Blockchain is entering the international conversation more and more. The technology behind this decentralized ledger is gaining notoriety. Blockchain is the tech that cryptocurrencies reside upon. More and more businesses are using blockchain technology and cryptocurreny. Without blockchain, there would be no Bitcoin, Ethereum or other coins. Countries are not sure how to go about blockchain regulation. They’re not even sure that they should.
Blockchain Has Potential
There is agreement on one thing. Everyone agrees that blockchain has potential. A lot of potential. Good potential. Blockchain is the technology that can decentralize financial transactions. It can streamline transactions. Not just locally, though. This can happen worldwide.
Blockchain is always changing which means regulatory agencies have a hard time keeping up with the changes. They are also not sure where blockchain fits into the economy. There is much disagreement. They wonder where this technology fits into the future of international commerce.
Blockchain Regulation Around the Globe
Let’s find out what different countries and regions are doing with blockchain regulation.
The European Union
The European Union is very firm on data privacy. They have strict regulations that impact blockchain. The General Data Protection Regulation (GDPR) just started on May 25. It is supposed to make data privacy efforts similar across the union because it mandates that EU citizens have a “right to be forgotten” online.
The GDPR may be a problem for many blockchain companies. That right to be forgotten may not work with the unchangeable blockchain. It may not work with decentralization of the technology the user is provided.
These new GDPRs are based upon morality. The moral idea is that EU citizens should have a basic right to control their data which puts the compliance burden on blockchain companies. They will have to ensure that the EU data ownership level is met.
In East Asia
East Asian countries have taken a “business first, regulation later” approach. Most government agencies have allowed blockchain companies to operate without restrictions. This attitude changed when cryptocurrencies massively grew last year. As the popularity of cryptocurrency grew, East Asian nations began to take a closer look.
China used to be an international refuge for cryptocurrencies. That changed quickly in 2017. That is when the People’s Bank of China banned ICOs (initial coin offerings). That meant that cryptocurrency exchanges had to change. Blockchain is still popular in China.
South Korea was next. They also blocked domestic ICOs. On the other hand, they said blockchain technology was pretty much encouraged within the country.
South Korea’s blockchain community has been doing very well. The government views blockchain technology as a good thing, but it has not yet defined its position on the legal and regulatory parts of the funding and trading of cryptocurrencies. Because of this, uncertainty is created in the South Korean market.
Japan recognized Bitcoin early and they were one of the first countries in the world to recognize that coin as a currency. They were also one of the first countries to issue cryptocurrency exchange licenses.
Despite that positive view of Bitcoin, Japan has not gone further. The regulatory agencies in Japan are only focused on Bitcoin. They are not embracing any other blockchain businesses.
United States’ Stance
In the United States, it is “regulation first, business later.” Skepticism seems to be the rule which has caused regulators to restrict blockchain use. They are blocking the potential mainstream applications of blockchain programs that use cryptocurrency.
There has been a lot of controversy within the U.S. regulatory agencies. They can’t seem to agree on the best way to deal with the future of blockchain, therefore, they can’t agree on security issues either.
The U.S. Securities and Exchange Commission (SEC) has said that cryptocurrencies will be considered “assets.” Because the government can limit them, many major international crypto-companies don’t want to operate in the U.S.
What is Next for Blockchain Regulation?
There are a lot of ideas about how best to regulate cryptocurrency and blockchain which has lead to a real lack of unity about how to move forward.
This is changing because G20 members met back in March so they could discuss the future of cryptocurrencies around the world. No agreement was met. They did, however, agree to publish a formal proposal. It should be published in July.
Most importantly, they think the coming proposal will set the standard for government and regulatory overview for years to come.