Australian Regulator Wants to Monitor How Firms Use Blockchain Technology

The Australian Securities & Investments Commission (ASIC) today released an information sheet on Blockchain Blockchain Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned). In this sense, blockchain is immune to the manipulation of data, making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamp Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned). In this sense, blockchain is immune to the manipulation of data, making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamp Read this Term technology, entitled "Evaluating Distributed Ledger Technology (DLT) Distributed Ledger Technology (DLT) A distributed ledger or distributed ledger technology (DLT) is a database that is shared and synchronized across a number of different devices in different locations. DLT networks effectively eliminate the need for a centralized authority to act as the network’s custodian. In its place is a Peer-to-Peer (P2P) network as consensus algorithms to ensure replication across nodes is undertaken.The most common kind of distributed ledger network is a blockchain network. Blockchain networks are used to A distributed ledger or distributed ledger technology (DLT) is a database that is shared and synchronized across a number of different devices in different locations. DLT networks effectively eliminate the need for a centralized authority to act as the network’s custodian. In its place is a Peer-to-Peer (P2P) network as consensus algorithms to ensure replication across nodes is undertaken.The most common kind of distributed ledger network is a blockchain network. Blockchain networks are used to Read this Term)". It contains six questions that the regulator is likely to ask when assessing whether the use of a blockchain meets regulatory obligations.

These questions are:

How will the DLT be used?;

What DLT platform is being used?;

How is the DLT using data?;

How is the DLT run?;

How does the DLT work under the law?; and

How does the DLT affect others?.

Explaining the need for the move, ASIC says that in the last few years, there has been intense interest in DLT from operators of market infrastructure, financial institutions, services providers and fintech firms around the world.

ASIC Chairman Greg Medcraft commented: "This info sheet is for both existing licensees and start-ups. It will help to fast track our discussions with stakeholders and we want to use the framework as a conversation starter as the technology continues to evolve."

The most interesting part of the document is the one that relates to working under the law as it seems to greatly complicate using smart contracts.

It reads: "Although DLT can allow entities to transact without the need for external mechanisms for conflict resolution, the DLT-based service will remain subject to the legal and regulatory framework of the relevant jurisdiction. In Australia, as with many jurisdictions, there are scenarios where the legal system does not permit enforcement of a contract solely on its terms. The DLT will need to be flexible enough to accommodate this."