Olga Zeveleva
December 2017.

What are some of the legal risks in adopting blockchain technology?

2 answers

If you talk to the regulators, they say the laws we have today will are fine for now, and we don’t need any new regulations or regulatory framework for blockchain technology (ICOs and unregistered securities sales are another matter). But regulators take a very different view than the industry does.

I don’t know if this is going to be an impasse, but blockchain firms have pleaded for legal clarity so that they can more confidently deploy applications, such as putting existing assets on a blockchain. And the regulators say, “No, you guys do what you want to do first, and we’ll look at it and see if it fits into an existing category of laws, and if it doesn’t, we’ll make adjustments as needed. But we’re not going to go and lead only to find out that you don’t want to do blockchain because it doesn’t work for some reason or is not scalable.”

So far, I think the regulators have been correct with their approach. Many enterprises are holding back on blockchain because it is too transparent, meaning blockchains can share too much customer or proprietary information with competitors. This isn’t a problem that a regulator can fix. Reducing issues associated with blockchain transparency can be better addressed through technologies like ring signatures and zero-knowledge proofs.

Garrick Hileman and Michel Rauchs released the 2017 Global Blockchain Benchmarking Study, which can be downloaded as a PDF here: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3040224.
You can read the brief summary of their study here: https://insight.jbs.cam.ac.uk/2017/central-banks-are-trialling-blockchain/
The above interview was conducted on 12 December, 2017.

Comment answer

It would be better to talk about the legal risks of a particular application of blockchain technology, since a blockchain is just a data structure. 

I’m guessing the question is more specifically related to cryptocurrencies, because that’s what people often think about when they think about blockchain. 

It’s a bit of a grey area, and there are some countries that are openly against bitcoin and other cryptocurrencies, because it devalues their fiat currencies in a way. But there is no clear regulation against using that technology in general. As far as blockchain technology goes, I think it’s pretty much in the clear. As far as cryptocurrencies go, we’ll see in a few years.

Comment answer