Blockchain technology is being introduced to solve several problems inherent in supply chain relationships, including security, compliance, and transparency. Understanding the nuances of blockchain technology is complex enough already. When selecting a reputed platform for trading, individuals must use 1k daily profit. Also, it helped many beginners to get started with bitcoin trading.
Therefore, it makes sense that those seeking compliance are looking toward government regulation and guidance on appropriately using blockchain within the industry. Blockchain technology is still relatively new, and embracing it will be critical. For example, when storing assets on a blockchain-based platform, you do not need to worry about theft or loss because it is stored securely and can be replicated at any time.
The issue comes with how to regulate this fledgling market that is innovating so quickly in an area fraught with potential abuse and corruption. In a place where newly developed technologies are being used to solve problems, the issue of blockchain regulation is still in flux. The European Union is creating a blockchain-related standard to clarify how companies should use this technology. Currently, multiple cryptocurrencies are trying to gain regulatory recognition, and many industries have started exploring ways to apply this technology in their businesses.
The legal and policy issues posed by blockchain technology have been discussed over several years, the earliest being in 2012 when the late Supreme Court Justice Antonin Scalia made remarks about the virtual currency that seemed somewhat hostile towards new technology for money. Let’s discuss what regulation challenges blockchain might face.
Blockchain’s Current Situation:
The technology still needs to be thoroughly examined. On the other hand, banks, governments, and companies are investing heavily in looking at blockchain’s future. The SEC has provided limited guidance thus far on blockchain companies, and the CFTC still needs to issue rules or regulatory guidelines for the cryptocurrency market. No laws related to cryptocurrencies have been passed in the US so far by Congress.
The Financial Action Task Force (FATF), a global organization that combats money laundering and terrorist financing, held a meeting to discuss how they should approach cryptocurrencies while they approve blockchain technology as an alternative form of storing data.
Regulation and governance:
The US government has been looking at the blockchain technology and cryptocurrency space, and they’ve mentioned that they will keep a watchful eye. Some government agencies promote the idea of self-regulation within the blockchain industry, while others are more skeptical of its capabilities. In one case, a company that did not meet security requirements was fined by the SEC because they were involved in an initial cryptocurrency offering (ICO), an unregulated way to raise money by offering tokens in exchange for cash.
More recently, a New York Court ruled in favor of cryptocurrencies as legal property during a lawsuit between two parties involving Bitcoin. However, it still needs to be determined how this ruling will affect other cryptocurrencies moving forward. There are different types of cryptocurrencies, and the pricing of each one varies independently. Moreover, it’s considered a high-risk investment for consumers and investors. To date, there haven’t been any regulatory actions taken against cryptocurrencies by a government agency.
Different challenges are being faced by blockchain technology as it pertains to regulation, but governments are taking steps toward addressing these challenges. So far, there have yet to be any formal regulations passed by Congress for cryptocurrencies and digital assets in the US. Thus far, countries outside the US have begun creating their own cryptocurrency rules and regulations to create stability within their markets. We’ll continue to monitor this space as regulatory guidelines develop further so we can adapt accordingly.
Why are governments looking to regulate blockchain?
The primary reason is that it’s an emerging technology with many potential uses and applications and several associated risks. In addition, there are various forms of blockchain, so the regulatory bodies are trying to determine which to focus on and which to regulate. For example, the US Securities and Exchange Commission (SEC) has been researching the technology to follow up on any compliance questions that might arise from the industry.
What type of regulation will we see for blockchain?
There’s no precise answer to that question, but there are two types of regulations for this space: 1) General Purpose Regulations (GPRS) and 2) Specific Purpose Regulations (SPRs). GPRS are designed to regulate all forms of cryptocurrencies and digital assets, while SPRs are designed to handle cryptocurrency exchanges specifically. Here are a few examples:
General Purpose Regulations (GPRs) – When a government wants to regulate an entire market or industry, they create a set of regulations applicable to the whole market or industry. The US government is trying to develop GPRs for cryptocurrencies, covering all forms of cryptocurrencies and digital assets.
Specific Purpose Regulations (SPRs) – When a government wants to regulate an individual type of cryptocurrency or digital asset, it will create a set of regulations for one specific type of cryptocurrency or digital asset.