Will Regulation Change Cryptocurrency Protocols?

Cryptocurrencies have entered the economy as alternative money, as speculation objects, and as utility tokens for innovative service-platforms. Cryptocurrencies are increasingly scrutinized by regulators, and the literature on the regulation of cryptocurrencies is emerging. In this paper, it is asked how regulatory efforts may interfere with the core of the cryptocurrencies – their protocols as enforced by the decentralized operators. It is found that regulations are likely to induce protocol changes by interfering with the operators' choices. Regulation may induce the development of regulatory-compliant cryptocurrency protocols, but also protocols specially designed to circumvent regulation.