Blog manager: Giovanni Capaccioli

Translated by: Lawlinguists

Regulatory framework and fields of application.

Intro

Given all that we have written, we identified four major fields of application in which the use of the blockchain can not only be relevant, but also allow the respective actors to build around the respective scenarios a blockchain technologically relevant to its areas of intervention.

It is clear that these actors reflect different characteristics and demands, infrastructural, technological and legislative and so on. For this reason it will be necessary for each one to have one available ad hoc structured blockchain technology, which is why it will be essential for them to choose from the beginning

the best blockchain based on needs: the range of blockchains available today varies by

performance and other technical features that make a blockchain more or less attractive for one or more fields of application.

Overview: three macro categories

It is very interesting, now, to present an overview that we believe defines a general concrete difference between the possible fields of application of the three main macro categories of blockchain.

In Green: The features that allow you to attack the Transaction segment

In Red: The features that do not allow you to attack the Transaction segment

In Blue: The features that are not blockchain

The market where the blockchain has mostly taken root is that of cryptocurrencies, it is quite clear for all; despite the fact that this technology has been found to have more applications in perspective, we still do not see it to its mass use, this is because of the four sectors mentioned in the pie chart, almost all of them are directed exclusively on the cryptocurrency, leaving the remaining three free.

(Deepening to the question “Governance” at this link.)

IOT is very well covered by IOTA, which has consequently carved out its own niche market. The

the rest of the competitors have followed one another in various ICOslooking in various ways, some more, some less, some imploding, other emerging, to follow the trail opened by Bitcoin.

It is quite obvious that the real gold vein of this technology can be found in the mine of transactions: from the ticket office to educational qualifications, from security training to copyright, from gaming to pharmaceutical companies, from finance to politics everything needs a Trusted register.

However, currently, there are no technologies available that can respond to the needs of this

segment, which in particular concern simple but essential technicalities.

• Legality.

• Security.

• Sustainability.

• Scalability.

• Economy.

• Speed.

• Efficiency.

Without these requirements the segment remains uncovered. The goal is to attack this sector that everyone wants to attack, but that nobody can penetrate either due to technological limitations or, above all, of the

stringent regulations.

Regulatory framework

Clearly, given the complexity of the scenario around the technology in question, we considered it wise to take our first steps cautiously, especially with regard to the almost total absence of legal regulations relating to the circuits offering Blockchain services apparently similar to Private or DLT circuits.

However our technology is neither public nor privatebut a hybrid that incorporates the features intrinsic and peculiar of both, in a mix that allows to keep the inherent advantages of nature itself of its existence and, at the same time, makes it marketable through processes sustainable by the current state of the market, that is, those that we commonly call healthy bearers of VAT numbers.

In this regard we had to write an entire ad hoc legal system, which currently, also thanks to our outposts scattered throughout the various European observatories on the subject (Ex: infrachain.com ), we believe to be the only guideline responding to national and international legal questions related to Blockchain technology.

As far as we are concerned, this could be a great opportunity to start, online

general, both on the technological and legal front, offering the European scene

an opportunity to explore a different perspective from DLTs and public blockchains.

Overview: external gaps as sources of solutions.

A newly conceived perspective that could actually be the solution to many problems that grip the scenario, favoring debates between purists and jurists, who try to understand each other battle that will see neither winners nor losers, unless one party gives up something…

In our case, silently, we worked to solve the problems at the origin and, from here, the result of correction made on the fundamental bases of blockchain technology, which resulted in the possible scenario that we are finally sharing with you.

To date there are no established companies operating on the market as legal entities for profit offering a public blockchain service, but a plurality of non-profit foundations that exercise freely and, in some cases, totally outside any legal limit. The latter operate in total freedom, remaining covered by the slow international jurisdiction that, by not reacting promptly to the phenomenon,

assists the proliferation of reiterating cases due to poor understanding of the basic technological components.

Thanks to this phenomenon there is the great opportunity for “all of us” to emerge in strength of the values that have characterized our research since the beginning, that is

• Efficiency,

• Legality,

• Security,

• Sustainability

• Economy,

by means of which we will clarify the legal gaps related to this technological area, with a plan to respond on one occasion to the main issues under discussion.

World

The blockchain phenomenon is increasingly at the center of attention not only by the media they deal with of technology and of companies that aim at innovation, but also of institutions on a legal and regulatory level.

The most significant interventions on the subject have been adopted especially by some technologically-based countries in the forefront in the Asian context. The United Arab Emirates and China were the leaders in this regard. Also in the In the United States in 2018, a growing number of interventions was recorded

state legislatures to regulate Blockchain technology.

Within the EU, the European Parliament with the Resolution of 3 October 2018 recognized the relevance of Blockchain technology and called for the legal-regulatory framework to be adapted in force with these innovations by defining strategies aimed at increasing the level of digital skills and encourage the widespread dissemination of this technology.

Italy

The Italian legislator, among the first in Europe, intervened with the Simplification Decreeconverted into law last February 2019, to give a first regulation to the Smart-Contract phenomenon of blockchain.

Specifically, the art. 8 ter of the Simplification Decree introduces the regulatory definition of technologies based on distributed registers and Smart Contracts. The first term identifies the blockchain, defining the same as a technology that uses “a shared, distributed, replicable register,accessible simultaneously, architecturally decentralized on cryptographic basis, such as to allow registration, validation, updating, data storage both in clear and further protected by cryptography verifiable by each participant, not alterable and not modifiable”.

The Smart-Contract is instead defined by the legislator as a computer program that operates on technologies based on distributed registers whose execution automatically binds two or more parts to the basis of effects predefined by the same. The Italian legislator also states that Smart Contracts meet the requirement of written form and highlight how the use of these technologies produces the effects

legal aspects of electronic time validation pursuant to art. 41 of the eIDAS Regulation (EU Regulation 2014/910).

In conclusion, the innovations introduced with the Simplification Decree are relevant as the registration of a document in blockchain now allows to guarantee the certainty about the temporal extremes of the same, with possibility of opposing the document to third parties. This novel must be included within the regulatory framework and conceptual reference. In this regard, reference is made to the EU provisions on the subject of anti-money laundering and the Bank of Italy reports that had already formally recognized the respective areas of competence, the phenomenon of cryptoactivity based on the blockchain and had it provided a first definition.

Overall, these legal frameworks could represent the starting point for giving life to one first regulation of the discipline itself. The Italian legislator has delegated to the Agency for Digital Italy the task of identifying, within 90 days of the law of conversion of the decree, technical standards and to establish with absolute precision the characters that must have the code at the base of the Smart-Contract.

However, at present, what we might call the small Italian revolution of the blockchain is still at rest. In fact, although the guidelines and technical standards should have been provided by the AgID by the end of May, currently (and therefore three months later) was not issued any implementing provision of the standard, despite requests from the Ministry of Economic Development. (this is our chance to provide an alternative before a definitive law is issued by the end of the year).

Overview: the MISE in Italy

Furthermore, last January 21, 2019, the meetings of the groups were held at the MISE

experts on artificial intelligence and blockchain, whose task is to prepare together with the MISE le national strategies to be sent to the European Commission. The publication of the aforementioned strategies nationals had been announced for March, yet it is still pending .

Blockchain and Privacy

The blockchain technology raises many questions about its compatibility with the GDPR as the chain is suitable to reveal, more or less indirectly, personal data of natural persons located in the European Union.

Already in 2014, the Group of European Guarantors, through the Opinion 05/2014, made it clear that hashing is a technique of pseudonymisation and not of anonymisation. Adding to this there are other problems, such as the difficulty in identifying the different figures (who is the data controller, who is the data controller, who the interested) or to manage the right to be forgotten in an unalterable system. For this reason, November 6th 2018 the CNIL (the French counterpart of our Privacy Guarantor) published a document where it has tried to deal with the complicated aspects of privacy related to blockchain technology and provided some advice for a responsible use of the same.

Despite the difficulties mentioned above, companies that use blockchain technology can in any case implement a correct processing of data, thus conforming to the dictates of EU Regulation 2016/679. In this regard, the agendadigitale.eu site often provides very useful and accredited guidelines; some deal with the topic of privacy in general (but which I can safely apply also from the aforementioned companies), such as the following  https://www.agendadigitale.eu/sicurezza/privacy/gdpr-dieci-regole-per-prepararsi-meglio-alle-ispezioni-del-garante/, others specifically applied to block-chain,

such as https://www.agendadigitale.eu/sicurezza/blockchain-e-privacy-soluzioni-per-la-compliance-alle-norme/.

The GDPR , in the art. 35 , requires the data controller to carry out an evaluation impact for those treatments that can present a high risk for people’s rights and freedom. The impact assessment is a specific assessment of the riskiness of the treatment carried out considering all the elements of the same and having regard also to the possible measures to limit the risk associated with it.

On 11 October 2019 the Italian Data Protection Authority published the list of treatments to be submitted to DPIA. Among them, point 7 is particularly important (treatments carried out through the use of innovative technologies, also with particular organizational measures). Therefore, those who process personal data using blockchain technology are required to

draft a DPIA if they do not want to incur penalties. (Affidaty drafted the document in compliance with the law)