With every technology development its influence on the law is growing. Because both highly influence the behavior of the people, law and technology have a complex interaction and interdependency. One of the most influential technological developments that influenced the legal system was blockchain. How can blockchain become a successful regulatory solution for finance?
One of the biggest value of blockchain technology that has been communicated by its creators is the transparency of operations and financial systems. Blockchain provides the opportunity to cover the regulatory oversight. Additionally, now that more consumers familiarized themselves with the term blockchain and its processes, it could enhance the people’s trust in legal systems. However, legal authorities have perceived blockchain more as a threat to regulatory systems, rather than an opportunity.
How Blockchain can benefit financial regulatory systems?
Delivering transparency: As mentioned earlier, blockchain technology has positioned itself as transparent from the very beginning. And it is true, every transaction is visible to any user who has appropriate access to it. But should people and regulators be worried about user privacy in this case? Blockchain technology allows users to remain anonymous or use pseudonyms, so the answer is “no”.
Peer-to-peer transactions: Blockchain technology allows users to communicate with each other directly. This means that there are no third-parties getting involved, and there is only one version of the information. No other parties apart from the sender and a receiver have an access to data.
No reverse actions: Blockchain technology has developed algorithms that ensure a full record of transactions with no possibility of alteration. Storing records in chronological order and permanently accessible to users allows improving audit processes of regulators.
Filippi and Hassan paper suggests that with the development of blockchain technology, we are now entering the fourth phase of law and technology relationship. They called this phase the code-ification of law. Code-ification of law implies that technological advances are not only enforcing legal systems but also elaborating on the rules. Such cooperation can lead to a more liberal legal system, however, only if undertaken correctly. Otherwise, it might lead to a dystopian society. What can be done for a successful blockchain and regulatory collaboration?
First of all, blockchain transactions have to gain legal validity. For that, regulators have to start getting involved in recognizing the blockchain data as proof of ownership. In order to attract the attention of regulators to this matter and consider blockchain as a valid financial instrument, one way to speed up the process is to populate the crypto transactions. Are you a business interested in providing own banking or eCommerce services?
There are platforms that build such solutions from scratch. The best ones have integrations that allow you to implement almost any add-on services to your business. For example, Crassula platform provides you with integrations that enable cryptocurrency transactions. The growth of cryptocurrency payment and blockchain adoption will elevate the growth of the system and support a faster recognition of blockchain as a full-fledged asset.
One thing to understand here: you do not have to be involved in law or regulation to influence its development. Especially with new technologies, it is so easy to start implementing them into your business and grow ts importance. Are you a forward-thinking company?
Visit https://crassula.io/ to learn more about how we can help you.
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