Building Bridges for Blockchain Regulation: IOTA Foundation and FTI Consulting Release Report on Industry Dialogue

There have been several discussions surrounding the regulation of the blockchain and the crypto industry. Interestingly, the fast-evolving eco poses several challenges to policymakers in raising awareness about the needs and the direction of the industry. Concerning this, the IOTA Foundation together with FTI Consulting, and projects from its community organized several discussions on blockchain regulation in the European Union

[ICYMI] Can regulators and builders see eye-to-eye when it comes to #blockchain & #DLT? 👀
Read it yourself in this new report showcasing policy discussions on EU blockchain regulation by #IOTA, @FTIconsultingEU & community projects.

🔗 pic.twitter.com/4veTvv2uqH

— IOTA (@iota) June 28, 2023

In a new report entitled “Bridging the Gap Between Technology and Regulation With Dialogue,” a summary of these discussions was comprehensively captured and stretched across the area of Decentralized Applications (DApps) and Non-Fungible Tokens (NFTs).

A CNF review of the report observed discussions on tokenization and the real economy with “Rob Daykin (Nakama), Gianfranco Campos (Zignar Technologies) and Barbara Brandtner, and Ernst Ferdinandusse (European Commission).”

This was the third roundtable discussion, and it focused on regulatory clarity and global harmonization to give users the needed confidence when confronted with problems with digital assets or new tokens appearing in the network.

The importance of distinguishing the difference between open and closed s, compliance, governance structure, and exchange of sensitive information was highlighted.

Blockchain technology and smart contracts offer a degree of enforcement of obligations based on data, but it is essential to trust the data provided by custodians of the assets to the oracles, which feed information to the blockchain. Overall, tokenization presents exciting possibilities for the future of finance and investment, but it is crucial to ensure a responsible and regulated approach to realize its full potential.

Other Discussions on Blockchain Regulation

The second roundtable saw a discussion of the future of NFT regulations with “Song Choi (Soonaverse), Vitaly Semko (Minted Vodka) Joachim Schwerin (European Commission), and Jeff Bandman (European Securities and Markets Authority).”

The guest speakers spoke about the importance of focusing on regulations based on use cases rather than the underlying technology. From the discussion, it was observed that the European Commission is exploring the Decentralized Finance (DeFi) industry to identify real economy use cases for NFTs. This means it is important to consider the potential of a self-regulatory framework and blockchain technology for supervision

The first roundtable also discussed Increasing Trust, Accountability, and Usability in Self-Hosted Wallets with DID and Reusable KYCs with Charlie ley (IOTA Foundation), and Marius Kat (European Parliament). A decentralized identifier (DID) was proposed to ensure that identities to wallets, and zero-knowledge proofs (ZKP) are linked. This provides a solution to data protection concerns as well as an incentive-driven to enable users to identify themselves.

It was realized that the main concern of the European Union regulators about self-hosted wallets is the lack of infrastructure and solutions to enable the owners to be identified when there is a suspicion of terrorism financing or money laundering

There was another roundtable discussing the Cost of Regulation and Uncertainty for SMEs and Startups with Dennis Shouten and Bas van Sambeck (Chunk Works), Peter Kerstens (European Commission), and Jan Klesla (European Blockchain Partnership).

According to IOTA, the event shows that both the industry and policymakers are willing to find common grounds to protect consumer rights and promote innovation