Bitcoins’ Regulatory Field: From Ambiguity Towards Discernibility

This paper explores the emergent regulatory landscape of Bitcoin through a multidimensional analytic framework grounded in the concept of the social embeddedness of markets. Traditional economic sociology outlines four dimensions of embeddedness—structural, institutional, cultural, and cognitive—which collectively frame market formation, governance, and valuation. Building on this foundation, this analysis introduces a fifth dimension, techno-structure, to capture the material mechanisms and technical infrastructures underpinning Bitcoin’s decentralized blockchain technology. This synthetic framework enables a comprehensive examination of how diverse stakeholders (users, miners, investors, regulators, and intermediaries) interact and conflict within Bitcoin’s regulatory field, shaping its evolving institutional contours. Bitcoin regulation presents a classic wicked problem characterized by profound uncertainty, incomplete information, multiple conflicting stakeholder frames, and rapid technological change. Divergent perspectives on Bitcoin’s nature, ranging from a financial asset, commodity, currency, or technology. It compounds regulatory ambiguity. The multidimensional embedding framework elucidates how these conflicting interpretations intersect with the socio-technical realities of Bitcoin’s decentralization, anonymity, and market performativity, creating regulatory gaps and tensions. The paper further analyzes prevailing regulatory strategies, notably the rise of enforcement-driven regulation in the United States, contrasted with the European Union’s proactive Markets in Crypto Assets (MiCA) framework aimed at harmonizing protections and transparency. Despite increased regulatory engagement, fragmentation persists across jurisdictions and agencies, raising challenges of uncertainty, compliance burdens, regulatory arbitrage, and conflicting legal classifications. Notably, the paper traces recent landmark developments in U.S. cryptocurrency regulation (GENIUS act) , including the approval of spot Bitcoin ETFs, executive orders fostering a pro-crypto regulatory environment, and the establishment of a U.S. Bitcoin Strategic Reserve. Attention is devoted to the distinctive positions of key market actors. Bitcoin maximalists emphasize ideological resistance to regulation, highlighting decentralization and financial sovereignty, whereas institutional investors tend to support selective, clear regulation to enable legitimacy and adoption. Bitcoin miners prioritize regulatory clarity and feasibility, particularly concerning energy use regulations, amid concerns about potential operational burdens and industry concentration. The role of regulators, often legally trained and technologically underprepared, is critiqued for its reliance on traditional frameworks inadequately suited to fast-evolving fintech innovations. This paper demonstrates that Bitcoin’s regulatory field is socially constructed through ongoing political, economic, and infrastructural negotiations among heterogeneous actors with divergent interests. The techno-structural embeddedness of blockchain technology materially shapes institutional outcomes and market boundaries. The case study of Bitcoin exemplifies broader challenges inherent to digital financial technologies where decentralized technical innovation confronts centralized regulatory systems. The resulting tensions are likely to inform the future trajectory of digital currencies and financial market institutionalization. This synthetic multidimensional analytical approach advances our insight into economic regulation by integrating social, cognitive, political, and technical aspects of market embedding. It offers novel perceptions into the complexities of regulating emergent digital financial technologies under conditions of uncertainty and conflicting stakeholder visions. By tracing Bitcoin’s co-optation and institutionalization, the paper contributes to understanding how disruptive digital innovations reshape mainstream economic and regulatory orders, with implications for finance, technology governance, and political economy.