- B Vrettos and M Bacina
OECD consults on responsible blockchain innovation
As early as 2018 the OECD developed and provided guidance for the progress and use of blockchain spanning across sectors.
The increase in adoption and development of blockchain technology, particularly the turn to digitisation spurred by COVID-19, has spurred further work by the OECD, which is now inviting comments on a working discussion draft document. This draft seeks to provide more substantive proposals to stakeholders in the blockchain industry.
The OECD recognises that, to date, the pillars of responsible blockchain innovation included:
Recognising the need for Compliance and Adherence with existing relevant requirements;
The importance of promoting Governance, Transparency, and Accountability, in blockchain-based systems;
Facilitating Interoperability through different means;
Safeguarding Digital Security and Data Privacy; and
Fostering Education and Skills Development in line with the needs of different stakeholder groups.
Building on these pillars, the OECD highlights blockchain's potential as a "general purpose technology" meaning that it is a technology that can be supplemented by other innovations, can improve over time and can become increasingly abundant. However, this potential is likely to be fostered in a piecemeal approach if the regulation for its use remains piecemeal. The OECD affirmed that:
Providing a timely, balanced, global response to these challenges is therefore key, with the lack of regulatory certainty already identified as an impediment to greater blockchain innovation and mainstream adoption and the lack of global consensus opening up opportunities for regulatory arbitrage.
The draft for consultation focuses on sustainable adoptions of blockchain with a particular emphasis on planning for decentralised ecosystems from legal and policy implications to the winding up of decentralised systems. Amongst others, another key area for exploration is the consideration of compliance with international privacy standards taking into account the near immutability and longevity of many blockchains which stands in stark contrast from many global privacy standards including the right to be forgotten.
While the comments will not be publicly published they will be made available to delegates of the OECD. In the draft, the OECD highlights the international progress made on designing regulatory frameworks for blockchain adoption. We echo the OECD's sentiments that in order to collectively reduce the opportunities for regulatory arbitrage the OECD's comments and frameworks should be adopted by each international regulator respectively.
Comments on the consultation are due on 31 August 2021.