E-Commerce and Digital Currencies Risk Management Challenges

In light of the rapid technological developments and the shift towards a digital economy, the financial services industry and related products are witnessing a tremendous development [7]. With the advent of the Internet, there has been a development in the global financial movement, accompanied by the spread of e-commerce, the development of means of payment and electronic transfer, and the creation of new business models, and it is possible to conduct any financial or commercial transaction online quickly and easily, using modern electronic payment methods. In 2008, the block-chain technology appeared, which was considered as the second invent after “Internet”. As result of that, the “Bitcoin” currency—appeared to be the first encrypted computer- generated currency, this new virtual currency caused great controversy in the financial and economic circles to study opportunities and the risks that these currencies may entail. Despite of its acceptance globally, it may be used in illegal transaction like, terrorist financing act and money laundry crimes, and may affect financial stability and the global financial system; Due to the high volatility of its prices, its use of speculation, its lack of submission to any central authority, and the fear that a new financial bubble will lead the world to a new financial crisis [2]. This paper aims to differentiate between digital and cryptocurrency, how to monitor related Risks and its impact on banking sectors, The chances, threat and the challenges of legislator and regulators when they set digital and cryptocurrency requirements. The author has collected data needed from primary sources represented in articles and references written on this subject as well as secondary sources as he had made interviews with risks managers in commercial banks in the west bank who have great experience in digital currencies risk management This paper conclude that there is no clear impact of encrypted digital currencies on the global economy, as it takes a lot of time to change the structure of the current global economy, and there are several factors and issues that limit its spread and some governments and major financial institutions fight their existence as it represents the currency that It is widely known and at the same time the largest sponsor of crime around the world.