The international legal race to exploit the innovations in blockchain ecosystem

By Tatiana Revoredo and Rodrigo Borges

The European Parliament hosted last May in Brussels, its headquarters in the European Union, a Blockchain Intercontinental Conference with the presence of more than 37 countries which met up to debate about the applications of this technology, as well as about the international regulation of Cryptocurrency and ICOs (Initial Coin Offerings).

Representatives of European governments and prominent leaders of the Blockchain industry attended the event. They were presented to the efforts of the International Community, in particular, those of the European Union, in creating favorable regulations to receive companies in search of this technology. Among the countries that took part, the initiatives of the Netherlands, Estonia, Lithuania, Japan, and the USnited Stateswere highlighted.

Influential leaders of the industry presented the big picture of the advances of the technology as well as the new applications they have developed, and that will bring positive impacts to the society, allowing a change in the way of doing business.

Due to qualities such as transparency, auditability, immutability, and safeness, the blockchain technology has brought an unprecedented mean for transfers of value, validation, and record of online information, and it has already been successfully tested in financial technology solutions. Therefore, its application in several sectors like energy, logistics, health records management, and polling has been developed, and it is going to be effectively implemented in the short term.

Image credits: Tatiana Revoredo

The debate in the European Parliament mirrors the Strong interest of the European Community to create favorable mechanisms for the development of the Blockchain technology. Some examples are the EU Blockchain Observatory and Forum, established in February, and the European Blockchain Partnership Declaration. The declaration was signed by 22 of their Member States, in April 2018, for the creation of an European platform which intent is sharing experiences and knowledge, regulation, as well as planning the launch of blockchain applications in the whole European Union, thus guaranteeing that the European continent is at the forefront of the blockchain technology advance.

In this context, more than 80 million euros have been allocated to projects supporting the use of blockchain in industry, and around 300 million euros of additional financing will be assigned to blockchain until the year 2020 [1].

The European Union, however, is not the only one to realize the essential character of this technology. There is an international legal race for the development of favorable environments for the blockchain ecosystem.

Image credits: Shuttestock

In their 2018 Economic Report, the Congress of the United States[2]dedicated a whole chapter to the blockchain technology and the cryptocurrency, recognizing the blockchain as a revolutionary technology for its immutability, speed, and effectiveness in data sharing and processing.

Furthermore, in 2016, the American state of Delaware, headquarters of more than 60% of the Fortune 500 companies, announced the Delaware Blockchain Initiative program, aimed to stimulate the adoption and development of Blockchain structures in the public and private sectors [3]. In the state of Illinois, there is a consortium of state and municipal bodies which, since 2017, exploits the innovations in Blockchain and the distributed ledger technologies [4], with its proper legal agenda [5].

Several draft bills favorable to the blockchain technology are also being discussed by the Regulatory of the state of Wyoming. The state of Colorado has recently been presented to a draft bill to promote the use of blockchain for the maintenance of government records.

Image Credits: Shutterstock

The Canton of Zug, in Switzerland, is known as the Crypto Valley [6]. It has become the Mecca of the new financial technologies, attracting blockchain and cryptocurrencies companies due to the public-private partnership created for the promotion of the economic region around Zurich. Due to these efforts, they have already managed to bring companies such as Google and Uber for the area.

Here, it’s worth highlighting that the country has been recognized for the sixth consecutive year as the most innovative in the world by the Global Innovation Index. Also, recently, the Swiss federal government, through its Federal Council, has announced a review of the regulations regarding the financial market which apply for the fintech companies with the goal of reducing the barriers for the entrance of fintech companies in the market, creating juridical safety, and increasing the competitiveness in the Swiss financial center. It has also recognized that due to the fast digitalization in the financial sector, especially in the blockchain area, it is assumed that business models that have still not been conceived will come up, and that it will be “closely following this development to propose quickly legal changes wherever needed[7].

Facing the prevision that the global blockchain market may go beyond 11,9 billion dollars until 2022 [8], Singapore has positioned itself as a blockchain hub with a strong performance of the government, coordinated with academic support.

Image Credits: Shuttestock

The monetary authority of Singapore, for instance, has proposed that the regulatory patterns are revised to accommodate the decentralized stock exchange based in the blockchain.

The Central Bank is exploring blockchain requests for the compensation and liquidation of payments and titles. And by the end of April, the governmental agency of intellectual property said it would speed the process of patents for technology companies, including those that create applications in the blockchain [9].

Image Credits: Shuttestock
In China, CCTV — China Central Television, the leading broadcaster controlled by the government, broadcasted a one-hour show about blockchain architecture with government officials and international experts who, besides explaining the concept and value of the blockchain, also taught the viewers that “the value of the blockchain is ten times greater than that of the Internet.”[10]

Brazil, in its turn, has kept itself away from this international race, only being concerned in discussing the regulation of the cryptocurrencies through its Draft Bill №2.303/2015.

With a regulatory scenario that must be urgently improved to attract investments and industries correlated to all the blockchain ecosystem, Brazil takes the risk of “exporting” brazilian entrepreneurs to countries with more favorable environment for the development of their projects, lose importance in the world scenario, and get stagnated in the underdevelopment outworking the evolution and exponential technological growth.

By Tatiana Revoredo and Rodrigo Borges

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[1] Fitzgerald, Gavin. In EU Member States Form Partnership To Develop Blockchain Tech,Abril, 2018.

[2] The Congress of the United States of America, In: The 2018 Joint Economic Report, pages 201–227. March 13th, 2018.

[3] Cision PR Newswire, In: Governor Markell Launches Delaware Blockchain Initiative. May 2nd, 2016.

[4] Illinois Department of Innovation & Technology. In: Blockchain in Illinois, 2017.

[5] Illinois Legislative Blockchain and Distributed Ledger Task Force.

[6] Term created at a meeting between the economic promotion division of the canton of Zug, representatives of the Ethereum Foundation and Johann Gevers, the founder and CEO of Monetas, a company that provides software capable of verifying contracts and trading terms, called smart-contracts.

[7] Swiss Confederation. In: Federal Council initiatiates consultation on new Fintech regulations. February 2017.

[8] International Data Corporation. In: Worldwide Semiannual Blockchain Spending Guide. July 19, 2018.

[9] Hynes, Casey. In: Government And Academic Support Are Giving Singapore an Edger In The Blockchain Race. Forbes. May 25, 2018.

[10] Huang, Zheping. In: China is suddenly full of nice things to say about blockchain technology. Quartz, June 6th, 2018.

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