When the Internet became mainstream in the mid-1990s, it was difficult to fully grasp the impact the transformative technology would have on society. Policymakers didn’t know how to regulate it, partly because they didn’t understand what it was capable of. At its onset, if a flurry of conflicting regulations from different government agencies had been imposed on this burgeoning technology, the Internet as we know it today might not exist. Instead, we have this extraordinary source of information and a vessel of global commerce that is an essential aspect of everyday life for so many of us.
Now, a new disruptive innovation is emerging. Blockchain technology is re-imagining the way we transfer, store, and secure assets, including currencies, commodities, property, and identity.
Some of the most influential names in tech and finance are getting behind blockchain technology, and in turn has drawn the attention of government regulators. We have reached the tipping point – it is only a matter of time before blockchain technology makes it way into our daily lives.
According to a report from Santander InnoVentures, by the year 2022, banks can save an estimated $20 billion a year on infrastructure cost by implementing blockchain technologies. The leading banks around the world have reached a consensus – blockchain technology is matter of when, not if – and are investing significant resources exploring this technology.
The brightest minds of Wall Street and Silicon Valley understand these technological shifts and inherent opportunities. Some of the world’s biggest banks and tech companies are jumping in, including: American Express, BNY Mellon, Citi, Goldman Sachs, UBS, IBM, Microsoft, NASDAQ, New York Stock Exchange, Qualcomm, Samsung, USAA, Visa, and many more. They have dedicated significant resources to study, experiment, and innovate with blockchain technology. There are over 1,000 blockchain focused startups around the world, and respected consultancies including Accenture, Deloitte, and PwC, are releasing studies touting its potential.
This technology also has many potential applications in the public sector. The UK Government Chief Scientist, Sir Mark Walport, recently published a report outlining how blockchain-based technologies could transform, add radical transparency, and boost productivity to a number of public services:
"Distributed ledger technologies have the potential to help governments to collect taxes, deliver benefits, issue passports, record land registries, assure the supply chain of goods and generally ensure the integrity of government records and services.”
The promise behind the blockchain is clear, and its future relies on the collaboration between government agencies, lawmakers and industry leaders.
When a new technology enters the mainstream, policymakers are often eager to regulate it in an effort to ensure fair use, consumer protection and accountability. The problem arises when multiple agencies, each with their own definitions of the technology and its uses, create broad based regulations that overlap or conflict with one another.
The U.S. Commodity Futures Trading Commission (CFTC) has classified bitcoin as a commodity, while the Security Exchange Commission (SEC) is looking at it through the lens of a security. The Internal Revenue Service treats virtual currency as property, and the Financial Crimes Enforcement Network regulates it as currency. This patchwork of incompatible rules can cause gridlock in the industry and stifle innovation, potentially forcing companies to domicile and innovate elsewhere.
In addition, there are lawmakers and regulators on Capitol Hill who have little working knowledge of digital currencies or blockchain technology, making it even more difficult to successfully regulate. Regulation is a process that requires a dialogue between government agencies, lawmakers and industry leaders who have a deep understanding of how the technology works.
Fortunately, next month these parties are coming together at the DC Blockchain Summit, an event that brings a cross section of government agencies and lawmakers together with industry leaders to have a holistic discussion about the future of blockchain technology. Look out for Wall Street powerhouses and industry experts like former JP Morgan executive and CEO of Digital Asset Holdings Blythe Masters – who will share their knowledge and engage in an open conversation with policymakers, paving the way for consistent, effective regulation. The DC Blockchain Summit is the first opportunity for regulators and innovators to engage in this dialogue – a dialogue that is absolutely vital to the success and advancement of the industry.
The DC Blockchain Summit will be held on March 3, 2016, at Georgetown University’s McDonough School of Business. For more information, please visit: digitalchamber.org/dcsummit.
Boring is founder and president of the Chamber of Digital Commerce.