As one of Canada’s prominent research institutions dedicated to understanding the impact of blockchain technology, the Blockchain Research institute (BRI) is an authoritative figure when it comes to making sense of the landscape. Now, the institution addressed the state of Canada’s blockchain regulation, providing recommendations and identifying issues in a new report.

Balancing innovation and caution

The Blockchain Research Institution’s lengthy 2018 Blockchain Regulation Roundtable looked to address the regulatory challenges that exist as a result of disruptive new innovation. Its author, Don Tapscott, is no stranger to this field, having served on the cutting edge of new innovation in Canada for a large portion of his career.

With the arrival of new, potentially world-changing innovation, there are many obstacles for those tasked with ensuring that new technology is able to coexist with modern institutions. This job is largely left to regulators, and Tapscott believes that “there has probably never been a more important or challenging time to be a regulator.”

As Tapscott wrote, one of blockchain technology’s primary features is the unpredictable nature of both its impact and development. This, however, directly results in the difficulty that regulators face when appropriately addressing the industry.

“Blockchain technology is as disruptive an innovation to money as the Internet was to ideas, both currencies that governments care a lot about,” the report stated. “Authoritarian regimes moved quickly to lock down the Internet with stringent laws and regulations, using the technology itself to promote the party line, censor free speech, and keep an eye on dissidents.”

‘Righting the wrongs’ of internet regulations

Drawing comparisons between the rise of the internet and the rise of blockchain technology seemingly remains a prominent part of the BRI’s approach to preaching the technology’s value. Its leading figures continue to call blockchain technology a new era for the internet. They believe it will usher in the ‘Internet of Value;’ a concept where value can be granted to previously unquantifiable digital assets.

With this comparison, Tapscott sees a similar regulatory approach, believing that governments have the ability to ‘right the wrongs’ of the internet. This, the report stated, is especially important when considering the speed at which blockchain technology is developing, and its broad potential impact.

“Unlike the Internet’s first era—the Internet of information—today’s Internet of value deals with assets such as money, land, and other financial instruments, the identities of people and things, intellectual property, cultural artifacts like art, music, and literature, and even scientific findings,” it added. “Society has an enormous interest in ensuring that governments develop proper policies, laws, and enforcement mechanisms.”

Don Tapscott: ‘good regulation is critical’

Canada’s regulators are actively approaching the blockchain industry, but have been cautious in taking action that could cripple the pursuit of innovation. This year alone, regulators have made significant strides in outlining future action that could help the industry continue its growth.

The Blockchain Research Institution hopes to further this process, and hosted a roundtable designed to discover key issues with Canada’s current approach to regulation. Hosted in Toronto in May 2018, an international group of stakeholders were brought together to discuss the landscape including Coinsquare CEO Cole Diamond.

Here, the report said that four core regulatory issues were identified: the lack of regulatory clarity, the obsolescence of statutes and regulations, the lack of a mechanism for meaningful dialogue between regulators and other stakeholders, and the lack of dialogue between financial service providers and blockchain entrepreneurs.

As a result, the BRI and participating stakeholders put forward a set of six recommendations for the country’s regulators:

  1. Form a multistakeholder action committee to move these issues forward.
  2. Prepare all stakeholders and the public for self-sovereign identities and pass legislation to recognize digital identities as valid.
  3. Institute a national regulator with oversight of the nascent industry rather than allow individual agencies to create their own regulations piecemeal.
  4. Agree on distinctions among cryptoassets and regulate accordingly.
  5. Discourage discrimination against blockchain entrepreneurs and support start-ups in the space.
  6. Encourage the formation of special interest groups to move governance issues forward across applications and domains.

The BRI is adamant that the path forward for blockchain technology will require regulation in some form, but hopes to aid Canada in shaping the regulatory landscape in a way that is beneficial for the country’s innovative thinkers.

“With the second era [of the internet] based on blockchain, we can make an even stronger case for positive government involvement,” added Tapscott. “This new platform enables storing, management, and transaction of assets—objects of value for which the public has a legitimate interest. The disruptions will be bigger this time around as well, including disruptions to the industries and markets that manage many key assets—specifically financial services and capital markets. Good regulation is critical.”

 

 

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