Early Regulations of Distributed Ledger Technology/Blockchain Providers: A Comparative Case Study

Abstract

Distributed Ledger Technologies (DLTs) such asBlockchain have been heralded for their potential to fundamentally disrupt traditional industries and longstanding practices in private and public businesses. In the financial sectors, for example, quite a number of novel financial technology (FinTech) services based on DLT/Blockchain have been introduced with cryptocurrencies representing prominent cases. While the already highly regulated financial sectors have emerged as early targets for DLT/Blockchain induced disruption, a diverse set of other areas, such as healthcare record keeping, insurance record keeping, industrial and retail supply chain management, property registries, citizen identification systems, and voting systems to name a few, has also come into the focus of DLT/Blockchain innovation. These new types of services might be in need of both complementary and novel regulations for DLT/Blockchainbased services. Interestingly, smaller jurisdictions such as Gibraltar, Malta, and Liechtenstein were among the first to provide advice and regulation for DLT/Blockchain service provisions. The study compares these early regulatory approaches to each other and discusses the prospects of DLT/Blockchain service regulation based on the study's findings. DLT/Blockchain service regulation appears to incorporate predominantly principle-based rather than rule-based regulations, which makes the regulation enforcement a uniquely individual case-based task.

Meta-View of Blockchain Technology Tensions in Organizational Implementation and Use

“…In particular, anonymous solutions make companies or company networks potentially more vulnerable to fraud or misuse of data and manipulation [11,51]. Additionally, companies might face several regulatory issues depending on their accountability model, since blockchain's properties (e.g., the irreversibility of data on the blockchain) are conflicting with laws, such as the EU General Data Protection Regulation (GDPR) [52]. However, as scholars have identified ways to comply with regulations such as GDPR when offering blockchain-based applications [53,54], we see the major issue lying in the agreement of all parties participating in the blockchain to the accountability model and associated business risks.…”