Managing blockchain technology is challenging because the decision-making process must involve those who create the technology and those who will ultimately use it and be affected by the decisions made.
Common governance approaches can ensure that the views of all stakeholders are taken into account, regardless of whether they are located within the geographic territory of a sovereign decision-making body.
Standardization in blockchain technology serves as a way to create a self-regulatory mechanism. It encourages innovation, ensures interoperability, and builds a common understanding of how to address security, privacy, and sustainability issues. Proponents of this approach to regulation argue that it can create tentative, non-binding regulations in a new landscape, while stricter forms of regulation can stifle innovation or create barriers to entry. The assumption is that the industry will move to the best possible standard for the benefit of all stakeholders. However, standardization can also become a bone of contention between innovators and technology users.
The pace of technological change is challenging commercial organizations and legal market regulators. Careful consideration must be given to whether the current legal system can absorb or mitigate the legal risks associated with smart contracts, or whether the transition to new technology requires a rethink.
Despite rapid advances in technology, many aspects of complex commercial agreements, including issues requiring human involvement and dispute resolution, do not lend themselves to automation. Mediators will continue to play an important role both socially and legally. Regulators, in exercising their oversight functions, must carefully monitor possible violations by digital platforms. Regulatory requirements should address the obligation of platforms to monitor and verify information about their providers.
