The introduction of blockchain and digital currencies have provided an immutable ledger of transparency to the world but what legal and regulatory considerations are there for companies embarking on the use of this technology if any? ITWeb events spoke to emerging technology law specialist Nerushka Bowan who will be facilitating a workshop on this topic at the annual Governance, Risk and Compliance Summit in February next year.
ITWeb: Can you provide us with a brief description of what Bitcoin and blockchain are?
Bowan: Bitcoin is the first crypto-currency - a type of digital currency. It doesn't have a physical form and its value is stored electronically in wallets using decentralised technology secured with cryptography. The mathematical proof of how Bitcoin works was published under the alias "Satoshi Nakamoto" in the white paper "Bitcoin: A peer-to-peer electronic cash system". The decentralised technology that Bitcoin is built on top of is commonly referred to as blockchain technology. Numerous applications are now being tested and developed on top of the blockchain, for example, tracking of diamonds, digital identities and share trading.
ITWeb: What legal and regulatory issues and questions need to be asked when embarking on a bitcoin/blockchain project?
Bowan: Bitcoin and blockchain projects have raised a number of legal and regulatory issues, including privacy and confidentiality of information stored on the blockchain, whether crypto-currency attracts tax, and whether smart contracts built on a blockchain are legally binding. Each use of Bitcoin, and each new application built on blockchain carries its own host of new questions and grey areas.
ITWeb: Could you elaborate briefly on what the latest trends are both locally and globally when it comes to Blockchain legislation?
Bowan: There is no "blockchain legislation" (and no need for one) but certain use cases for blockchain are being looked at more carefully to see if there is need for regulation. For example, Singapore is exploring ways to regulate good initial coin offerings through regulatory sandboxes. Financial regulators in the UK, UAE and Australia are also making use of regulatory sandboxes to evaluate new development in technologies, such as blockchain, before regulating. The South African Reserve Bank is also considering setting up a regulatory sandbox.
ITWeb: What key thoughts do you hope to leave delegates with at the Governance Risk & Compliance event in February 2018?
Bowan: An understanding of what the terms "Bitcoin" and "blockchain" mean, what is the potential impact of these technologies for the future, what are the potential use cases, overview of the trends both locally and globally, and a discussion of the potential risks and legal and regulatory issues when embarking on a project.
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