCE AND CUSTOMS LAW

IKHTIYORJON TURABOEV, IKROM ERGASHEV Tax monitoring in Uzbekistan: problems and issues ............................................................8

DILMURODJON RAKHIMOV Organizational and legal issues of gender equality in the civil service .............................. 15

NOILA NURMAMATOVA Mechanism of appeal to the Constitutional Court .............................................................. 23

ILHOM NOROV Problems of public service in the Republic of Uzbekistan: further improvement of the public service system .............................................................................................. 30

12.00.03 – CIVIL LAW. BUSINESS LAW. FAMILY LAW. INTERNATIONAL PRIVATE LAW

BEGALI XOLMIROV The concept, importance and characteristics of electronic currency ................................. 37

MUHAMMAD ALI RAMAZONOV The concept and essence of cryptocurrency ..................................................................... 44

PARIZODABEGIM MUKHAMATKULOVA Some issues of regulation of cybersport and business activities in IT .............................. 51

12.00.04 – CIVIL PROCEDURES LAW. ECONOMIC PROCEDURES LAW. ARBITRATION PROCESS AND MEDIATION

ABDUMURAD KHAKBERDIEV Types of arbitration courts and their classification ............................................................. 57

DONIYORBEK DАVRONOV Procedure and basis for application of procedural coercive measures ............................. 68

12.00.08 – CRIMINAL LAW, CRIME PREVENTION. CRIMINOLOGY. PENAL LAW

BUNYOD ISLOMOV Mitigating factors and criminal defenses in criminal legislation of the Kingdom of Norway (comparative analysis) ...................................................................... 78

JALOLIDDIN HAYDAROV Qualification of crimes of torture and other cruel, inhuman or degrading treatment ......... 88

6 TSUL Legal Report Volume 3, Issue 1 (2022) E-ISSN: 2181-1024

12.00.09 – CRIMINAL PROCEDURE. CRIMINOLOGY, OPERATION SEARCH LAW AND FORENSIC EXAMINATION

SARBON URALOV Specific aspects of proof ................................................................................................... 96

KHAYDARALI YUNUSOV Contributions of Central Asian scholars to the development of islamic sciences: Sarakhsi – founder-father of international law ................................................................ 103

DJAMALIDDIN MUSAEV Principles of international cooperation in the field of preventing illicit trafficking in narcotic drugs, psychotropic substances and precursors . ........................................... 111

SHAHNOZA ALMOSOVA The essence of parallel import and problems of its regulation in the Republic of Uzbekistan . .................................................................................................. 121

USMON ALIEV Problems of reforming the UN security council and improving its effectiveness ............. 127

DALER VALIJONOV International legal cooperation of the prosecutors bodies against corruption ................. 134

E-ISSN: 2181-1024 Volume 3, Issue 1 (2022) TSUL Legal Report 7

12.00.03 – CIVIL LAW. BUSINESS LAW. FAMILY LAW. INTERNATIONAL PRIVATE LAW

THE CONCEPT, IMPORTANCE AND CHARACTERISTICS OF ELECTRONIC CURRENCY

Keywords: Digital (electronic) currency, WebMoney Gold, virtual currency, traditional money, electronic money, fiduciary money, virtual communities, analogy method, issuers.

Kholmirov Begali Abdikhamidovich, Independent researcher (PhD) Tashkent State University of Law E-mail: begaixolmirov2020@gmail.com ORCID: 0000-0003-2123-3121

The article analyzes the legal nature of the electronic currency. It is of scientific research interest, since the main task of the state in the field of electronic payments is not only to create a legal climate, protect the participants in the settlement, increase transparency and legalization, but also create equal conditions for the development of electronic cash and virtual money. As well as, in the context of the global financial and economic crisis, the fall in public confidence in the banking system and state currencies, the ideas of creating new, alternative currency systems have become especially relevant. The most famous is an electronic currency protected by a cryptographic coding system, which is why it is called a crypto currency. A number of authors’ publications have already discussed the features of electronic currency. Within the framework of this article, the legal foundations of the issue under study will be touched upon. For the World Bank, ministries of finance and central banks of different countries, the problem of the existence of virtual, or cryptocurrencies, is relevant.

tied to national currencies, but there are other

Digital (electronic) currency - electronic bases for exchange [1]. The binding can be money that is used as an alternative or to precious metals (E-gold, WebMoney Gold additional currency. Most often, their value is - WMG), there is also a floating exchange

E-ISSN: 2181-1024 Volume 3, Issue 1 (2022) TSUL Legal Report 37

12.00.03 – CIVIL LAW. BUSINESS LAW. FAMILY LAW. INTERNATIONAL PRIVATE LAW

rate (bitcoin and other cryptocurrencies). The governments or central banks of China [2][3], Japan[4], Ecuador[5][6][7], the Netherlands[8][3], Kazakhstan[9], Russia have announced plans to issue their national digital currencies [10].

Risks play an important role in the activities of any business entity in the Russian Federation. In the created difficult economic conditions, characterized by either growth or crisis phenomena, the role of risk management of an economic entity is increasing. The versatility of random events. which is the risk, significantly affects the choice of evaluation method and method of managing the object. We will avenge that there are new objects of economic development and. hence the new risks associated with them. Such objects include virtual currency.

Let us turn to the definition of the concept of risk and virtual currency. In many studies of the concept of risk, there is no clear definition of it; scientists are still arguing on this topic. Opinions can be divided into two approaches: subjective and objective. From an objective point of view, risk is a random event that leads to a negative result.

A diametrically different concept is given from a subjective point of view, risk is the choice of an individual’s behavior, taking into account the consequences. In our opinion, the first definition is more accurate, excluding the psychological component. In turn, virtual currency is a complex combination of words. Let’s dwell on that. what is a currency is a monetary unit designed to measure the value of goods, works and services. [11] Some economists display the currency as the legal unit of the country. Another component of the phrase “virtual currency” is virtuality. Virtuality is a state or an object. which does not really exist, but can arise under certain conditions. Therefore, a virtual currency is a monetary unit and a means of payment designed to measure a value that does not really exist, but may arise. The complexity of understanding virtual currency determines the complexity of its origin and use.[12] In a number of articles, virtual currency is transformed into a cryptocurrency and a game currency with the same content. A striking characteristic of any virtual currency is its decentralization, which can be both a positive and a negative feature. We can note that the history of the creation of the first digital currencies begins in 1983.

Let us note the dignity of a virtual currency, the movement of which from one side of the transaction to the other shows the presence of trust, safety and cheapness compared to traditional transactions. A number of authors in their articles write a lot about “digital value” - a digital expression of value.

Unlike currencies in virtual economies (for example, in online games), digital currencies are used to purchase real goods and services directly [11] [12]. Despite this, digital currencies can also be called virtual currencies, using this expression as a synonym [1]. The ECB defines digital currency as any currency in digital (nonmaterial) form, such as: (1) bank account entries, (2) electronic money and (3) virtual currencies (which, unlike electronic money, do not have a material equivalent in order to same name as legal tender) [13]. The FBI and FinCen use the term “virtual currency” in their official documents as a general and unique [14].

The report “Central Banks and Digital Currencies” by Bank of England official Ben Broadbent in 2016 at the London School of Economics proposed options for the use of digital currencies by central banks.

In October 2012, the European Central Bank released a report on “Virtual Currency Schemes”. It notes that in some cases, “virtual communities” create and distribute their own digital currency for the exchange of goods (services) and unit of account. The report defines Virtual Currency as one of the types of unregulated [state] digital money, which is usually created and controlled by

38 TSUL Legal Report Volume 3, Issue 1 (2022) E-ISSN: 2181-1024

12.00.03 – CIVIL LAW. BUSINESS LAW. FAMILY LAW. INTERNATIONAL PRIVATE LAW

developers, and accepted among members of a certain “virtual community” [13]. II. Research results and discussion The electronic currency does not have an issuer or other authority that would exercise centralized control over its circulation; its turnover is controlled by a complex algorithm and the actions of its users in the absence of any intermediaries or supervisory authorities. It’s a kind of economic torrent In these relations, there are no contractual relations with the operator (issuer) of electronic money due to its absence. No one can seize, suspend account transactions, cancel a payment, which gives additional security to transactions.

For the World Bank, ministries of finance and central banks of different countries, the problem of the existence of virtual, or cryptocurrencies, is relevant. The first cryptocurrency bitcoin appeared in 2009, and its appearance is explained by the economic crisis of 2009. The main feature of bitcoin is that it is not tied to any of the existing state currencies, however, it is easy to exchange it for dollars or euros. The value of a bitcoin is determined by the ratio of supply and demand. The cryptocurrency is saved from depreciation by the limited number of coins that can be produced by the algorithm - 21 million. Vpsot is mined by solving a specific problem. For bitcoin, you can buy real goods and pay for services, which makes them a means of payment, money. However, there are no bank accounts in the Lncom system, there is no single bank that issues currency. System users themselves create one virtual coin, which is transferred to their account (wallet). At the same time, what is attractive to users is that all accounts are anonymous and are created only for the implementation of one transaction, after which they are destroyed.[1] Thus, it is almost impossible to determine who participated in the transaction and when.

The use of cryptocurrency as a means of payment for real services and goods.

Comparative Electronic Virtual currency criterion currency 1. Placement Digital Digital Type

2. Value unit The traditional The unit was form of created in a representation private order. of currencies, without legal legally approved tender status form * ruble, dollar, etc.. 3. Legal status Legally Not legally approved approved 4. Issuers Government Private companies and individuals

5. Refundability Guaranteed no guarantees

6. Supervision Yes Yes and control of supply and emission 7. Risk Yes Yes

In the practice of Russian courts, there are already examples of cases considering the acquisition of narcotic drugs by paying for them in foreign currency b (the verdict of the Moskovsky District Court of Ryazan dated April 16, 2013 on charges of citizen M.A. Kondratyev of committing crimes under Part 1 of Art. 228, and “in” part 2 of article 229.1 part 1 of article 229.1 of the Criminal Code of the Russian Federation). The article deals with the transition of countries to a virtual currency, as well as a comparative characteristic with fiduciary money. Virtual currency has distinctive features, criteria for establishing dependence on electronic money. The purpose of writing the article was to identify the distinctive criteria and essence of virtual currency. Methods: comparative and historical analysis, analogy method. The main criterion is legislative approval and the type of issuer. Note that virtual currency is the future of the new payment system.

E-ISSN: 2181-1024 Volume 3, Issue 1 (2022) TSUL Legal Report 39

12.00.03 – CIVIL LAW. BUSINESS LAW. FAMILY LAW. INTERNATIONAL PRIVATE LAW

On March 20, 2013, the US Treasury Department’s Financial Crime Commission (FinCEN) issued a document interpreting the applicability of the US Bank Secrecy Act to the creation, exchange, and transfer of virtual currencies. [14] Virtual currency is an asset, the value of which is determined only by supply and demand and is not constrained by anything only at the wishes of the private owner of the currency. Pi one state or private structure (individuals) cannot manage the supply of virtual currency, but only a computer protocol and an embedded algorithm. A distinctive feature of the virtual currency action schemes is the way the transaction is carried out. In the traditional case, trust is needed between the parties, i.e. personal participation of persons and the circulation of cash. In virtual reality, the personal presence of the parties to the transaction is not necessary, trust is determined by using a distributed ledger. This is a vivid example of the difference between traditional money and virtual money. In the case of control over the traditional circulation of the Central Bank, the circulation of virtual currency - private owners. In the case of payments using virtual currency, the payer stores cryptographic keys in the “wallet”. When paying, the process of direct direct exchange of value is replicated via the Internet.

We note the main functions of traditional money and compare them with the functions of a virtual currency: - The measure of value; - Instrument of payment: - means of circulation; - means of accumulation; - World money.

Of all the functions, virtual money does not fully perform only three of them - a measure of value, a means of payment, a means of circulation. It should be noted that most of the users of these systems perform such a function as accumulation on a subconscious level. For short-term purposes, virtual currency is not suitable for accumulation due to high volatility. By analogy, the long-term goal of accumulation is also not achievable. But as a means of speculation, virtual currency is completely suitable, this also determines the level of risk.[15] The level of risk of using a virtual currency is determined by several supply and demand factors.

Demand factors include: security, cost and volatility. To supply factors: fragmentation, efficiency, security and sustainability.

Virtual currencies differ from traditional money in a narrow sense, having a number of unique characteristics. On the one hand, they represent an asset, on the other hand, they provide payment mechanisms. Payment mechanisms are based on a decentralized unified accounting system for operations. The main criteria for the classification of currencies are: the possibility of converting, the technological features of the issue. Convertible decentralized virtual currencies are of the greatest research interest due to the innovative value exchange mechanism and the wider potential for use in payments. The main advantages of virtual currency schemes are: speed of settlements, anonymity, low transaction costs.

We also note the threats to the use of virtual currency - the ambiguity of the legal status, potential illiquidity, high information and network dependence. Thus, virtual currency is an innovative means of payment.

Electronic money is especially useful and convenient when making mass payments of small amounts. For example, when paying in transport, cinemas, clubs, paying utility bills, paying various fines, making payments on the Internet, etc. The process of paying with electronic money is fast, there are no queues, there is no need to give change, money is transferred from the payer to the recipient quickly .

Electronic money is most correctly compared with cash, since the circulation of non-cash money is necessarily personified, and the details of both parties are known. In the case of payments by electronic money, it

40 TSUL Legal Report Volume 3, Issue 1 (2022) E-ISSN: 2181-1024

12.00.03 – CIVIL LAW. BUSINESS LAW. FAMILY LAW. INTERNATIONAL PRIVATE LAW

is enough to know the details of the recipient of the money.

Electronic money has the following advantages over cash:[16] - excellent divisibility and integrability - when making a payment, there is no need for change; - high portability - the value of the amount is not related to the overall or weight dimensions of money, as is the case with cash; - very low cost of issuing electronic money - no need to mint coins and print banknotes, use metals, paper, paints, etc.; - no need to physically count the money, this function is transferred to the storage instrument or payment instrument; - it is easier than in the case of cash to organize the physical protection of electronic money; - the moment of payment is recorded by electronic systems, the impact of the human factor is reduced; - when paying through a fiscalized acquiring device, it is impossible for a merchant to hide funds from taxation; - electronic money does not need to be counted, packed, transported and organized in special storage; - perfect persistence - electronic money does not lose its qualities over time; - perfect qualitative homogeneity - individual copies of electronic money do not have unique properties (such as scratches on coins); - security - protection from theft, counterfeiting, denomination changes, etc., is provided by cryptographic and electronic means.

The central banks of most countries are very wary of the development of electronic money, fearing uncontrolled emission and other possible abuses. While electronic cash can provide a host of benefits, such as speed and ease of use, greater security, lower transaction fees, new business opportunities with the transfer of economic activity to the Internet. There are many controversial issues regarding the introduction of electronic money. The introduction of electronic currencies raises a number of questions - fundamentally unresolved problems in collecting taxes, ensuring emission, the lack of standards for ensuring the emission and circulation of electronic private money, concerns about the use of electronic payment systems for money laundering.

III. Conclusion In conclusion, Electronic money is an ambiguous and evolving term with many meanings related to the use of computer networks and stored value systems to transfer and store money. Electronic money is understood as systems for storing and transferring both traditional currencies and non-state private currencies - the circulation of electronic money can be carried out both according to the rules established or agreed with state central banks, and according to the own rules of non-state payment systems.The article deals with the transition of countries to a virtual currency, as well as a comparative characteristic with fiduciary money. Virtual currency has distinctive features, criteria for establishing dependence on electronic money. The purpose of writing the article was to identify the distinctive criteria and essence of virtual currency. Methods: comparative and historical analysis, analogy method. The main criterion is legislative approval and the type of issuer. Note that virtual currency is the future of the new payment system.

Electronic money is usually divided into two types: based on smart cards (English card-based) and based on networks (English network-based). Both the first and second groups are divided into anonymous (non-personalized) systems, in which it is allowed to carry out operations without user identification, and non-anonymous (personalized) systems, requiring mandatory user identification.

It is also necessary to distinguish between electronic public and private money. State electronic money is denominated in the national currency and is an integral part of the state payment system. Accordingly,

E-ISSN: 2181-1024 Volume 3, Issue 1 (2022) TSUL Legal Report 41

12.00.03 – CIVIL LAW. BUSINESS LAW. FAMILY LAW. INTERNATIONAL PRIVATE LAW

the issue and circulation of such electronic money takes place on the basis of national legislation.

According to the position of the ECB[2], the means of access to a bank account, namely, traditional bank payment cards (both microprocessor and magnetic stripe), as well as Internet banking, do not belong to electronic money, but in systems that carry out settlements by electronic money, bank accounts are used only when entering and withdrawing money from the system. In this case, the consolidated bank account of the issuer of electronic money is used, and not card or current accounts of users. When issuing electronic money, traditional money is credited to the consolidated bank account of the issuer. When electronic money is presented for redemption, traditional money is debited from the issuer’s consolidated bank account.

Also, according to the position of the ECB, electronic money does not include prepaid single-purpose cards, such as: a gift card, a fuel card, a telephone card, etc. The use of such a payment instrument does not mean that a new payment has been made. The real payment is made at the time of purchase or replenishment of such a card. Its use, as a rule, does not generate new cash flows and is a simple exchange of information about consumed prepaid goods or services.

Electronic private money is an electronic unit of non-state payment systems that regulate their issue and circulation with their own rules. The degree of control and regulation by government agencies of such payment systems in different countries varies greatly. Often, non-state payment systems tie their electronic money to national or foreign currencies, but the state does not ensure the reliability or liquidity of private money.

Currently, electronic money is considered as a potential substitute for cash for micropayments[9]. However, in terms of their qualities, electronic money is able to partially replace or completely displace cash in settlements. The artificial limitation of the amount that can be saved in an electronic wallet is caused by the uncertainty of regulators in the reliability and safety of using such a payment instrument. Obviously, in the absence of negative examples, this limit will be increased or completely canceled.