A Contextual Study of Regulatory Framework for Blockchain

Introduction

Since its beginning, an interest in regulatory framework of blockchain technology has been found among the experts and stakeholders. In order to inquire the regulation of blockchain technology within the areas of law, this chapter provides a literature review of blockchain based applications in a wider spectrum as it pertains to law. The objective is to explore the existing state of rules and regulations of blockchain and their implications. Therefore, this study is structured as follows: It starts with the examination of regulatory and legal challenges to blockchain and identifies areas where legal and regulatory intervention is required through a focused review of the most significant studies on the subject. For this, first, it provides a cursory overview on technological aspects of the issue and identifies the features of ‘decentralised’ nature and functionality of blockchain while highlighting the considerable regulatory implications attached to it. Second, it discusses blockchain-AI convergence and the existing and proposed legal framework along with the challenges to determine whether those regulations fit with nature and objectives of blockchain technology. Lastly, while discussing the features of a smart contract, this study, report the results emphasizing the need for regulation and governance of blockchain transections to mitigate the risk and increase the security features for the parties involved. For this, the regulatory framework should be drafted to support blockchain’s innovative potential rather limiting it. With this, the proposed regulations should target to disrupt the criminal and fraudulent transactions without killing the innovation of blockchain. In conclusion, while focusing on the intersection between the technology and the law, study has identified several vulnerabilities particularly related to legal execution of smart contracts such as lacking formal legal requirements of a contract, lack of jurisdiction and scalability etc. Hence, the proposed paradigms for the new technology, its untraceable nature of applications and agreements are not of easy to converge with the conventional legal or regulatory parameters that arises biggest concern pertaining to reliability of blockchain technology and hinders its large-scale acceptability as a trusted medium of trade.