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Blockchain, Digital Currency, Featured

The Need for a Global Blockchain Council Governing Digital Asset Behavior

The past few months were marked by a series of events where digital currency/blockchain-powered institutions clashed with regulatory authorities. The issues for most parts converge to the brazen lack of knowledge and understanding on the part of Government bodies. This can be explained. The blockchain-powered industry is still in its nascent stages. Although it wields considerable power over global economies, it is constantly evolving.

Global Blockchain Council and Charter

There is a dire need for a Global Blockchain Council that will scribe an explicit compilation of distinctive definitions pertaining to blockchain-driven operations. As blockchain-based products flood the market, so do the terminologies.  Those are variably interpreted by the industry players to suit their purpose. On several occasions have the financial authorities erred or faltered due to a lack of concise definitions of the terms that describe the functioning of a product that involves common people’s money. 

This continuously evolving, technology-powered, investment instrument uses quite a dictionary of ambiguous terminologies, broad classifications, and vague definitions. It’s high time the crypto industry found its own charter spelling out definitions and hierarchies and also pronouncing protocols and guidelines that determining digital asset behavior.

The Events

A number of Forex Brokerage firms supposedly allow individual traders to deposit, withdraw and trade on a Crypto-enabled platform. However, the operation of these firms may be subject to the respective state’s legislation. For instance, Forex trading in crypto has legal implications for Americans since contracts for difference (CFDs) are not allowed in the United States. 

The Financial Conduct Authority (FCA), the United Kingdom’s financial regulator, has recently put a stop to a leading exchange’s derivatives trading. This has since descended many steps before being finally resigned to, ‘not capable of being effectively supervised’ and that its ‘complex and high-risk financial products’ pose a significant risk to consumers.

The past few weeks have suffered heat from Securities Exchange Commission SEC stalling a seemingly high return product from a reputed digital currency wallet service provider. The row happened over the (SEC) classifying the product ‘security’ and threatening a lawsuit over its launch. The proponent company hit back demanding to know what features of the product led to that conclusion.

A flash of crypto drama that unfolded in the senate, in August,  revealed Congress’ stance to empower the Treasury department to extract tax compliance on the “brokers”. Understandable, except for the broad classification of the term “brokers” that eclipsed the developers of software and hardware providers who have no link to digital asset trading. Attempts at the amendment of such an erroneous definition were thwarted on the occasion.

Also Read: Revised Safe Harbor Proposals by SEC Commissioner Peirce

The Council and the Issues

The blockchain council should comprise a technology panel, an investment management panel, and a panel of lawyers to contribute to the charter. The charter must address all ambiguity there is to the functioning of the cryptocurrency. This includes clear and concise answers to whether or not a product or a utility token may be considered a security or what all exchange functions may be regulated. The charter would spell out the distinction between similar sounding and often confused, such as ‘coin’ and ‘token’. It would clearly state the functions and limitations of a utility token, delineating it from a security token.

Also Read: What Do The Investors Need To Know About Cryptocurrency Regulations?

Tying up Loose Ends

Drawing up a charter would be no simple feat with a technology that is continuously emerging. It would have to be consistently updated and revised. The culmination of the charter and globally accepted blockchain laws would help with regional jurisdiction and check fraudulent activities and the dark entities. It would also reduce the suspicions of authorities when guided by global law. All this, to help culminate a tidy and fair decentralized economy in a parallel flow.

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