Since the birth of Bitcoin, both Bitcoin and blockchain have grown in drastic ways, being morphed by those desiring to fully utilise the technology. With big businesses and big banks investing within the technology, such as HSBC and Barclays, as well as other investors like VC, R3 and Hyperledger Project it is clear that the future for these technologies is substantial.
On top of this, certain states in the U.S. have started filing for BitLicenses, one of which has already been approved in New York. Though the desire for BitLicenses is high and has many benefits to a business using it, the rate at which they are being issued is direly slow.
The main benefit around being able to use a BitLicense is through the dampening down of crime. Financing crime and money laundering have been the particular areas for concern by governing bodies and thereby have been working on a number of regulations yet to be seen in order to combat criminal activity.
Regulation of the technology seems destined; however, Veronica Mcgregor, Hogan Lovells US LLP, and Robert Courtneige, Locke Lord, “don’t see it being regulated as a whole, but consumer related stuff will be”.
As stated in Blockchain Part 1, the definition of blockchain is still revolving around its use as a virtual currency instead of looking at a grander picture of it. And as an institution that is defined in such a way, it is being regulated quite thoroughly. There are many ideas for what regulations should be in place and what regulators need to do in order to enforce them
‘Regulation’ is always connoted with negativity and bureaucracy which nobody likes, the truth however is the opposite. The regulations that have recently come to pass, such as PSD2, have in many ways helped organisations expand and know exactly what they are and aren’t allowed to do with technologies, products and systems meaning they are able to focus on what they can do and how to achieve it.
“Currently, one of the main issues surrounding blockchain is down to its definition still being based on its use as a digital currency” according to Francesco Burelli from Accenture. This point is playing a part in the way blockchain is currently being used and how regulations may affect it.
Burelli continued to say that the technology has four distinct advantages;
- Data immutability
- System resilience and speed
- Automated logic.
The way in which the EU and US approach regulating such things it will be interesting to see what is put in place, how long it will take and whether the two entities will pair up to establish regulations based on a broad use of the technology or limiting it to currency regulations.