Web3 Foundation whose flagship project is Polkadot, held an expert panel at Polkadot Decoded this week on the current state of web3 regulation in the EU. The panelists discussed the benefits of web3 blockchain technology that could help solve current Web2 challenges such as internet privacy, security and the use of intellectual property. Panelists agreed that web3 technology needs tailored regulations that reflect the uses of blockchain technology and should focus on behaviors rather than technology. The discussion outlined the importance of legal clarity for Web3 entrepreneurs and why jurisdictions such as the EU are surpassing laggard jurisdictions, which are mired in definitional and jurisdictional uncertainty.
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“For the same reason we don’t talk about regulating Python. The underlying premise of good governance is that you have to be technology neutral, blockchain should never be regulated, certain applications should be.”
This panel follows Daniel Schoenberger, Chief Legal Officer of the Web3 Foundation and his testimony before the US Congress on regulating digital assets, where he argued the current regulatory approach has held back innovation in the Web3 space. Regulators across the globe are approaching regulation in different ways from the regulatory enforcement actions by the United States’ Securities and Exchange Commission to the EU’s most recent legislation, the Market in Crypto-Assets (MiCA) Regulation coming into force this month.
“The Web3 Foundation sees its role as helping regulators to understand blockchain technology. Companies should be regulated for what they are, and what they do. We are encouraged by how some jurisdictions have tailored their regulations to the reality of the technology. A good example of this deep understanding is, the EU’s MiCA regulation, which has included its own class of utility token, a crucial step to recognizing the different classes of tokens based on their functionalities,” said Daniel Schoenberger, Chief Legal Officer of Web3 Foundation during the panel.
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Also, joining Daniel Schoenberger on the The Decentralized Web: How Much Regulation is Necessary? panel were:
- Joachim Schwerin, Principal Economist at the European Commission;
- Paige Collings, Senior Speech and Privacy Activist at Electronic Frontier Foundation;
- Alfred Früh, Professor of Private Law at the University of Basel;
- and, Ana Trbovich, Vice Chair of Energy Web Foundation.
Outlining his view of blockchain technology, Joachim Schwerin, Principal Economist of the Digital Transformation of Industry unit within the Directorate-General Internal Market, Industry, Entrepreneurship and SEMs of the European Commission, said, “Blockchain is a societal revolution. Blockchain is something that puts decentralization and empowerment bottom-up first, and we have demonstrated that already, when we declared that blockchain is an innovation priority for Europe for the next decades to come in every policy field. That is the first time ever in the history of the European Union that we have made such a statement about a technology so shortly after it had emerged.”
Describing the need to regulate behavior and not technology, Ana Trbovich, Vice Chair of Energy Web Foundation said, “For the same reason we don’t talk about regulating Python. The underlying premise of good governance is that you have to be technology neutral, blockchain should never be regulated, certain applications should be.”
Explaining Web3’s role in protecting privacy risks, Paige Collings, Senior Speech and Privacy Activist at Electronic Frontier Foundation, said, “It is important that any regulation should be addressing behaviors rather than technologies. Just because something is decentralized doesn’t mean we don’t have bad actors. We need to make sure the same considerations of the centralized web are being applied in the decentralized world as well, and that we are not just taking this as an opportunity to innovate without any consideration of people’s speech and privacy, but we are putting that at the forefront of any new developments.”
Speaking on the potential for blockchain technology to support the protection, use and commercial exploitation of intellectual property, Alfred Früh, Professor of Private Law at the University of Basel, said, “Web2 broke the copyright system. We have tools that have the potential to get control back to creators. We have to find the dialogue with authorities that have been doing this for a long time, patent and trademark offices, copyright offices, for example, so we can integrate them into the whole ecosystem.”
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