Blockchain Laws and Regulations | Laws and Regulations | GLI

Areas of law covered include:

1 Government attitude and definition

2 Virtual currency regulation

3 Sales regulation

4 Taxation

5 Money transmission laws and anti-money laundering requirements

6 Promotion and testing

7 Ownership and licensing requirements

8 Mining

9 Border restrictions and declaration

10 Reporting requirements

11 Estate planning and testamentary succession

The GLI to: Blockchain & Cryptocurrency Regulation 2019 covers government attitude and definition, cryptocurrency regulation, sales regulation, taxation, money transmission laws and anti-money laundering requirements, promotion and testing, ownership and licensing requirements, mining, border restrictions and more

Source: Blockchain Laws and Regulations | Laws and Regulations | GLI

Facebook’s Crypto Libra May Kill Launch in India, Its Biggest Market: Report | CCN Markets

The Economic Times, India’s biggest business daily, reports that Libra will not be available in India, citing people with direct knowledge of the matter:

“The social network’s digital wallet, Calibra, won’t be available in markets where “cryptocurrencies are banned or Facebook is restricted from operating in,” the person said. “Facebook has not filed any application with RBI (Reserve Bank of India) for its cryptocurrency in India,” said a second person aware of the matter. RBI did not respond to queries from ET.”

This, despite a previous report that Facebook specifically picked India as the launch market for its cryptocurrency.

 

India will be a tricky nut to crack for Facebook’s Libra

The Indian government and regulators have traditionally carried a hostile view toward cryptocurrencies, implementing a slew of measures to discourage adoption of the likes of bitcoin.

India has taken a variety of steps to stifle the growth of cryptocurrencies, fearing that bitcoin and the likes are instruments for laundering money, duping naïve investors, evading tax, and financing terrorism.

 

The government has already instructed banks to stop dealings with cryptocurrency exchanges, while the income tax department has singled out people involved in crypto transactions.

What’s more, the Indian government might put you in jail for a decade if you’re found in possession of bitcoin or other cryptos, if the draft of the country’s Banning of Cryptocurrency and Regulation of Official Digital Currency Bill is to be believed.

 

All of this makes it difficult for Facebook’s Libra to crack the cryptocurrency market in India. This would be a big blow for the social media giant as India is its largest market, accounting for more than 10% of its user base.

Statista estimates that Facebook has 260 million users in India out of a global user base of 2.38 billion. So missing out on this market could deal Libra a big blow as Facebook will be missing out on a huge chunk of the population that has been rapidly transitioning toward digital modes of payment.

India’s convoluted laws won’t be easy to bypass

Facebook’s crypto Libra is raising a lot of eyebrows in countries such as the US and France, where regulators are concerned about how the social media giant will keep user data safe and private. But it is an entirely different ball game in India where Facebook could face an outright ban.

According to Salman Waris, who is the managing partner at specialist technology law firm TechLegis Advocates & Solicitors, Facebook could fall on the wrong side of the Reserve Bank’s norms and India’s Income Tax Act. He told ET:

“Under Section 79 of the Indian IT Act, Facebook is obligated to take ‘all due care’ to ensure its network or platform is not used for illegal activities like dealing in cryptocurrencies in India. Section 79 would apply to Facebook even though it is based out of India. Section 75 of the IT Act also gives extraterritorial jurisdiction to the law.”

Even if Facebook’s Libra is a closed system that’s used for making peer-to-peer payments on its platforms such as Messenger and WhatsApp, it could invite the wrath of the Indian government and regulators.

The establishment has tried to kill cryptocurrencies in India with a lot of zeal. So it won’t take long for the government to believe that bad actors are using Facebook Libra to launder money or finance terrorism, taking a massive market opportunity away from the social media company.

TILTing 2019 – exploring the journey of crypto-assets across the EU financial legal framework

At TILTing 2019 the Lab presented a study on the legal instruments that are, as of today, applicable to blockchain-based digital assets under European law, and the relative enforcement challenges. The broader question to be tackled is whether and how regulators deal with such challenges, and what are the interests at stake. http://ipkitten.blogspot.com/2019/05/tilting-perspectives-2019-report-2.html

Control as Liability

Generally, unintended consequences of laws, discouraging entire categories of activity when one wanted to only surgically forbid a few specific things, are considered to be a bad thing. Here though, I would argue that the forced shift in developers’ mindsets, from “I want to control more things just in case” to “I want to control fewer things just in case”, also has many positive consequences. Voluntarily giving up control, and voluntarily taking steps to deprive oneself of the ability to do mischief, does not come naturally to many people, and while ideologically-driven decentralization-maximizing projects exist today, it’s not at all obvious at first glance that such services will continue to dominate as the industry mainstreams. What this trend in regulation does, however, is that it gives a big nudge in favor of those applications that are willing to take the centralization-minimizing, user-sovereignty-maximizing “can’t be evil” route.Hence, even though these regulatory changes are arguably not pro-freedom, at least if one is concerned with the freedom of application developers, and the transformation of the internet into a subject of political focus is bound to have many negative knock-on effects, the particular trend of control becoming a liability is in a strange way even more pro-cypherpunk (even if not intentionally!) than policies of maximizing total freedom for application developers would have been. Though the present-day regulatory landscape is very far from an optimal one from the point of view of almost anyone’s preferences, it has unintentionally dealt the movement for minimizing unneeded centralization and maximizing users’ control of their own assets, private keys and data a surprisingly strong hand to execute on its vision. And it would be highly beneficial to the movement to take advantage of it.

Source: Control as Liability

‘A Loan Shark Situation’: MakerDAO Is Leaving Crypto Borrowers With Rising Bills – CoinDesk

An ethereum protocol for programmatic lending, MakerDAO emerged as a clear market leader in part for its rock-bottom interest rates of 0.5 percent.But the code behind MakerDAO requires interest rates to do more than extract business from borrowers, it’s a technological necessity for keeping its DAI stablecoin worth $1.With interest rates rising to 19.5 percent, and DAI still worth below $1, some early borrowers are angry, feeling as though they were misled.Describing the project’s marketing tactics as akin to digital “loan sharks,” they argue their experience with decentralized finance has been worse than with traditional banking.

Source: ‘A Loan Shark Situation’: MakerDAO Is Leaving Crypto Borrowers With Rising Bills – CoinDesk

In Code(rs) We Trust: Software Developers as Fiduciaries in Public Blockchains by Angela Walch :: SSRN

Abstract

This chapter addresses the myth of decentralized governance of public blockchains, arguing that certain people who create, operate, or reshape them function much like fiduciaries of those who rely on these powerful data structures. Explicating the crucial functions that leading software developers perform, the chapter compares the role to Tamar Frankel’s conception of a fiduciary, and finds much in common, as users of these technologies place extreme trust in the leading developers to be both competent and loyal (ie, to be free of conflicts of interest). The chapter then frames the cost-benefit analysis necessary to evaluate whether, on balance, it is a good idea to treat these parties as fiduciaries, and outlines key questions needed to flesh out the fiduciary categorization. For example, which software developers are influential enough to resemble fiduciaries? Are all users of a blockchain ‘entrustors’ of the fiduciaries who operate the blockchain, or only a subset of those who rely on the blockchain? Finally, the chapter concludes with reflections on the broader implications of treating software developers as fiduciaries, given the existing accountability paradigm that largely shields software developers from liability for the code they create.

Keywords: Blockchain, DLT, Bitcoin, Ethereum, Distributed Ledger Technology, Cryptocurrency, Digital Currency, Blockchain Technology, Governance, Fiduciary, Law

Source: In Code(rs) We Trust: Software Developers as Fiduciaries in Public Blockchains by Angela Walch :: SSRN

The Stakes of Smart Contracts by Mark Verstraete :: SSRN

By consensus, smart contracts are a revolution in private ordering: they offer guaranteed enforcement, independent of the whims of territorial governments; efficient formation and interpretation; immunity from external interference; and complete deference to the parties’ wishes. Each of these claims is a myth. While smart contracts present themselves as natural and neutral, they are in fact deeply politicized. The Legal Realists tore down the foundations of smart contracts almost a century ago. Advocates for them have not solved the problems of the past—they have forgotten them.This Article offers a new critique of the optimism about smart contracts and desirability of securing mutual agreements by code rather than law. More specifically, this Article takes aim at the assertion that smart contracts can, and should, provide an alternative to traditional contract law. It contends that advocates for smart contracts rely reflexively on deeply contested assumptions from Lochner-era legal thought, including a political commitment to “freedom of contract,” insistence on a division between “public” and “private” spheres, and a minimalist view of the state’s role in managing private law systems of contract and property. More specifically, these assumptions cause smart contract partisans to fundamentally underestimate the role of the state in maintaining a functioning private law regime. This failure to recognize the inevitable extent of state intervention in private law means that smart contracts will create novel distributions of wealth and power that are normatively suspect.Furthermore, this Article draws upon two foundational moments in Internet law—early hopes for a realm beyond territorial governance, and attempts to override copyright law through technology—to demonstrate the errors that advocates and scholars alike commit based on the evanescent technology promise of this new method. Finally, this Article demonstrates that, far from realizing a utilitarian ideal of efficiency, smart contracts are constructed without democratic oversight and governance, which are essential for a legitimate system of private law.Keywords: contracts, legal theory, private law, private law theory, Lochner, smart contracts, law and technology, blockchain, Legal Realism, private order

Source: The Stakes of Smart Contracts by Mark Verstraete :: SSRN

Blockchain technology and the GDPR: the beginning of a beautiful privacy whac-a-mole?

On the first day of the CPDP2019 at 10:30 we’ll have a fantastic panel on blockchain technology and GDPR.

https://www.cpdpconferences.org/cpdp-panels/blockchain-technology-and-the-gdpr-the-beginning-of-a-beautiful-privacy-whac-a-mole

• What are the main points of friction between blockchains and the GDPR?
• What are the technological privacy enhancing mechanisms that could apply?
• What are the appropriate and necessary conciliations for the creation of privacy-preserving blockchains in accordance with data protection regulation?
• Is there a market for non-compliance that blockchain technologies are best suited to serve?

The speakers include: Michèle Finck, Max Planck Institute for Innovation and Competition (DE); David Ciliberti, DG JUST (EU); Alexandra Giannopoulou, Blockchain and Society Policy Research Lab, Institute for Information Law, UvA (NL); George Danezis, UCL (UK); and Konstantinos Stylianou,
University of Leeds (UK). The panel will be moderated by Mireille Hildebrandt, VUB-LSTS (BE), and chaired by Balazs Bodo.

ABSTRACT: Individual user control of data has become a central issue in the European Data Protection Regulation (GDPR), creating a more demanding data protection framework for involved actors, all while coming in conflict with fundamental characteristics of blockchains. Thus, the difficulty lies in designing a system without compromising core values of both privacy regulation on the one hand and blockchain technology on the other. Given the right incentives there is no doubt GDPR compliant distributed ledgers can, and will be designed. The real question is what happens if there is persistent market/social/political interest in those blockchain implementations which do not care for, or are unable to achieve GDPR compliance. Considering the interdisciplinary nature of the main question, the proposed panel consists of invited experts selected to cover various privacy-related fields including law and computer science.

• What are the main points of friction between blockchains and the GDPR?
• What are the technological privacy enhancing mechanisms that could apply?
• What are the appropriate and necessary conciliations for the creation of privacy-preserving blockchains in accordance with data protection regulation?
• Is there a market for non-compliance that blockchain technologies are best suited to serve?