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88 UMKC L. Rev. 419 (2019-2020)
An Emerging Political Economy of the Blockchain: Enhancing Regulatory Opportunities

handle is hein.journals/umkc88 and id is 431 raw text is: AN EMERGING POLITICAL ECONOMY OF THE BLOCKCHAIN: ENHANCING REGULATORY OPPORTUNITIES* John W. Bagby,S David Reitter,** and Philip Chwistek I. INTRODUCTION New technologies seldom integrate immediately, well, or even ultimately into existing public policy. Existing law, regulations, and prevailing contracting practices are largely the product of traditional, fairly well-understood technologies, social mores and customs. Policy adjusts slowly to change, and, too often, it adjusts excruciatingly so. This delay tolerates the largely unimpeded disruptive introduction of technologies, permitting the transformation of institutions in unexpected ways. The delay often fails to compel public policy to operate ex ante, possibly enabling the prevention of future externalities during a technology's early stages of introduction. Blockchain exhibits these characteristics. The institutional framework of public policy necessarily adapts slowly in response to changing technologies. This is perhaps the most fundamental feature of laissez-faire, democratic capitalism. Such matters are complicated by the novel ontologies developed by technologists. Their taxonomies are inadequately reflected in the public policy lexicon.' But the difficulties do not stop at policy makers' misunderstanding of technology. Technologists regularly assume away regulation if their inventions are designed to skirt regulation. Indeed, blockchain regulation is also complicated by Internet Exceptionalism, the fairly accurate observation that technology can avoid policy influence, particularly in the near term. This is an impudent form of laissez-faire that taunts public choice advocates about the latter's difficulties in exercise of control over, often, anonymous actors * Blockchains are inherently secure, encrypted technologies, enabling electronic transaction processing, communications, authentication, and recordkeeping. Blockchain circumvents traditional (banking) systems, promising transaction cost savings and speculative profits. Blockchain is an open, encrypted and distributed ledger system underlying cryptocurrencies (Bitcoin) and initial coin offerings (ICO). Both masquerade as media of exchange. Future blockchain applications include supply chains, identity management and healthcare information exchange. Blockchains' technical complexity obscure comprehension by many legislators, regulators, lawyers and judges. Libertarian technologists cheer these barriers to regulation. This paper explores blockchain operations, reviews evolving cryptocurrency policies, and proposes regulatory approaches, urging expanded jurisdiction over blockchain bubbles. Professor Emeritus, College of Information Sciences & Technology & Smeal College of Business, The Pennsylvania State University; Google Research; jbagbyl46@outlook.com. Associate Professor of Information Sciences and Technology, The Pennsylvania State University. Schreyer Honors College graduate, College of Information Sciences & Technology, The Pennsylvania State University. 1 See AngelaWalch, The Path ofthe Blockchain Lexicon (and the Law), 36 REV. BANK[NG & FIN. L. 713 (2016-2017) (arguing blockchain nomenclature is ill-defined contributing to regulatory challenges, such as how it is esoteric controversy that is notoriously confusing, with disputes over whether a blockchain is the same as a distributed ledger, or whether an appcoin is the same as a protocol token).

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