5 key learnings in blockchain regulation this week
Women in tech, developing nations, privacy, how governments can tax crypto and more insights from the Paris OECD Blockchain Forum.
By Catherine Thomas
Arunma Oteh, Treasurer and a Vice President of the World Bank, Source: OECD, https://ocde.streamakaci.com/blockchain/
The Organisation for Economic Co-operation and Development (OECD), held a thousand-person Blockchain Policy Forum at their HQ in Paris, titled: Distributed Ledgers Opportunities and Challenges, with a mix of blockchain evangelists, regulators, global governments and academic speakers. The OECD is similar to the UN, established in 1961 with 36 global countries and a budget of €374 million. It aims to promote policies that will improve the economic and social well-being of people around the world; and provides a forum in which governments can work together to share experiences and seek solutions to common problems, this week blockchain being at the centre. Here’s a summary of the five most interesting things I took away from the conference:
1. Women rule
The Prime Minister of Serbia, Ana Brnabic, was the political star; she is the first women to take the role of PM, is openly gay and achieved high office without being a member of a political party. The Serbian PM made it clear digitisation is central to her mandate as it offered developing countries the ability to leapfrog and become the leaders of Industry 4.0. Use cases currently implemented include the Public Registry.
Arunma Oteh, VP of the World Bank, spoke about their bond in collaboration with Commonwealth Bank of Australia named Bond-i, which stands for “blockchain operated new debt instrument”. Arunma stated the reason for the bond was to promote trust, transparency and efficiency, and eagerly attended sessions throughout the two days.
2. Tax Regulation was a Huge Hit
Tax policy was a crowd pleaser, and Arnis Libenzons, Head of the E-Commerce team of the Latvian Tax Control Board, was the centre act. In past events, very rarely do you hear policy makers truly understand the concept of decentralisation and open source.
Arnis highlighted that tax administrations are increasingly reliant on third party information such as from banks, payment service providers and information exchanges; but what happens when you cut out the middleman? As distributed businesses grow, there is a need to create new tax rules for international taxation. And, further to this, tokenisation and blockchain could be used by governments themselves to cooperate and collect taxes.
3. Small and Nimble
It’s brilliant to see nations such as Latvia, Serbia, Mauritius, Bermuda, Slovenia and Finland leading in the OECD for proactive research in blockchain and use cases. The US, UK and Russia also spoke, but with an attitude of we will set the regulation and the rest of the world should adopt our best practice… A quick lesson in geopolitics through blockchain regulation.
In the session for regulation of digital assets, Antonina Levashenko, Director of the Russian Presidential Academy of National Economy, made recommendations such as: reconsidering the view on security tokens as well as exchanges and adopting soft standards for ICOs on an international level with a blacklist for fraudulent projects.
In the session for corruption offences committed with cryptocurrencies, Elizabeth Aloi, from the US Department of Justice- Money Laundering Unit, spoke on their work educating law enforcement which included distributing a sheet depicting the top coins. Exchanges seem to be their main target, although they hadn’t got as far as decentralised exchanges. The audience did question how corrupt was Bitcoin compared to the dollar, which the panel answered there’s no possible way to measure corruption in general, but the level of related crime found with both is similar, although it’s easier to hide your suitcase for of dollar bills, than your Bitcoin.
4. Use Cases: Self-Sovereign Identity, Sustainable Development and Mobility as a Service
The second day covered use case focused for healthcare, migration, water management, transport, energy and agriculture. Self-sovereign identity was a topic which came up time and time again in panels relating to the refugee crisis, security, banking and supply chain. The question of: what is identity and who owns identity, created a dividing debate between blockchain evangelists, government bodies and corporates.
Our portfolio member IOTA was represented on the panel for sustainable development by Julie Maupin, promoting the need for collaboration for funding and research to #Buildl together, taking teams to the field. IOTA was referenced in another transport session held by Katja Schechtner, Advisor in Innovation and Technology MIT Media Lab. Who gave a great presentation on MaaS in cities, highlighting how complex navigating the different transportation platforms is, as well as the data challenges and ownership of the data.
5. The Challenge of Privacy
During many sessions, the debate if blockchain is the most transparent type of recording data, or the most private way to transfer value, seemed central to many of the use cases. The US Ministry of Justice, suggested cryptocurrency is the most transparent way to track flow of ‘money’, but there is an issue that once exchanged into fiat, depending on the jurisdiction, you cannot then follow the trail.
In different sessions, people made different statements; this was confusing to the most literate blockchain crowd, so you can image how some government officials new to the topic felt. I went back and asked our research team to help with this topic. They stated that this is a complex issue, that blockchains are configurable and can be designed in different ways. The Bitcoin network is pseudonymous but as we have seen the identity of users can be uncovered relatively easily. While other privacy-oriented tokens like Monero or Z-Cash offer greater degrees of anonymity; Sarah Meiklejohn, from the UCL department of Cryptography, stated they had been able to ‘un-tangle’ certain tokens, and expected this to be easier in the future; and that’s not even getting into the topic of quantum computing…
It was inspiring to see so many people from different sectors working towards improving the lives of many through blockchain. For NGOs and governments as a whole, there seems to a growing interest larger than adoption of DLT, but we can expect in the next year to see further use cases being implemented and more nations defining regulation. The OECD currently has a working paper on Blockchain Technology and its Use in the Public Sector, and I am sure we can see this developed as a consequence of the conference.
Here’s the Link to the live stream of the event: https://ocde.streamakaci.com/blockchain/