Should Blockchain be regulated? Regulators have wrestled with how to regulate it. The technology is new, and there are no known commercial applications in the financial world. However, the emergence of this technology has caused uncertainty in many areas, including regulation. Among other things, it is hard to define its use cases and determine what regulation needs to be applied. In this article, we discuss some of the key issues to keep in mind.
The General Data Protection Regulation (GDPR) has fundamentally changed the legal landscape in the United States and the European Union, creating many challenges for the adoption of Blockchain technology. In their recent book, Should Bitcoin Be Regulated?, White & Case associate Tim Hickman and partner John Timmons examine the relationship between these two laws. They also discuss how these two technologies are likely to interact with each other, and whether specific regulation is necessary.
The Federal Reserve recently joined the ranks of government bodies that are heavily regulating securities. The regulators are right to protect consumers, because bad investments can drag down an entire economy. While the SEC cannot prevent cryptocurrency exchanges from doing business in the US, it does regulate cryptocurrencies. This makes it imperative that governments understand the differences between the two technologies. Misunderstandings can lead to crippling regulations that hinder the development of new applications.
The General Data Protection Regulation, or GDPR, is a landmark piece of legislation that fundamentally altered the legal landscape in the United States and European Union. Because of these issues, Blockchain adoption has been challenged in these countries. In Thailand, for instance, the Stock Exchange launched its own “LiVE” blockchain-based crowdfunding platform that facilitates peer-to-peer lending. Although blockchain is not a perfect solution to these problems, it has the potential to overcome them in the future.
The government is well-positioned to regulate cryptocurrency exchanges, but regulating the technology in general is a better option. While government regulation of blockchain is vital, there are many instances where the technology has been misused. While Bitcoin is a widely-used form of digital currency, the government has only recently begun enacting regulations to protect its users. As a result, the government’s role in crypto is increasingly diluted, with its regulatory focus on bitcoin trading.
While cryptocurrency exchanges and blockchain technologies have their own unique applications, government institutions have historically been open and consultative in matters related to their use cases. For example, the Stock Exchange of Thailand has launched a platform for peer-to-peer lending and the European Commission is attempting to regulate the technology in general. In fact, blockchain-based platforms are now the most important form of digital currency, but government regulation should not be confused with the cryptocurrency market.
Governments and other regulators must be able to distinguish between the technology and the cryptocurrency markets. In addition, there are numerous differences between the two. For instance, blockchain is a digital ledger, and crypto is a use case. Neither is regulated in the traditional sense, but it can be regulated in specific ways. And while it’s a digital ledger, the government should still be able to regulate it if it wants to protect its users.
There are many legal and policy considerations that must be addressed in order to regulate the technology. While crypto is unregulated, it should be regulated to ensure that it is safe for citizens. While governments are not the right place to regulate blockchain, it’s essential to ensure that they understand the difference between the two technologies and their application. A properly regulated blockchain system can help prevent money laundering and protect consumers. You must be careful with what you allow and do not.
The government must be able to regulate crypto and Blockchain. The two are different technologies. In other words, the SEC regulates crypto and the Bitcoin industry. It should also regulate the Bitcoin market, but the SEC should not regulate the blockchain itself. Furthermore, regulation should only be implemented in areas that are most suited for it. There is already a long list of governments that regulate Bitcoin, and it’s not hard to find one that does.