Regulation is proving to be the most formidable barrier to the development and deployment of blockchain solutions in business contexts, a new PricewaterhouseCoopers survey of 600 global business executives across 15 countries has found.
These concerns about regulation registered higher on the radars of respondents than other philosophical or technical issues, with 48 percent of respondents ranking it among the top three factors and 27 percent identifying it as the single biggest barrier.
In addition, 45 percent of survey respondents identified lack of trust among users as a core impediment, 44 percent noted the inherent difficulty of bringing a network-based business together and 41 percent and 29 percent said that technical challenges of interoperability and scalability, respectively.
Alison Kutler, strategic policy advisers leader at PwC, reckoned that this dynamic isn’t necessarily a surprise given that blockchain’s promise to anonymize and decentralize is in conflict with many traditional regulatory responsibilities.
“This conflict is creating tension, especially in industries with mature regulatory constructs and high-value transactions. In addition, widespread adoption of blockchain across jurisdictions and participants requires standardization, which is often achieved from a central authority,” she told Forbes, adding that:
“However, technology mandates by policy makers can also harm innovation if overly prescriptive, presenting a delicate balancing act for the future of blockchain policy.”
While jurisdictions across Asia, Europe and North America have taken a wide variety of approaches to regulating activities the technology can be used for, such as initial coin offerings and cryptocurrencies, each unique approach brings about it’s own aspect of uncertainty, such as GDPR rules in the European Union or an absense of broad federal regulation in the United States.
What’s certain, PwC advises its clients, is that blockchain-based businesses shouldn’t count on getting a free pass in any of these countries even if they’re doing something fancy and innovative.
“By and large, we expect existing regulation to extend to new business models and applications. If you remain agile, you’ll be able to adapt and remain compliant,” the report recommends.
The report’s findings offer a strong indicator that, in the global context, the ball is effectively in the regulators’ court when it comes to laying groundwork for the blockchain sector’s continued development.
“Regulators should be aware that they have the attention of industry leaders and innovators developing in this area, and as such, they should bring them to the table to collaborate on reasonable oversight,” Kutler said, adding that authorities should take care to not “shoehorn” new technologies and business models into existing frameworks.
While most of the regulatory attention to date has focused on cryptocurrencies themselves and exchanges, other applications of the underlying blockchain and distributed ledger technologies have been met with a warmer reception by many.
“Policy makers in some jurisdictions seem more supportive of the innovative applications of blockchain and are creating regulatory environments that allow incubators to develop new applications. The results of these highly experimental environments for blockchain-based commerce will be critically influential for expanding policies to more geographic areas and industries.”