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  • P Xenos and M Bacina

More countries create welcoming regulator environments for blockchain adoption


A recently published survey (link to actual survey unavailable due to privacy issues), conducted by venture capital firm Digital Currency Group, surveyed executives within the company's portfolio, seeking to understand regulatory drivers for blockchain businesses around the world.


The findings of the survey include:


  • Close to a quarter of 60 polled portfolio companies believe blockchain will be mainly deployed in asset tokenization;

  • 30% of respondents see the technology’s future use cases in payments;

  • 31% of the surveyed companies said there was a lack of regulatory progress in 2019; and

  • 53% of respondents characterized the regulatory environment as the single greatest threat to the future of blockchain.

The sample size is small and obviously skewed, but such a significant number noting a lack of regulatory progress is concerning. The US Senate's recent aggression towards the Libra Association members Stripe, Visa and Mastercard, and the US Securities & Exchanges Commission lawsuit against two offshore entities which operated the Telegram Initial Coin Offering in January 2018, are but a few recent examples of the ongoing challenges facing those seeking a sensible regulatory framework for blockchain.


The number of governments with positive attitudes towards cryptocurrencies and blockchain is increasing, as there have been some promising developments over the last few months, particularly with respect to Liechtenstein, Ukraine and Slovenia.


Liechtenstein


On 3 October 2019, it was unanimously voted by Liechtenstein's legislature to approve the “Token and Trustworthy Technology Service Providers Act (Blockchain Act)”. See timeline of the Blockchain Act coming into effect below:



Source: NÄGELE Attorneys at Law LLC, 2019

This new law allows Liechtenstein to claim to be the first country to comprehensively regulate the token economy, allowing rights and assets to become tokenized in a legislatively defined "container" concept. As of January 2020, nearly any right or asset can be “packaged” into a token according to the Token Container Model. Government officials announced that:


On the one hand, the law regulates civil law issues in relation to client protection and asset protection. On the other hand, adequate supervision of the various service providers in the token economy will be established.

Ukraine


The new administration in Kiev, headed by the young president Volodymyr Zelensky, has revitalized interest in cryptocurrencies and blockchain


A breath of fresh air is now being injected into efforts to legalize decentralized digital money and regulate related economic activities.


Bitcoin.com reports that President Zelensky is also preparing to appoint a new governor of the province this week, 36-year-old crypto millionaire Maxim Kutsiy.



Slovenia


One of the major factors in making Slovenia an international blockchain hub is its welcoming regulatory attitude. Not only is the possession of digital assets legal in Slovenia, but capital income from trading cryptocurrency is not subject to income tax for individuals.


Who's next?

One certainty is that the movement is clearly at the smaller country end with a growing list of jurisdictions moving to embrace the benefits of blockchain and DLT and seeking to gain the investment and jobs that this new wave of technology is bringing. Where Australia will sit in the pack is still a matter for Canberra to decide.