On 3 October 2018, the European Parliament adopted a non-legislative resolution on distributed ledger technologies (DLT) – blockchain technology. The resolution discusses potential benefits from the application of DLT in various sectors of the economy, including financial services, and sets out the suggested regulatory approach.
Ironically, the same qualities that make blockchain technology so useful – an autonomous, decentralised platform that all parties have an equal measure of control over – are the reasons it could prove difficult to regulate.
This initiative by the European Parliament is seen as “an excellent opportunity to become the global leader in the field of DLT,” according to the Union. An innovation-friendly legal framework developed on the basis of the principle of technology neutrality is necessary to foster the possibilities and opportunities of DLT. This framework would promote legal certainty and transparency and provide for the necessary safeguards to ensure consumer, investor and environmental protection and facilitate efforts to prevent and combat corruption, tax evasion, unlawful payments, anti-money laundering and misappropriation of assets.
This is a clear message from the lawmakers, though this does not mean that they support cryptocurrency in the same way. The utilisation of the emerging technology is growing, and the region is keen to adopt it.
The need for regulation is increasingly coming to the forefront as businesses need guidance on how to navigate such unchartered territories.
In October 2018, supermarket giant Morrisons faced a mass payout to staff after losing a major court case over a data leak.
In a ruling which could have implications for all UK businesses, the Bradford-based chain lost its appeal against a High Court ruling that it is legally liable for a former employee leaking personal information about 100,000 staff members.
The use of blockchain technology coupled with a regulatory framework will avoid major data leaks and will ensure that the handling of confidential information remains secure. Although the October Resolution establishes only non-binding recommendations at this stage, there is a clear appetite from both the regulatory and commercial sectors to focus on the potential of this technology.
Undoubtedly, it could be profoundly disruptive to established intermediary processes. However, it remains to be seen whether the technology likewise (and inevitably) might be disruptive to concepts of individual privacy in the era of GDPR.
With this Resolution, the European Parliament clearly expresses its position to support blockchain. We at KaurMaxwell believe its call for “open-minded, progressive and innovation-friendly regulation” could pave the way for further EU policy and legislative development in this area of cutting-edge technology.
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