New Whitepaper Highlights Blockchain Emerging Trends and Regulatory Insights
In 2017, we witnessed a groundswell of changes in the global blockchain landscape. This year promises to be even more uncertainties amid continued talk of regulatory crackdowns.
Last month an in-depth white paper was released by the global law firm Reed Smith, aiming to brings a dose of clarity to this ever changing landscape. Written and developed by the firm’s FinTech team, the report addresses a number of blockchain technology applications across a variety of industries, including the rapidly developing cryptocurrency /digital token arena. It also takes a deep dive into the rapidly evolving legal and regulatory landscape.
The publication’s “Forward,” written by Amy Davine Kim, the Chamber of Digital Commerce’s Global Policy Director and General Counsel, describes the white paper Blockchain as a “comprehensive compendium . . . laying out the foundation for regulatory oversight and then diving into specific use cases and geographies to help guide [companies in the blockchain space] to success in a regulated environment.”
During a March 6, 2018 phone call with Kozlov, who for 16 yrs has served as a partner at Reed Smith, he offered a brief overview of the report findings and its influence on the blockchain conversation.
BM: What is the main intent of the white paper?
HK: The intent was to deliver an in-depth analysis of blockchain’s growing opportunity through the examination of multiple use-cases. We feel that it is a useful tool for those already heavily involved in this space, as well as for those seeking to explore and discover more about blockchain technology. We took an in-depth look at how blockchain advancements have the potential to rapidly impact, or even transform, businesses and operations.
BM: This was a major undertaking. Why the decision to write it at this time?
HK: While there was no single catalyst behind our decision to develop this report, there were a number of driving factors. First of all, we’ve built a significant global Fintech practice at Reed Smith over the years and Blockchain is probably the most dramatic recent addition to the work we’re engaged in. With this, we wanted to clear up some misconceptions about what blockchain is in a reasonably digestible format And frankly, our relationship with the Chamber of Digital Commerce was another factor. We were able to do this under their umbrella a bit. We just felt like this whitepaper was something we needed to do.
BM: What did you find most challenging when pulling the pieces of this report together?
HK: I would say getting it to the point to where it was understandable by the average, smart reader. Another big challenge for us was capturing at a moment in time the global regulatory landscape for this space. Because this conversation is moving and evolving so quickly, freezing it at a particular certain date in order to gain a snapshot how rapidly these changes are occurring was definitely a challenge.
BM: We’re there any emerging trends you were able to identify from this work?
HK: Yes, there were a number. First on the cryptocurrency side, I think we’re going to see some greater efficiencies from new cryptocurrency exchanges coming into the marketplace. I believe this will be in the form of both technology and bandwidth improvements.
Also, in my view we’re going to see a growing number of new exchanges that offer more than just the ability to purchase a particular cryptocurrency per exchange. Fiat to crypto, crypto to fiat is just one example of this.
I think we’ll also see some sophisticated products coming to exchanges that offer greater versatility. As exchanges become more stable and more secure, you’ll see more institutional and family offerings for participants who view crypto as an asset class
Finally, as we mention in the whitepaper, I think we’re going to continue to see smart contracts and blockchain rolled out into a wide number of sectors, whether its energy products, shipping, trade, finance, authentication and verification, social media. I think there are so many applications that smart contracts services haven’t even scratched. There’s a lot of room for innovation in this area, with lots of smart people figuring out ways to apply this technology.
BM: Was there one big discovery that stood out from your research
HK: One of the things that came through is that a solid grasp of the global regulatory scheme as it relates to blockchain is critical to understanding the obstacles and opportunities that the cryptocurrency space offers. When we talk about regulatory issues, we’re talking largely about the crypto space, less so about things like smart contracts, and things like that. But I do believe that getting a handle on what can and cannot be done in different jurisdictions was one of the challenges that we tried to address.
BM: What’s the report’s take on the recent regulatory strictures being proposed in the ICO/Token Sale realm?
HK: I don’t think there are any surprises here. Practitioners in this space have long understood what the definition of a security is. While it may not be a bright line, the fact of the matter is that regulators are coming. Responsible participants in the industry welcome the presence of regulation and oversight because it lets reputable and reliable products and opportunities come to market. So the more we have a bright line of how to do this and how to be compliant, the easier it will be for people.
BM: In closing, what are your long term hopes for the report?
HK: I think the report has been really well received in the sense that there aren’t a lot of resources out there like it. It’s ability to capture the entire landscape of the industry in what amounts to about an hour long read is what makes it valuable. It’s a place where you can get a good understanding of things like the use of a smart contract to tax issues to intellectual property, among numerous other themes. Readers will find it to be a great bible for understanding the entire blockchain landscape.