We often hear that “code is law”. It means that all transactions happening on decentralized networks are final and immutable. It does not mean, however, that code derives from the law.
The legal frameworks we operate within are not God-given. They are social agreements that should be the subject of inclusive discussion prior to enactment. While many in the “decentraland” would like to claim the arbitrary right to create the law along with the code, one has to recognize that such a way is short-sighted and doomed to fail.
Before we code the law and make it final, we need to make sure that it does not perpetuate problems and weak points of existing systems and also recognizes opportunities offered by innovation and technological progress. A clear example of such situation is to require tokenized assets’ trading to be registered with a central securities depository, even though data is safely saved and accessible publicly on the Blockchain network.
We can clearly see, that such regulatory obligation duplicates the same process. Recognizing the technical potential of Blockchain is essential in making the markets more effective.
In order to realize all the promise of tokenization, we need to strive to make sure it is used not just for individual benefit, but for the benefit of the greater good.
In order to make sure we follow the right direction and actualize a more inclusive and transparent system, we need to habituate ourselves to constant and recurrent questions:
How do we include all stakeholders in establishing better foundations of the future systems?
How do we make sure that the foundation we are creating today will be sustainable in the future? How can Blockchain improve accessibility of assets that remain to be exclusive only to a prominent few since decades?
How do we take Blockchain into account while improving existing regulation?
How do we shift from centralized to decentralized structures in a sustainable manner?
Regulation is hugely based on technological possibilities. 10 years ago we had to put our trust in safekeeping our financial records in centralized institutions. There simply was no other technical solution, which made their role needed and reasonable.
But technology changes and evolves, and the institutions we needed 10 years no longer serve the same purpose.
Blockchains are a cheaper and more effective solution to the multitude of middlemen such as registrars, stock transfer agents, central securities depositories, custodians, brokers, and clearinghouses. Lawmakers should recognize that existing regulation protects monopolies, rather than serving the consumers.
The development of Blockchain presents us with a profound question, the answer to which will impact the lives of people everywhere – how should the financial system work?
Do we want it to be just the way it is now? Blockchain developers and entrepreneurs should be a part of this discussion together with the lawmakers and regulators.
Finding the solutions that will enable better and more inclusive economy requires our strong and mutual collaboration. So let’s talk about the future we want to create and see how Blockchain can get us there.
Zoë Adamovicz is CEO and co-founder at Neufund, an end-to-end solution for asset tokenization and issuance. Neufund recently completed their first sale of an equity token offering for their parent company. Zoe is an advisor to multiple governments, including Germany and Malta. She is an occasional angel investor and a mentor at Gaza Sky Geeks. In December of 2018, Zoe was recognized by Forbes as one Europe’s Top 50 Women in Tech.