Regulatory issues in blockchain technology

Author:Peter Yeoh
Position:School of Law, Social Sciences and Communications, University of Wolverhampton, Wolverhampton, UK
Pages:196-208
SUMMARY

Purpose This paper aims to examine the key regulatory challenges impacting blockchains, innovative distributed technologies, in the European Union (EU) and the USA. Design/methodology/approach A qualitative perspective underpins the study. This paper relies on primary data from applicable statutes and secondary data from the public domain including relevant case study insights. ... (see full summary)

 
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Regulatory issues in
blockchain technology
Peter Yeoh
School of Law, Social Sciences and Communications,
University of Wolverhampton, Wolverhampton, UK
Abstract
Purpose This paper aims to examine the key regulatory challenges impacting blockchains, innovative
distributed technologies, in the European Union (EU) and the USA.
Design/methodology/approach A qualitative perspective underpins the study. This paper relies on
primary data from applicable statutes and secondary data from the public domain including relevant case
study insights.
Findings The smart regulatory hands-off approach adopted in the EU and the USA to a large extent bodes
well for future innovative contributions of blockchains in the nancial services and related sectors and toward
enhanced nancial inclusiveness.
Practical implications The paper’s ndings provide support for blockchain technology to advance
with minimum regulatory brakes for greater value-adding and efciency advancement, especially for
nancial services, thereby expanding accessibility and therefore nancial inclusiveness.
Originality/value This paper helps to draw greater attention to the technology underpinning virtual
currencies. It also highlights other economic potentials owing from blockchain advancement.
Keywords Bitcoin, Virtual currencies, Blockchain, Disruptors, Distributed ledger technology
Paper type Viewpoint
Introduction
Banks and other central authorities maintain a single authoritative copy of the ledger to
provide the “trust” element for users relying on ledgers (The Economist, 2015). This is
achieved by allowing each user of the system to maintain their own copy of the ledger and
keeping all copies of the ledger veriably synchronized through a consensus algorithm
(Morgan, 2016). Blockchains are a software protocol that underlie cryptocurrencies like
bitcoin and, in one sense, are nothing more than a modernizing information technology, but
in another sense, are novel and disruptive. Blockchains might, therefore, usher in a possible
second internet era, allowing the secure exchange of value across networks (Swan, 2015a,
2015b).
The use of blockchain by virtual currencies like bitcoins erases the need for central
authorities as well as the need to trust them (Coin Center, 2016;De Flippin, 2016;De Filippi
and Loveluck, 2016). While blockchain enables bitcoin users to hold, send and receive money
online, these distributed ledgers do more, including clearing and settlement of digital asset
trading and distributed computing without having the need for central intermediaries
(Morgan, 2016). Thus, blockchain technology is emerging as a new type of trust to a wide
range of services globally, in particular, nancial services (Trautman, 2016). This could
potentially render the existing banking and related systems obsolete. Indeed, blockchains’
secure value transfer features could enable the information technology revolution to reach
the major sectors of nance, economics and law, which have been updated but not completely
transformed (Swan, 2015a,2015b).
Currently, blockchain technology is used in two modes: public and private ledgers (Swan,
2015a,2015b). Various nancial institutions are implementing private (permissioned)
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1358-1988.htm
JFRC
25,2
196
Journalof Financial Regulation
andCompliance
Vol.25 No. 2, 2017
pp.196-208
©Emerald Publishing Limited
1358-1988
DOI 10.1108/JFRC-08-2016-0068

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