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The Future of Blockchain and Bitcoin Regulation

The Future of Blockchain and Bitcoin Regulation

​During the last couple of months, the popularity of both bitcoin and its underlying system, the blockchain, has grown considerably. With bitcoin prices rising above $1,100, and numerous financial institutions and companies showcasing their interest in blockchain technology, we’re without a doubt, about to experience a financial revolution.

However, regardless of whether you view bitcoin as the key to a free, but also utopian-type of economy, and blockchain technology as the key to achieving trust in the digital era, and online security, both systems are not outside the reach of government regulators throughout the world. Because of this aspect, it is always important to keep a close eye on the opinions of regulators.

Bitcoin regulations

A couple of months ago, the Federal Reserve in the United States, decided to release a report named ‘Distributed ledger technology in payments, settlement and clearing’, which represents the institution’s first move to rein in blockchain-based applications. It also represented one of the many other government institutions to release their views on both bitcoin and blockchain technology. Regardless of this aspect, no institution has clearly outlined their regulatory plans so far, therefore legislative framework is still mostly inexistent for bitcoin and blockchain technology, but things won’t stay this way forever.

In the Federal Reserve report, it was noted that: “For example, the legal procedures that deal with securities settlement systems, central counterparties, or central securities depositories may need to be updated if these intermediaries are made redundant by a distributed and decentralised system based on blockchain.”

Therefore, apart from attempting to create somewhat of a legislative framework meant to regulate blockchain-based implementations of applications, the FD is also likely to verify whether existing technologies don’t violate any of the pre-existing regulations.

Regardless of this aspect, so far government entities have not begun working on the legislative framework, mostly due to the fact that there was nothing for them to regulate in the first place. Most blockchain implementations were experiments, unreleased on the public level, but as time passes, many of these trial projects will be released on the market. This represents the main reason why many economic analysts are unsure on how government entities will respond to the new releases, as we’re talking about a technology that can evolve insanely quickly.

While regulation is surely needed in order to ensure a secure and safe implementation of blockchain-based platforms, blockchain supporters alongside with members of the digital currency community throughout the world hope that the regulations that will soon be imposed, will not limit the technology, or deem it obsolete. We’re on the brink of revolutionizing the world’s financial system, so stopping would be unwise.

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