Regulation of Blockchains Based on Distributed Ledger Technology

Abstract

The digital economy and Distributed Ledger Technology (DLT) are developing rapidly into our business and private life. The technology enables a way to secure decentralized datasets without involvement of third parties or intermediates in a secure, auditable and incorruptible way. Storing data on worldwide peer-to-peer networks makes these applications difficult to regulate as they are not residing in a specific area of influence of any given regulation or jurisdiction. Blockchain applications based on DLT offer an extensive level of anonymity to their stakeholders. In future artificial intelligence could start to optimize the applications and trigger decisions automatically which will become a major challenge for competition and anti-trust regulators. Based on the Bitcoin technology we will see that there are fair possibilities to regulate the ledgers indirectly through existing legal and regulatory systems. Also, strong self-regulation will play a part to make these technologies widely acceptable. Capacity building has to be emphasized to keep the asymmetry of information between regulators, industry and consumer as small as possible. Some scholars already claim that blockchains have already started to create a supranational economy in which the classical idea of a legal person is obsolete whereas the supranational law is not really designed to address these new developments yet.