As blockchain applications from finance to healthcare sweep the market, governments are beginning to wonder how this new distributed ledger will factor into legislation. Many experts are claiming that blockchain’s distributed ledger technology (DLT) could be a magic bullet for economies recovery in the wake of the 2008 financial crisis. However, this may be a case where the great power of an all encompassing digital financial ledger comes with great responsibility.
Legislators from Japan have recently considered making bitcoin and other cryptocurrencies legal currency. While bitcoin has faced scrutiny in the past, this seeks to create a new chapter in the narrative of cryptocurrency by introducing government legislation. While the sentiment behind blockchain and cryptocurrencies has typically been anti-centralization (i.e there is no true gatekeeper, like a bank or a government in a blockchain), Japanese government’s the proposed plan to endorse cryptocurrency opens it up to taxation and regulation.
According to the Guardian, Japan has yet to make any official moves on this front. However, they are far from alone when it comes to debating whether governments should intervene in the expanding world of blockchain.
According to Reuters, the United States has been debating how best to intervene (if at all) in the expanding world of blockchain applications–especially financial ones. When it comes to the securities market, experts believe that blockchain can greatly increase speed and security when it comes to making digital transactions–the current wait time to fully process a securities settlement takes place up to three days after the exchange between buyer and seller is confirmed.
These same experts are also wary of the lack of middlemen in the blockchain system. Charlie Cooper of R3 CEV, a consortium of more than 40 banks that collaborate on blockchain applications told Reuters he was “unsure” of what organization he should begin to coordinate with.
“Unless I’ve got a lobbying firm to have a specialist in all these organizations . . . it’s almost like the universe is so big that we don’t know where to start,” he said.
DLT makes the power of professional middlemen, from accountants to banks nearly obsolete. There currently isn’t even a consensus regarding which agency should oversee the regulation of blockchain transactions in the United States, perhaps largely because the nature of blockchain itself removes the need for an omnipotent overseer.
In 2017, as blockchain applications continue to gain international attention it is likely that we will see governments begin to take action on a regulatory basis. We are living in the wild west of blockchain, and the rules of the future will be written in the coming months.