To lead the pack and conversation around blockchain, the U.S. needs a consistent, enforceable, and understandable blockchain policy.
BLOOMBERG NEWS
Especially given the current focus on technological competition and growth, including July 2020 Congressional hearings, establishing a consistent blockchain policy has never been more important.
Blockchain technology, and the cryptoasset ecosystem, might seem like an abstract idea or concept to business people, individuals, or entrepreneurs who are not immersed in the space on an everyday basis. That said, it is difficult to overstate just how important blockchain technology, and its related applications, will be for the wider economy now and going forward.
Digital dollars, cryptodollars, and the entire conversation around tokenization are a great start, but are merely scratching the surface of blockchain in the economy at large.
In order to actualize and realize the benefits of blockchain technology for the entire economy, and to help encourage mainstream adoption of both blockchain and cryptoassets, there needs to be a consistent blockchain policy developed and enforceable at the national level. Now, it might seem contradictory to be speaking about a top down policy for blockchain implementation, but there is some merit to be derived from such an approach. The specific implementation of this policy will vary from jurisdiction to jurisdiction, but will have to focus on the following points.
Let’s take a look at some of the core points and areas that any blockchain policy should incorporate, especially as blockchain moves out of the financial services space, and into broader economic areas.
Data integrity. The information stored on a blockchain needs to be insured and protected. For example, if property records are stored on a blockchain, how can network members rest assured that this information is safe and secure? The lack of insurance products, reasonably so, prevents wider adoption of blockchain; every other technology tool and business sector has insurance, so why should blockchain be any different?
Data mobility. As data is increasingly transmitted between different devices – cars, houses, smart devices of all kinds – the potential for hacking and data breaches are going to grow exponentially. Blockchain has the potential to secure this information on a real time basis as it flows between different entities and organizations, but not if industry standards and policies are still incomplete. Otherwise, all of this information is going to be increasingly vulnerable without relief in sight.
Consumer education. Blockchain is coming for the global economy, and consumers are going to have to understand what exactly blockchain is, how it operates, and what it means for their personal property rights. Considering the lack of financial literacy that continues to rear its ugly head on a periodic basis, blockchain education is going to have to become part of any public policy framework. The blockchain revolution has arrived, and in order to succeed individuals and institutions will need to be well informed about the opportunities and challenges involved therein.
There is obviously much work to be done to develop and implement a U.S. blockchain public policy, but a few commonsense action steps can jumpstart this process. In order for any policy to be effective, it will require collaboration between the public sector and private sector, including bringing together regulators, blockchain and crypto organizations, as well as wider industry. Getting right to work, these issues include, but are not limited to, the following.
Blockchain policy action steps
Legal consistency. Establish consistent legal and regulatory framework for the treatment of data stored on blockchains, including the rights of individuals. Data is property, and property rights must be protected if blockchain is to be trusted especially as it expands and develops into other areas.
Public private partnership. Work with private industry, and industry regulators, to set up blockchain insurance products to limit the liability of organizations and individuals who – through no fault of their own – suffer damages linked to blockchain applications. Insurance and other investor protections are critical if widespread engagement and adoption are to be encouraged and expected.
Develop cryptodollars. Tokenize the U.S. currency as soon as possible. No reserve currency lasts forever, and there are alternatives to the U.S. dollar that are becoming increasingly mainstream. Integrating the dollar with blockchain establishes the dollar as the currency of the present, and the future.
Digitization and automation are the future of how commerce will be conducted, no matter what specific industry is analyzed, but in order for blockchain to fully realize its potential there must a public policy that is understandable for both individuals and institutions.
Blockchain is a game changing technology, but it is just a technology tool, and like any other tool it will require rules, frameworks, and guidelines to operate effectively. A national blockchain policy might not have been included in the original ethos of blockchain, but just might be the key to its future success.