Blockchain: Can it be safe without regulation?
Blockchain is a system of recording and sending information with regard to any transaction concluded on the internet, for example, deposits/withdrawals at your bank. In other words, it may be described as replicating, distributed ledger which creates a record of transactions. It is a foundation of cryptocurrency (bitcoin), however, its significance can be seen in other sectors such as Internet of things (IoT), Distributed Autonomous Organizations (DAO), or Distributed Ledger Technology (DLT).
Nevertheless, it was observed that blockchain technology is not as widely used as it could be. Business leaders and regular people are slow and conscious to adopt block-chain system due to the fact that they fear that potential government regulation may impose on them obligation which might require them to make expensive or difficult changes in the future. By the same token, many asks themselves whether the blockchain can be safe if it is not regulated?
It is important to say that blockchain-based transactions are potentially disruptive when it comes to how global currency is handled. They are not associated with a force like national bank, or central bank. As its nature in unclear, the legal status is certainly uncertain. The regulation currently available differs depending on the country.
According to Spanish law, cryptocurrency cannot be considered as a financial instrument, nor a currency. The Law 46/1998 of 17th December makes it clear that cryptocurrency is not legally treated as money for legal tender. The joint communiqué issued by the Bank of Spain and the Spanish Market Regulator observed that there are no issues of cryptocurrency or initial coin offering (ICO) approved by any regulatory body. However, it is assumed that they could be collate to securities in relation public offerings, or to chattels or commodities:
In that case, ICOs can fall within the prospectus-filing requirements of the Spanish stock market law (LMV).
If the cryptocurrencies fall within the scope of commodities, their trade will be subjected to the general rules of the Civil Code and the Code of Commerce. Furthermore, article 2 of Regulation Rome I, Regulation (EC) 593/2008 on the law applicable to contractual provides that the party to the transaction are free to choose the governing law.
In light of the above, much depends on how Spanish law would describe cryptocurrencies. The most recent position of Bank of Spain and CNMV is that the specific regulation of cryptocurrency and ICOs (initial coin offering) is essential.
The legal approach to cryptocurrencies in the US varies by state, and federal authorities. The Financial Crimes Enforcement Network does not regard cryptocurrencies as a legal tender, but as money transmitters. On the ground that tokens are ‘’ other value that substitutes for currency’’. In contrary, Internal Revenue Service considers cryptocurrencies as property, and accordingly issued a tax guidance. Still, most federal regulators claim the need for jurisdiction.
Although UK have not implemented regulation yet, the United Kingdom’s Financial Conduct Agency has said that is leaning towards classify cryptocurrencies as commodities. What means that the UK is a safe place to conduct crypto-related business at the moment.
The safety of blockchain differs depending on the country, or state. However, top of economies in the world acknowledge the need to implement regulation with regard to blockchain. The future regulation can be subjected to many difficult and expensive changes.
Letslaw es una firma de abogados internacionales especializada en el derecho de los negocios.