In order to understand blockchain regulations and other issues around blockchains, it is important to know what exactly they are and what the regulations surrounding them are meant to accomplish.
What is a Blockchain?
In a broad sense, a blockchain is a network that effectively connects different forms of online data. This consists of a ledger (designed to capture information), a certain number of users (who can edit the chain of transactions and their transaction history), a software program to validate the process, and a transaction log.
The Relevance of Regulations
With over 2500 cryptocurrencies handling more than 200 trillion dollars, blockchain regulations are incredibly important. There are some mixed views, with countries such as China and Russia outlawing cryptocurrency completely.
In the United States, blockchains are regulated by agencies such as the Federal Trade Commission (FTS), Internal Revenue Service (IRS), and the Financial Crimes Enforcement Network (FinCEN). This becomes complicated as each has different perspectives on what is defined as a cryptocurrency and how it should be regulated.
In the European Union, the fifth Anti Money Laundering Directive included cryptocurrency services as something to be held under scrutiny, meaning that companies need to register with financial authorities and report any potentially suspicious activity. With the UK involved with Brexit, an equivalent directive is being established.
In short, as blockchains have become more established, they are more closely observed. It is important for people involved in this activity to be aware of the blockchain regulations in their local territory.
