Featured Product

    EP Examines Policy Options to Improve Legal Certainty for Blockchain

    July 24, 2019

    EP published a report that examines the European data protection framework and applies it to blockchain technologies to document the conflicts and tensions between these two. The report argues that blockchain technology could offer distinct advantages to help achieve some objectives of the General Data Protection Regulation (GDPR) in EU. On the basis of this analysis, the study developed concrete policy options that could be adopted to ensure that distributed technologies develop in in line with the objectives of the legal framework.

    Blockchain, according to some, promises to inaugurate a new era of data storage and code-execution, which could, in turn, stimulate new business models and markets. The precise impact of the technology is, of course, hard to anticipate with certainty, in particular as many remain skeptical of the potential impact of blockchain. In recent times, there has been much discussion in policy circles, academia, and the private sector regarding the tension between blockchain and GDPR. Many of the points of tension between blockchain and the GDPR are due to two overarching factors:

    • First, the GDPR is based on an underlying assumption that in relation to each personal data point there is at least one natural or legal person—the data controller—whom data subjects can address to enforce their rights under EU data protection law. These data controllers must comply with the obligations of GDPR. Blockchains, however, are distributed databases that often seek to achieve decentralization by replacing a unitary actor with many different players. The lack of consensus as to how (joint-) controllership ought to be defined hampers the allocation of responsibility and accountability.
    • Second, the GDPR is based on the assumption that data can be modified or erased where necessary to comply with legal requirements, such as Articles 16 and 17 of GDPR. Blockchains, however, render the unilateral modification of data purposefully onerous to ensure data integrity and to increase trust in the network. Furthermore, blockchains underline the challenges of adhering to the requirements of data minimization and purpose limitation in the current form of the data economy.

    The report presents the following three policy options to address the above-mentioned issues:

    • Regulatory guidance. To increase legal certainty for those wanting to use blockchain technologies, regulatory guidance is needed on how specific concepts ought to be applied where these mechanisms are used. The regulatory guidance could take the form of various regulatory initiatives. Supervisory authorities could coordinate action with the European Data Protection Board to draft specific guidance on the application of the GDPR to blockchain technologies. Regulatory guidance could also offer additional certainty to actors in the blockchain space who have long stressed that the difficulty of designing compliant blockchain use cases relates in part to the lack of legal certainty as to what exactly is required to design a compliant product. 
    • Support codes of conduct and certification mechanisms. Both certification mechanisms and codes of conduct are tools specifically mentioned by the GDPR that are aimed at helping to apply the overarching principles of GDPR to concrete contexts where personal data is processed. Both certification mechanisms and codes of conduct exemplify a co-regulatory spirit whereby regulators and the private sector devise principles designed to ensure that the principles of European data protection law are upheld where personal data is processed. This has, for instance, been achieved in relation to cloud computing, where many of the difficult questions examined above have also arisen.
    • Research funding. The current governance design of blockchain use cases is not designed to enable compliance as it does not enable the coordination of multiple actors, who could be joint-controllers, to comply with specific legal requirements. Solutions could be found by means of interdisciplinary research, devising both technical and governance remedies and experiments with blockchain protocols that could be compliant by design.

     

    Related Link: Report (PDF)

     

    Keywords: Europe, EU, Banking, Insurance, Securities, Blockchain, Distributed Ledger Technology, Regtech, Fintech, FDPR, Policy Options, EP

    Related Articles
    News

    APRA Consults to Standardize Submission Date for Quarterly Reporting

    APRA proposed to standardize quarterly reporting due dates for authorized deposit-taking institutions. The proposed standardized due date is 35 calendar days after the last day of the reference quarter, which will create a 14-calendar-day extension for credit unions and building societies.

    November 08, 2019 WebPage Regulatory News
    News

    EBA Publishes Methodology and Draft Templates for Stress Tests in 2020

    EBA published a package for the 2020 EU-wide stress test exercise for banks.

    November 07, 2019 WebPage Regulatory News
    News

    EC Publishes Results of Fitness Check of Reporting Requirements in EU

    EC published results of the fitness check of supervisory reporting requirements in financial services legislation in EU.

    November 07, 2019 WebPage Regulatory News
    News

    BCBS Assesses NSFR and LE Rules in Argentina and China as Compliant

    BCBS published reports that assess the implementation of net stable funding ratio (NSFR) and large exposures, or LE, framework in Argentina and China.

    November 07, 2019 WebPage Regulatory News
    News

    FSB Publishes Summary of Plenary Meeting in Paris

    At the meeting, the Plenary reviewed vulnerabilities in the global financial system, fintech developments (including developments in the crypto-asset markets), ongoing work of FSB, and the work program for 2020.

    November 07, 2019 WebPage Regulatory News
    News

    HKMA Highlights Technology Initiatives at the Hong Kong FinTech Week

    HKMA co-organized, with InvestHK, the Hong Kong FinTech Week 2019, which was a five-day flagship fintech event that attracted thousands of attendees worldwide.

    November 06, 2019 WebPage Regulatory News
    News

    ECB Report on Fallback Provisions in Contracts Referencing EURIBOR

    ECB published a report, by private sector working group on euro risk-free rates, presenting recommendations for fallback provisions in contracts for cash products and derivative transactions referencing EURIBOR.

    November 06, 2019 WebPage Regulatory News
    News

    EC Regulation on Homogeneity of Underlying Exposures in Securitization

    EC published the Delegated Regulation 2019/1851 regarding the regulatory technical standards on the homogeneity of the underlying exposures in securitization.

    November 06, 2019 WebPage Regulatory News
    News

    FSI Examines Regulatory Approaches on Climate Risk Assessment

    The Financial Stability Institute (FSI) of BIS published a paper that examines the regulatory approaches being used for climate risk assessment in the insurance sector, in particular through enterprise risk management (ERM) frameworks.

    November 06, 2019 WebPage Regulatory News
    News

    SRB Launches Q&A Process for Resolution Reporting

    SRB has setup a dedicated solution for raising questions on the resolution reporting.

    November 06, 2019 WebPage Regulatory News
    RESULTS 1 - 10 OF 4112