[Read more session reports and updates from the 14th Internet Governance Forum]
The emerging blockchain technology has introduced new issues around privacy, economic growth, and governance on the Internet. In order to tackle these issues, regulators must have a clear picture of the technology’s strengths and weaknesses. It is hard to imagine global rules for governing blockchain, but national norms can and should be harmonised.
The session started with an overview of the main benefits that the blockchain technology could bring, in areas such as enhancing the protection of privacy, and contributing to achieving the sustainable development goals (SDGs). For example, blockchain can help in remittances and bringing more transparency in international trade activities (SDG 8), removing trade inefficiencies (SDG 9), and supporting financial inclusion (SDG 10), as noted by Mr Jorn Erbguth (Blockchain and Data Protection Consultant). There are also several initiatives that propose tokenisation of public goods as a way to preserve scarce resources, and this can be in line with the SDG 14 and 15.
On the topic of privacy, Ms Liz Steininger (CEO, Least Authority) noted that personal data can be very valuable assets for blockchain applications. Being fascinated by blockchain technology at the beginning, users put a significant amount of personal data publicly available. But the processing of this data needs to be in line with privacy legislation: digital technologies have to adapt to the requirements of the legal frameworks, and not the other way around (as it is sometimes the case). On the other hand, blockchain can also offer a solution for enhanced privacy, via privacy enabling technologies such as advanced forms of cryptography (a zero-knowledge proof).
Accountability in the content of blockchain remains an important issue. Generally speaking, digital technologies are handled by people, and people should be held accountable for how they develop and use these technologies. But this is a rather challenging approach when it comes to peer-to-peer technology users: they are less accountable, since they concentrate less power.
How to govern blockchain and deal with dispute resolution cases? Blended solutions should be looked at carefully, and the views of blockchain users should be considered in any policy-making processes.
Custody, money laundering and tax evasion, even bug in the software are security and privacy risks that must be taken into account. Some of these can be addressed through government regulations. One example, offered by Mr Thomas Nagele (Attorney at Law), is the Lichtenstein legislation on blockchain and Distributed Ledger Technology (DLT) (TVTG). Carefully prepared, through rounds of consultations with relevant actors, the act will enter into force on 1 January 2020.
Recommendations were made during the session for regulators worldwide to analyse their current legislations: Are they providing legal certainty for blockchain businesses? Do they offer a framework to recognise the potential of the tokenised economy? If not, the legislations should be updated. This was the case in Germany, which has recently announced a new legal framework covering these areas as well. According to Mr Thomas Heilman (Member of the German Bundestag), the new rules do not tackle tokens directly, but will allow smart-contract based companies to operate within a predictable legal framework, which cover accountability obligations and the need to follow the Know Your Customer (KYC) procedure.
Central banks were also encouraged to consider the introduction of digital versions of their respective currencies, as stablecoins. This topic is already being discussed within the EU Central Bank.
To achieve massive adoption, blockchain will need a set of standards and best practices, which are discussed in many international organisations right now, as we heard from Mr Petko Karamotchev (Director, INDUSTRIA Technology). One example is the ISO/TC 307 Working Committee, a global community effort to create a standard on blockchain and DLT. This ISO working group is focusing on security, privacy, identity, smart contract, and use cases which can build up to a standard.
By Arvin Kamberi