“It is no surprise the digital currency ecosystem created by Bitcoin and its progeny has been rapidly followed by legislation and regulatory activity at every level of government,” said Sandy Thomas, Reed Smith’s Global Managing Partner. “Navigating this complex legal landscape is nearly impossible without a firm grasp on its terrain and an easy-to-understand roadmap – both of which Blockchain delivers in a clear and comprehensive fashion. We believe this resource will help businesses stay ahead of the regulatory curve as this technology continues to develop and proliferate.”
The publication’s brief “Forward,” authored by Amy Davine Kim, the Chamber of Digital Commerce’s Global Policy Director and General Counsel, characterizes 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.”
Reed Smith’s FinTech leaders, counsel Kari S. Larsen and partner Herbert F. Kozlov, oversaw the work of the firm’s global FinTech team in creating the 107-page report.
“We are confident Blockchain will bring clarity to areas of the emerging digital token economy that have been evolving since the Bitcoin white paper appeared in 2008,” said Larsen. “Our team has created a report that is current and imminently useful for participants across every sector, at any scale.”
Kozlov added, “The white paper provides an in-depth analysis of this growing technology opportunity and examines multiple use-cases. It is a useful tool for those already participating in this space, as well as for readers who want to explore and learn more about blockchain technology. Our white paper addresses the way in which blockchain technology may rapidly impact, or even transform, businesses and operations.”
Blockchain’s 12 chapters provide a depth of information to help businesses and organizations initiate or expand their relationships with digital currencies and digital ledger technology (DLT). Their contents include:
- The Mysterious Origins of Blockchain starts at the very beginning of “trust machine” technology, delving into Bitcoin’s arrival on the global economic scene as a revolutionizing innovation. It also describes the spread of digital currencies, the emergence of blockchain technologies, and the start of government regulation of both.
- Blockchain 101 explains the DLT algorithm, a key innovation in how digital information is transmitted, stored and secured. The chapter also addresses particular problems with counterparty trust and digital asset ownership.
- Smart Contracts explains how digital transactions are automatically verified and executed by computer software that translates contract terms into code, including how smart contracts executed on a distributed ledger, in contrast to a centralized ledger, allow for equal footing and leverage to both parties involved.
- U.S. Regulatory Landscape surveys the ever-changing laws and regulations at both the state and federal level impacting cryptocurrency and cryptocurrency-related activities. The chapter compares various virtual currency activities more likely to be permissible under state or federal law, with those more likely to attract regulatory scrutiny.
- International Regulatory Landscape examines the substantial differences in cryptocurrency regulations across global jurisdictions, including countries with minimal regulation; those primarily adapting existing laws – for example, anti-money laundering and money transmission laws – to new cryptocurrency activities; and those with very stringent regulations or outright prohibitions on cryptocurrency.
- Insuring Digital Currency and Digital Currency Business explores the unique characteristics of Bitcoin and its economy – including decentralization, open-sourcing, ransomware, no requirements for financial institutions to issue currency or store it, anonymity, and non-reversible transactions – that raise unique issues for insurance coverage. A robust discussion of what companies can do to address these issues is included.
- Applications in Capital Markets details the potential of DLT to improve the current infrastructure of financial transactions in significant ways, such as by making transactions more efficient and more secure, by providing more transparency and regulatory control, and by improving contractual performance. It covers questions raised by these applications, and the regulatory attention such transactions have generated.
- Blockchain Innovation in the Energy, Commodities, Shipping and Trade Finance Industries explores and evaluates the potential application of DLT across a number of areas in the energy and commodity supply chain, including the impact for producers and consumers, energy trading, shipping, and trade finance, as well as the legal, commercial and regulatory impacts that blockchain may have on these industries.
- Privacy and Re-identification on the Blockchain covers the use of the technology for the management and transaction of digital information. It also examines the solutions the blockchain offers for privacy protection, and the new challenges to privacy this technology presents.
- Intellectual Property explains the intellectual property rights surrounding blockchain technologies, including Bitcoin’s permissive open source license, other blockchain application licenses, and the steep expansion of blockchain technology patents beyond cryptocurrencies. Democratization in the context of these technologies is examined.
- Social Impact, Responsibility and Media explores the successful application of blockchain technology to problems in the social responsibility, social media and advertising spaces, including the many potential opportunities in these areas.
- Closing Note provides an upbeat summary of the white paper, and describes Reed Smith’s ability to advise companies and other organizations on legal issues surrounding the continuing development of blockchain technologies.
The white paper concludes with a glossary defining several dozen terms and phrases commonly used in Bitcoin, blockchain, and distributed ledger technology legislation, regulations, and media, including blockchain, merkle tree, hard fork, cypherpunk, hot storage, hash, Byzantine Generals Problem, nonce, and Sybil attack.
Blockchain - Distributed ledger technology and designing the future is now available here.
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