When things get too “disruptive”, the regulators move in – just ask Airbnb and Uber – but it may not apply to Blockchain – yet.
The European Securities and Markets Authority have ruled that there is no requirement for the European Union to introduce a set of rules with which to regulate the blockchain, following a public consultation.
Instead, systems built on blockchain will be expected to comply with existing rules “for safeguarding financial stability and orderly functioning of financial markets”, ESMA says.
For the uninitiated, blockchain is the “distributed ledger technology” (DLT) that has underpinned the success of bitcoin and other crypto-currencies.
Banks and financial services have long viewed bitcoin as a potentially cheaper and more efficient alternative method of keeping track of transactions, plus it is borderless and does not require a centralised authority to govern its use.
That said, the blockchain is still in its infancy and has yet to be adopted widely outside of a few niche products and services.
ESMA’s statement read: “At this stage, it is premature to fully assess the changes that the technology could bring and the regulatory response that may be needed, given that the technology is still evolving and practical applications are limited both in number and scope.”
You can look at the ruling in two ways – a victory for disruptive tech and crypto technologies – a sign that the fees, charges and regulations introduced by the big financial firms may finally be put to one side in favour of a fairer, more transparent, technologically and socially advanced monetary system.
Or, and we fear this may be the more likely explanation, the regulators are simply biding their time, and when the time comes and blockchain hits the mainstream, they will be there to ensure the status quo remain firmly in control of the money supply.
In today’s data rich world, big brother is always watching, and he is keeping his beady eye on blockchain.