Regulation without intermediaries? Legal challenges of decentralized crypto-economic networks
The public Ethereum network is gearing up to become a major change agent in the world of contemporary trade and finance. With it’s rise…
Regulation without intermediaries? Legal challenges of decentralized crypto-economic networks
The public Ethereum network is gearing up to become a major change agent in the world of contemporary trade and finance. With it’s rise comes a set of qualitatively new challenges to regulators world-wide. Gone are the days where the primary challenge law-makers faced was how to distribute risk and responsibility among a number of easily identifiable market players in order to achieve a certain outcome in the way those players behaved. In the era of decentralized crypto-economic networks that possess both a strong internal currency and a capable service layer that gives utility to said currency, regulators are now confronted with a seeming lack of identifiable market participants that could serve as useful proxies to transpose policy goals with. The reason being, that crypto-economic networks like Ethereum are capable of running complex high-level economic infrastructure without the need for traditional, identifiable intermediaries in order to create a trustworthy environment in which economic exchange can happen reliably. Instead, trustable economic infrastructure is created through a multilayered approach, comprised of peer-to-peer networking technology and cryptographic proof systems, as well as economic incentives and consensus rules.
On the other hand, no accumulation of people and economic value exists in isolation. Any network of humans and computers, is in some way tied to a larger reality. Humans have lives of their own, independent of any single network they are members of and software runtimes have to be hosted on some form of physical hardware. As a result, the virtual nature of crypto-economic networks dissolves at some point into a set of causal relationships in a realm that is under the tight control of traditional regulators.
Exported from Medium on January 3, 2025.