Regulation: International

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On February 19, 2020, the European Commission (Commission) released a communication entitled “A European strategy for data”. It lays out a vision for a “European data space” and a plan – through legislation, technical standards and public-private initiatives – for the EU to become a future leader in…

We are happy to report that our recent in-depth Practice Note on Blockchain as applied to Supply Chain Management was selected to appear as the cover story for the June/July issue of Practical Law – The Journal. Read the full text here.

On January 23, 2019, the UK Financial Conduct Authority (“FCA”) issued its widely anticipated “Guidance on Cryptoassets” consultation paper CP19/3 (the “Consultation”). The Consultation followed the UK Cryptoassets Task Force’s publication last October, which set out the UK’s policy and regulatory approach to cryptoassets and distributed…

Uncertainty regarding the compatibility of blockchain technology and the European Union’s General Data Protection Regulation (GDPR) has often been highlighted as a potential obstacle to the development and widespread implementation of blockchain systems involving personal data.

To address tensions between blockchain technology and the GDPR, Commission Nationale de l’Informatique et des Libertés (CNIL), the French data protection regulator, published an initial report analyzing certain fundamental questions regarding the interaction between blockchain technology and the GDPR’s requirements (the “Report”). The Report was the first guidance issued by a European data protection regulator on this topic.

CNIL’s Approach to Identifying Blockchain Data Controllers and Data Processors

The Report highlights the challenges of identifying data controllers and data processors in the blockchain context – an important distinction that determines which set of regulatory obligations applies.

In discussing the likely classification of the various types of persons and entities involved in a blockchain, the CNIL primarily distinguished between (i) participants (i.e., those who transact on the blockchain) that have the ability to determine what data will be entered into a blockchain or have permission to write on it or cause data to be written to it, and (ii) miners or other validators (i.e., those who do not transact and instead validate transactions submitted by participants). The CNIL also provided an analysis as to how to classify smart contract developers and natural persons who enter personal data in a blockchain, distinguishing, with respect to the latter, between those engaging in personal or household activities and those engaging in professional or commercial activities.

The effective date of the EU’s General Data Protection Regulation (GDPR) is fast approaching (May 25, 2018), and its impacts are already being felt across various industries. Specifically, the conflicts between the GDPR and the technical realities of blockchains raise important legal considerations for companies seeking to implement blockchain solutions…

Virtual worlds similar to the OASIS in Steven Spielberg’s upcoming film Ready Player One may be closer than we think – and provably scarce, blockchain-based digital assets could provide the leap forward that gets us there. Already, developers are testing early implementations.

Since CryptoKitties launched at the end of 2017, promptly causing a traffic jam on the Ethereum network and proving that crypto-collectible “games” leveraging blockchains can be a hot commodity, a number of copycats have sprung up.

While interesting, this first generation of blockchain games has been a relatively simple series of experiments. Meanwhile, developers have taken note of the potential synergies between blockchain-based digital assets and the mass-market video game and virtual/augmented reality space. As they explore potential ways of using blockchain technology to make virtual worlds and interactions more immersive and to build better bridges between in-game and real-world commerce, there are a number of legal issues to consider.

While there has been a great deal of attention being paid lately to the use of blockchain for the issuance and investment (or speculation) in cryptocurrencies, other enterprise-based applications of blockchain continue to be deployed with increasing frequency but less fanfare.

One of the more recent deployments of blockchain – viewed as a milestone in the world of supply chain logistics – is based on Easy Trading Connect (“ETC”), a blockchain-based system developed by a consortium of companies led by Dutch financial institution ING. The system was initially designed to manage commodity trading funds transactions. The most recent transaction, involving a shipment of soybean cargo, is believed to be the first agricultural commodity sale processed completely “on chain” (e.g., on a blockchain-based system). The ETC was used to process all steps of the transaction, and reportedly no paper contracts, certificates or other similar documents changed hands. According to ING, the system reduced what is traditionally a process of 11-14 days to only four days.

This is not the first deployment of ETC – in 2017, it was used to handle the sale of an oil consignment. The shipment at issue was resold three times through the system before it actually left its departure point. The banks involved reportedly reduced the cost typically associated with these types of transactions by thirty percent.

Renren Inc. (NYSE ticker RENN), a Beijing-based social network company, saw rapid growth in its stock price following the release of a whitepaper (in Chinese) and publicity over its intention to engage in an Initial Coin Offering (ICO) of cryptocurrency dubbed RRcoin. However, last week Renren announced it has…