The increasing usage of Bitcoin and blockchain technology in today’s economy is posing a challenge to the governments. With the current legal and regulatory environment set to address the issues related to conventional economic systems, governments are still stuck at finding ways to include digital currencies and distributed ledger systems into it.
According to George Takach, a senior partner at McCarthy Tetrault LLP, it is just a matter of time for the law to catch up with technological innovation. In an article on one of the online law magazines, he compares Bitcoin and blockchain technology to the internet a few decades ago. He compares the regulatory scenario in Canada with that of few states in the United States. While the State of New York rushed with a half-baked BitLicense, the Canadian government has opted for a wait and watch approach. So far, the Canadian regulatory bodies have only issued directives for countering money laundering using digital currencies.
Each state and country react differently to new technologies, especially the disruptive ones. Takach gives the State of Utah’s reaction to the introduction of Public Key Encryption in the 1990s. The regulations introduced by the state in the early days of its adoption didn’t come of any use as the industry developed in an entirely different direction. Similarly, any actions on the part of governments and regulatory bodies, concerning digital currencies at the moment may or may not be fruitful.
The cryptocurrency industry is still in its nascent stages. There is still room for adoption and innovation. As the technology develops, the use case for Bitcoin or blockchain technology may be completely different from what it is now. The increasing use of blockchain technology can be taken as an example. The distributed ledger was initially meant for keeping a record of all the transactions happening over the Bitcoin network. but now, the distributed ledger by itself is being used for a variety of applications.
George Takach doesn’t believe that there is a regulatory vacuum concerning cryptocurrencies. Like in the early days of internet-based business models, the general legal rules of libel, taxation, securities regulations etc. applied to them then, and the same applies to cryptocurrencies now.
Even though the general laws cover some aspects of digital currencies, there is still few regulatory challenges when it comes to countering terrorist financing, privacy rules, and consumer protection. These challenges can be eventually solved, using internet related precedents.
Ref: Lexpert | Image: NewsBTC