As the implementation of blockchain technology increases, so does the list of international organizations getting involved in its development. Some organizations on the list include the International Organization of Securities Commission (IOSC), which recently published a wide-ranging research paper that includes findings on blockchain tech; the United Nations Development Program (UNDP), which partnered with Blockchain, the world’s leading software platform for digital assets, the UN Refugee Agency (UNHCR) and the World Economic Forum (WEF) to explore the use of blockchain technology for development; and the World Bank, which launched a blockchain lab as part of a bid to pilot projects that can improve governance and social outcomes in the developing world. Recently, the Organization for Economic Cooperation and Development (OECD) added itself to the list by launching a number of projects that focus the collaborative efforts of its thirty-six member states on blockchain research, development, and implementation.
The OECD is an intergovernmental organization whose mission is promoting policies that improve the economic and social well-being of people around the world by providing a forum in which governments can work together, share experiences, and seek solutions to common problems. The OECD studies issues that directly affect everyone’s daily life and works with governments and industry leaders to understand what drives economic, social and environmental change. It also measures productivity and global flows of trade and investment, analyzes and compares data to predict future trends, and sets international standards.
The OECD believes that blockchain is a transformative technology and, according to OECD Director, Greg Medcraft, “The ultimate impact of blockchain will depend on the ability of governments to develop the right policies to harness the potential benefits of the technology while mitigating its risks and potential for misuse.”
To develop adequate policies, OECD Director Medcraft believes three objectives should guide policymakers. First, the efforts of policymakers should be “proactive and forward-looking” to prevent “regulatory knee-jerk reactions” and “resist the temptation to jump in” before the technology is fully understood. Second, policymakers and regulators must keep up with the changes brought about by technology and improve their capacity to understand and deal with these innovations. Third, policymakers must ensure a coordinated approach on two fronts - collaboration with industry academics and consumer groups, and international cooperation.
Collaborating with both industry academics and consumer groups is essential for the development of industry standards necessary to “build trust in the technology, guide new business models, support policymaking and regulation without necessarily replacing the need for the rule of law, create the right co-regulatory framework, and ensure interoperability both within and between sectors.”
Blockchain technology is still in its infancy. However, we have already seen that the social and legal implications of blockchain technology development and implementation are not local, they are global. Thus, according to Medcraft, international consensus and international cooperation are essential for the development of the technology because they facilitate the exchange of information, allow for the emergence of best practices, prevent regulatory arbitrage, and avoid market fragmentation. Such cooperation and consensus enable efficiency and scaling of business, establish greater legal certainty, and raise awareness of the benefits and potential risks of implementing blockchain technology.
Intergovernmental organizations such as the OECD are strategically placed to help enable efficiency and scaling of business, establish greater legal certainty, and raise awareness of the benefits and potential risks of implementing blockchain technology because they provide an international forum that facilitates the exchange of views across a wide range of policy areas. Furthermore, organizations such as the OECD have a track-record of developing relevant international standards and guidelines that are widely used by governments and corporations. The OECD, for example, played a crucial role in promoting European recovery and integration by developing comparable statistics and indicators measuring economic and policy performance. They also have an established history of forging international consensus through peer-pressure, coordinating macroeconomic policy, sharing tax information, and improving aid effectiveness.
Due to the complex and developing nature of blockchain technology, its potential widespread applications, and global reach, it is crucial that governments work together and with the relevant industries to promote the healthy growth and implementation of the technology. The OECD is spearheading projects and events that bring governments and relevant industries together to discuss the future of blockchain and the policy environment needed for growth and risk mitigation. Some of the projects and events are:
The OECD Responsible Business Conduct Committee task force dedicated to the application of distributed ledgers in the global Footwear and Garment industry supply chains.
May 2018: The OECD hosted a forum on digital assets to discuss challenges posed by ICOs, and consider policy responses with key industry players, other international organizations like the FSB and IOSCO, and regulators.
June 2018: The OECD Competition Committee will hold a hearing with outside experts on “Blockchain and Competition” to start identifying potential competition and regulatory law issues.
July 2018: The OECD will host a major blockchain conference in Paris, where policymakers, business, academics and consumer groups will come together to discuss the policy issues posed by blockchain, and consider what more needs to be done to best capture its benefits.
The OECD’s capacity to develop guidance for governments and international standards could be a powerful tool in responding to the strong demand for blockchain technology amid regulatory uncertainty.
The OECD will utilize existing policy tools to establish cooperative frameworks for blockchain governance. These tools will act as a starting point to address some of the risks posed by the rapid development and implementation of blockchain technology. Such tools include:
The OECD Observatory of Public Sector Innovation guidance to support government innovation and embrace of technology – including its upcoming ‘Blockchain Unchained’ report.
The OECD Guidelines on the Protection of Privacy and Transborder Flows of Personal Data.
Cooperation with other standard-setting bodies. For example, ensuring that government advice reflects technical ISO standards.
Cooperation with international counterparts such as the International Organization of Securities Commission (or IOSCO) and the Financial Stability Board to address the issues raised by the implementation of blockchain technology and to harmonize responses.
Blockchain technology is at a crucial moment of its development. As the world understands the power of transparency and trust provided by blockchain, systems that are the foundations of our society, such as how we transact value with one another, how companies do business, or how nations govern their citizens, are beginning to change. It is, therefore, crucial for policymakers to adapt their methods and policy-making tools to reflect the changes brought about by the technology. Especially when it comes to governance, policymakers need to consider that regulating blockchain technology using old methods might not only be counterintuitive in instances where the technology itself can provide a better method of regulation, but it can also hinder its development. Thus, the OECD’s approach of cooperation, collaboration, and sharing of knowledge and ideas between industry leaders, corporations, governments, and international organization is vital for the development of adequate policies, the growth of the technology itself, and mitigating risks that might arise from the implementation of blockchain technology.
About the author
Liz is a third-year law student at the University of Houston Law Center focusing on the legal implications of disruptive technologies, specifically blockchain and its different applications across many industries. She is also the founder and president of the Blockchain and Cryptocurrency Law Association at the University of Houston, established to educate law students about blockchain technology and the opportunities its implementation will create for attorneys.