Blockchain and the thin line of regulation

edited by:
Dane Marciano, CEO of Affidaty S.p.A
Giovanni Capaccioli, R&D of Affidaty S.p.A

Legality

Often one stops to primary considerations while analyzing the blockchain to identify eventual assets suitable to his/her working field. While doing that sometimes it is possible to neglect side details that then manifest themselves as critical areas in a second moment.

For example, the most famous blockchains rely on automated processes that guarantee both sides in a transaction that can be carried out by smart contracts only in the presence of positive balance. It means that to pay inside the public, decentralized and distributed circle one needs a positive balance in his/her e-Wallet, where cryptocurrency is deposited and used to pay miners.

It means that if a company wanted to implement certification through blockchain, it would need a cryptocurrency checking account. 

So far, this process doesn’t look problematic. However, the problem exists, since currently there is no legal regulation for a company to have an account in cryptocurrency. It’s important that it is not like that all over the world, but it is in most states, except for Switzerland and Malte, to cite two close-by examples. 

The legality/illegality issue is sensitive, even more in the case of the introduction of new methods or technologies in a country or a continent. Currently some states, like the abovementioned, already started to fill the legislative holes concerning blockchain and that’s why in their territories the illegality issue is limited and easily verifiable. 

The situation changes when looking at other states or inside European borders: being a new technology, it moves inside the current gaps in the legislation. Moreover, in such cases, the analogy principle is applied, allowing the judge or the court to rule on the case, intervening in a deductive way, relying on a different, but comparable, regulated discipline or deducting from the system general principles.

This is how fast the problem evolves changing from a user to a firm point of view. A company finds hard dealing legally with this technology. As a direct consequence, the whole system, as explained and used, is not that simple and risk-free.

This said it doesn’t mean that blockchain is incompatible with the enterprise world, the concept remains the same: the difference between useful and useless, legal and illegal, performing and underperforming, is due to the technology itself, but how it is applied to the reference ecosystem. It isn’t possible to judge a fish by how it runs a hundred-meter dash. Every instrument needs to be set as good as possible to fit the environment better.