Turkish Law Blog

Could Regulating Blockchain Technology Improve Competition in Digital Markets?

Öykü Dalgıç Öykü Dalgıç/ University of Sussex
20 March, 2020


Digital technology creates significant benefits for the economy and improves peoples life quality. According to advancements in networked processing, computing power, and cloud-based systems, consumers are enjoying new types of products and services in various sectors. Blockchain is one of the promising technologies. Proponents of blockchain technology acknowledge it as an instrument to enhance individual freedoms and user autonomy.[1] Some believe that blockchain offers more opportunities for criminal behavior rather than providing benefits to society. “Silicon Valley and Wall Street are betting... the blockchain... can change... everything...”[2] But what could be the role of the blockchain concerning competition in digital markets? There is a growing concern about online platforms excessive domination in digital markets. According to the Economist, dominant players of the digital market "look unstoppable".[3] Unfair usage of digital tools distorts markets and creates additional costs for consumers. Therefore, online platforms are now under the scrutiny of competition authorities across the globe. Thereby, traditional competition law tools must be improved according to the specific dynamics of digital markets. Moreover, recent data scandals [4] showed that tech giants are not that reliable. Blockchain’s model could be a solution for excessive dominance of online platforms and lack of competition in digital markets since it places the trust between parties in the underlying technological platform and thereby potentially eliminates the need for intermediaries. Accordingly, transaction fees decrease and the efficiency of markets increases.[5] Considering recent data scandals and manipulation of what content users see, blockchain could be an alternative for online platforms operating as intermediaries, which lost the public's confidence in the last few years or might even disrupt platform business model permanently.[6] Hence, online platform leaders could be displaced, and competition in digital markets might potentially be enhanced by blockchain technology. However, to ensure that blockchain does not share the same faith with the internet, regulators should adopt regulatory solutions that provide a balance between innovation and public interest.

In this context, Section (I), will firstly provide an overview of blockchain technology. Subsequently, why blockchain is a regulatable technology, current regulatory approaches towards blockchain and how can blockchain be regulated successfully, will be discussed. Section (II) will present the inefficiency of competition law in digital markets dealing with anti-competitive behavior and possible solutions. In Section (III), blockchain’s potential to improve competition in digital markets as a disruptive technology will be examined. Finally, this paper will conclude that blockchain might enhance competition in digital markets as a disruptive technology. However, no technology is good, bad, or neutral on its own. Despite its promising qualities, blockchains can also be used for anticompetitive practices, mass surveillance, or profiling activities that might lead to discrimination. Hence, not to repeat the mistakes of internet regulation, regulators should focus on innovative and flexible regulatory approaches. In this context, this essay suggests a data-based co-regulation approach supported with regulatory sandboxes which might have the advantage to create a legal ecosystem for blockchain systems to grow and innovate while regulators can be the part of the innovation process and be aware of risks that blockchains hold to serve the public interest better.

I. Analysis of Blockchain Technology

i. Introducing Blockchain and Smart Contracts

Like the way the internet has connected networks in order to exchange information, blockchain aims to transfer valuable assets such as a trademark or a painting.[7] In the simplest terms, a blockchain can be regarded as a "special sort of decentralized database”[8] Special features of blockchain networks are (i) distribution of trust "across a system as a whole," (ii) cryptoeconomic security, (iii)immutability, (iv) transparency and (v) algorithmic trust.[9] With the distribution of the trust, users are not trusting the individual elements but the network power. This way, instead of relying on a broker, or an intermediary and paying them for their services, the blockchain network verifies the transaction itself.[10] Hence, an advanced “peer to peer” system emerges. Eventually, trade costs decrease.[11] Since the rationale behind blockchain architecture is that someone inside the network will not be trustworthy eventually, cryptoeconomic security ensures that miners who are responsible for validation of transactions are rewarded so that they don’t become potential attackers to the system.[12] Transactions made within the blockchain network are immutable, so it is almost impossible to amend a recorded value.[13] Due to its transparent nature, transactions within the blockchain network are publicly available. Lastly, blockchain trust is based on algorithms therefore, what is being trusted for a transaction in a blockchain system are computers. [14]

Beyond using blockchains for cryptocurrencies, smart contracts are the force that turns distributed consensus on blockchain systems into services[15]. A smart contract is defined as "an agreement whose execution is automated" and this automatic execution is usually carried out via computer running code which has translated legal written language into an executable program.[16] Its distinctive feature from other electronic agreements is the cryptography factor. Many transactions that need human involvement can be carried out automatically with smart contracts. For instance, smart contracts are quite suitable for the machine to machine transactions such as supply chain and Internet of Things services. [17]

ii. Blockchain as a Regulatable Technology

Some blockchain developers contend that their exercises regulated only by code, not any legal system.[18] Scholar Alexander Savelyev as well stated that “smart contracts don’t need a legal system to exist…..De facto, they represent a technological alternative to the whole legal system.”[19] These statements are quite similar to what has said about the Internet in its early years. David Johnson and David Post pictured a "cyberlibertarian utopia," contending that legal regulation arising from state sovereignty cannot function in cyberspace, making the internet unregulatable.[20] Moreover, The Declaration of the Independence of Cyberspace has highlighted that state interference to the internet was unwanted, but more importantly, it was impossible indicating that, “Your legal concepts of property, expression, identity, movement, and context do not apply to us. They are all based on matter, and there is no matter here” [21] However, the history of the internet has already proved that states are able to enforce laws in cyberspace. For example, the EU adopted the E-Commerce Directive And the US has adopted the Digital Millennium Copyright Act. Furthermore, in Lessig’s terms “code is law” does not mean that law is inferior to code or blockchain instead of legal enforcement.[22] According to this paper, code and law complement each other and regulation could be in many forms. More importantly, blockchain needs law for stability and to be legally recognized. Indeed, Etheruem co-founder Gawin Wood emphasizes the need for legislation to continue to innovate.[23]

Even though blockchain is kind of a decentralized database and has no central authority, it can still be regulated like the internet through several access points. Michele Fink even argues that regulating blockchain might be easier than regulating the internet since sensitive issues such as hate speech and freedom of expression are not related to what blockchain applications.

For instance, blockchain could be regulated with a coregulatory approach in which government agencies and Internet Service Providers (“ISPs”) cooperate. Governments can use ISPs to prevent usage of blockchain-based applications by ordering them to block encrypted data that passes through their network. [24] This regulatory solution can be suitable for illegal transactions considering the notorious silk road incident. However, as a result of the encrypted nature of blockchain, monitoring and blocking could be technically challenging and costly as it is observed with the internet.[25] More importantly, using ISP’s for blocking activities might exacerbate the censorship debate. Censorship technologies might be used for commercial and political control on blockchains.[26] Thereby, without proper legal safeguards, blockchain technology might turn into a powerful instrument of surveillance and control. Hence, in the case of this kind of regulatory approach, rules determining ISPs interference shouldn’t repeat mistakes of internet censorship. ISPs interference must be proportionate, and rules related should be designed considering the philosophy behind blockchain technology.

Additionally, as miners are detectable because of high-level energy consumption required for proof-ofwork systems and their coinbase transactions, they could be another regulatory access point. Although, the main objective of the decision was not to affect the blockchain network, in 2018 US Federal Communications Commission, ordered a citizen to stop operating his bitcoin mining device because of his harmful interference with a T-Mobile network. [27] Hence, this decision illuminates that miners could be liable to law enforcement.

Furthermore, to regulate blockchain, governments may force core developers to design additional features in the system, such as “government backdoors”[28] However, this might cause security flaws within blockchain network as EU Security Commissioner addressed [29] and it is again used to conduct mass surveillance. On the other hand, imposing legal obligations to core developers might improve governance of blockchain systems and solve accountability issues. Core developers perform the software development process and intervene in any errors that might occur in the blockchain systems as it is observed with Etheruem developers. [30] Accordingly, besides the blockchain system itself, users place their trust in core developers with regard to services offered through the blockchain network. In this context, Angela Walch indicates that core developers, who design the system and involved in decision making around risk management, policy, and technical choices, should be treated like “fiduciaries “such as doctors or lawyers, as users of the blockchain system depend on them.[31] This way, developers might adopt their policy and technical choices more carefully and users relying on the blockchain system could be protected since developers will be liable for their actions. However, treating core developers as fiduciaries and holding them accountable could not be possible in some jurisdictions where code enjoys free speech protection[32] and software licenses usually disclaim any liability arising from the software. Moreover, treating specific developers as fiduciaries could harm innovation, deterring them from participating in new beneficial projects as a result of potential liability risk.[33]

iii. What should be the Regulatory Technique for Blockchains?

After critically analyzed possible regulatory access points for blockchain technology, the most appropriate regulatory technique that could ensure regulatory access points to fulfill its objective should be considered. In this context, this paper will first look at regulatory approaches to date and then propose an alternative regulatory approach.

Currently, the US seems to try to adopt a "command-and-control regulation" technique towards cryptocurrencies.[34] Although blockchain technology has the potential to facilitate many services, virtual-currency related services are the most advanced usage of blockchain systems in the US. Within this scope, the state of Vermont drafted legislation that is proposing the establishment of a “digital currency limited liability corporation” (“LLC”). On the contrary to a general partnership, with this kind of corporate structure, individuals operating within a blockchain network cannot be held liable individually in case of a dispute.[35] This form of LLC expected to encourage innovation and set a transparent regulatory environment for cryptocurrency businesses. Further, in 2017 The US Uniform Law Commission, which designs model codes to be used by state legislators, adopted the Uniform Regulation of Virtual-Currency Business Act. [36] The proposed uniform regulation contains unambiguous and concise definitions of virtual currency and virtual currency business activity.[37] Further, the proposed regulation is designed to regulate only specific virtual currency business activities and not the blockchain technology itself. This uniform regulation has the potential to create a legal environment that could support the innovation of virtual-currencies and blockchain while providing protection to consumers who are engaged in virtual currencies in the US. However, all these proposed legislation carry the risks of regulating an emerging industry prematurely and inflexibly.

Indeed, blockchain technology is still at a very early stage and continues to evolve. Premature ex-ante regulation might create substantial compliance costs that could negatively affect blockchain startups. Moreover, consumer demands might not be foreseen correctly due to fast-evolving consumer preferences in digital markets.[38] Again, precise terminology is the key to successful regulation and enforcement. Unfortunately, at this stage, there is not even a consensus on the definition of blockchains.[39] In Angela Walch terms, confusing terminology creates headaches for regulators since they are struggling to understand and identify the features and variants of blockchain technology.[40] The unclear language surrounding blockchains threatens to regulate technology effectively. Parallelly, misunderstanding of the technology and its limitations might lead to unenforceable or unsuitable rules.[41] For instance, with regard to Vermont’s proposal Carla Reyes stresses the fact that US corporate law requires “at least one shareholder and shareholders must be legal persons” [42] Fully autonomous blockchain-based systems, hence, will not be able to form an LLC.

While the US is adopting a more interventionist approach, conversely, the EU seems to have a more passive approach towards blockchain and virtual currencies. According to the European Parliament, risks surrounding blockchain technology shouldn't be ignored, and this might lead to a regulatory intervention at some point. At the same time, it emphasized that regulating blockchain at a “very early stage (…) may not be adapted to a state of affairs which is still in flux and may convey a wrong message to the public about the advantages or security of virtual currencies.”[43] Again, in 2019, the European Banking Authority indicated in its report that, further analysis is needed to decide the appropriate EU level approach with regards to crypto-assets.[44] Hence, before directly adopting a pre-emptive regulation, indeed, focusing on understanding the technology and using competition law and consumer law supervision could be more suitable for blockchain technology. However, it is essential to note that, if regulators do not keep up with technology and act too late, they might fail to control the new risks that the technology holds.

Within this scope, this paper reckons that to regulate nascent, dynamic and disruptive technologies like blockchain effectively and in early stages of development, regulatory structure and design needs to be “proactive, dynamic and responsive.”[45] To achieve this kind of regulation, this paper suggests a datadriven "co-regulation" approach supported with regulatory sandboxes. In this context, policymakers and regulators firstly should collect and analyze data surrounding nascent technologies like blockchain to decide in early stage whether new technology need regulatory attention. Investment data and data based on the interest of consumers can be used to determine when to or should regulate the emerging technology. This way, regulators could be more pro-active and avoid wasting resources on technologies that are unlikely to be successful.[46] After determining the new technology should be regulated, coregulatory approach which is flexible and designed mainly to "safeguard public policies"[47] could be adopted. Although, self-regulation an  minimum state interference considered most efficient in dynamic, innovative industries, as it observed with the internet self-regulation could lead to market distortions and constitutional legitimacy failures such as rights to privacy.[48] Co-regulation could be the approach that could eliminate these problems. Co-regulation enables early intervention.[49] Because this kind of regulatory approach embraces flexibility and acknowledges that regulation is a continuing process. More importantly, Co-regulation ensures a dialogue process between regulator and stakeholders. [50] This way, regulators can understand blockchain technology better and ensure its development in accordance with public policy objectives.

Within this framework, regulatory sandboxes might increase the effectiveness of the co-regulatory approach as they are valuable toolboxes for public-private dialogue. Generally speaking, sandboxes typically, (i) instead of a one size fits all approach they provide customized rules for each business proposal and individual guidance, (ii) enables companies to test their new services free from legal obligations and enforcement for a specified period.[51] For instance, in the UK, the Financial Conduct Authority ("FCA”) currently operating a Fintech Sandbox program. After the first trial, FCA's report revealed that “value of digital currencies, liquidity requirements, transaction fees and the availability of exchanges” are the factors posing a risk to the success of blockchain-related projects.[52] This kind of insights could help regulators to develop guidelines or formal rules for blockchain-related businesses and, likewise, blockchain-based firms could improve their products and risk management mechanisms accordingly.[53]

However, the effectiveness of co-regulation is questionable, since there is no guarantee of dialogue will eventually transform to actual lawmaking. Moreover, the transnational construct of blockchain makes regulatory sandboxes, which are limited to a single jurisdiction, less effective. The optimum scenario would be a global process of multi-stakeholder co-regulation. [54] However, this kind of structure seems unlikely to happen in the near future. Nevertheless, even though co-regulation might not be the ultimate solution, it at least creates a space where regulators and stakeholders can have a mutual understanding. This way, the co-regulatory approach has the chance to serve private interests by encouraging technological innovation while also raising awareness of public interest risks by including regulators to workings of the technology.

II. Analysis of Competition Law in Digital Markets

Before, examining the potential effects of blockchain technology on competition in digital markets, it is essential to explain what makes competition in digital markets problematic. Two critical dynamics of digital markets, namely network effects, and control over data have led to the dominance of a small number of firms (Google, Amazon, Apple, Facebook). Although, some scholars argue that, networks effects do not necessarily cause monopolies, there is no empirical support on controlling data leads to entry barriers and competition in digital markets is fierce,[55] size and substantial market power of some platforms are still worrying among politicians and journalists. Indeed, without abuse, dominance
on its own is not a crime, but, it seems like traditional competition law has failed to detect anticompetitive structures and conducts of these online giants. Amazon is one of the examples for explaining how traditional competition approaches have failed. Amazon has built its empire by integrating across various types of industries, exploiting data, cutting prices aggressively, and aiming excessive growth at the expense of profit.[56] Even though all of these elements facilitated an anticompetitive structure and ensured its dominance and barriers to entry for other firms, the competition authority in the US failed to recognize how its conducts are anticompetitive by only assessing consumer prices. [57] Other, competition authorities are also struggling to keep up with specific dynamics of online platforms. European Commission overlooked the role of privacy while evaluating the competition and failed to foresee adverse post-merger effects during the acquisition of Whatsapp by Facebook in 2014.[58] Even though Facebook is fined, it is not an adequate safeguard for protecting competition in digital markets. In this context, proposed solutions to enhance competition in digital markets will be critically evaluated under the following subsections.

i. Control Over Data and Network Effects

Reducing the effects of mass data control in digital markets is an important starting point for enhancing competition. Powerful online platforms’ easy access to data, protects them from competitors and allegedly creates substantial entry barriers for new players. Even if creating a new app or online service is easy, achieving successful growth is relatively difficult mainly when many dominant online platforms use their user group data to promote their latest products and services. Indeed, in the digital market manipulation context, online platforms use personal data without individuals' knowledge and use that information to convince them to buy a new product or service they don't need by using complex algorithms.[59]

Evans, although, states that, multihoming and switching, between platforms, contradicts with the claim that control over data boosts network effects [60], many users invest their online accounts, and most of the time, they want to keep using their existing accounts instead of creating a new one in a different platform. Hence, lock-in effects can still occur even, when the alternative option exists. Therefore, in assessing anticompetitive conducts, regulatory agencies and courts should consider the “potential” for lock-in instead of only examining whether a specific market sector has alternative online platform operators.[61]

Alternatively, the right to data portability (“RTDP”) under GDPR [62] might be a solution to combat market concentration in the EU. However, the current version of RTDP might be too limited as portability only applies when the data subject herself provided the data. Further, it cannot be a general instrument of economic policy in digital markets, as data is "unlocked" solely if the data subject invokes RTDP under GDPR.[63] Edwards, thus, indicates that the right of data portability is not enough, and "regulation to promote true interoperability is vital. [64] Interoperability enables free data flow, which is essential for data-driven innovation.[65] Open and interoperable standards can help to increase competition in digital markets. UK’s Open Banking Standards designed to enhance competition in the banking sector by enabling fintech entrepreneurs entry to market could be an appropriate example.[66] On the other hand, interoperability not always leads to more innovation and competition. Interoperability through uniform standards and interfaces might limit companies to develop their innovative goods and services with specific components since they have to comply with the requirements of interoperability. Furthermore, the implementation of the maximum level of interoperability could also cause privacy harms. If technical and consumer control mechanisms are not well designed, interoperability might increase the risk of misuse of personal data due to multiple service providers access to user’s personal data. [67] Therefore, open and interoperable standards should avoid over standardization, serve procompetitive goals and interoperability degree should be optimal.[68]

ii. Vertical Integration and Intermediation Power

As it is highlighted with the Amazon example previously, having a variety of businesses in different sectors might undermine competitiveness.[69] Online platforms might use their dominant market share to dominate other markets. As a result of this, competitors of online platforms could become dependent on them. Cross-leveraging market advantages across other types of business lines might also cause significant harms to consumer. For instance, Google's dominance of online search and advertising reduces competition in the online advertisement market. Even though, consumers seem to enjoy low prices in the context of “consumer welfare” approach, which measures competition on short term effects on price and output, lack of competition leads to high prices charged to advertisers and these high prices reflected to the advertised products and services.[70] Hence, regulators and courts should consider the online platform's status in different business lines while evaluating market power.[71] Additionally, to cognize potential harms to competition Khan suggests that, consumer welfare perspective should be replaced with an approach focused on the competitive process and market structure.[72] She also suggests, placing limits on vertical integration of platform which are dominant at a certain level as an ex-ante regulatory approach.[73] Parallelly, the European Commission is considering, to separate intermediation activities form other, vertically integrated activities and establishing a new regulator to determine “ex-ante rules of behavior.”[74]

In any case, despite different approaches how to analyze competition in digital markets, there is a consensus on that regulatory agencies must modify their policies and enforcement mechanisms according to special dynamics of digital markets to eliminate potential anticompetitive tactics and consumer harm such as privacy intrusions. Nonetheless, the history of the internet shows that disruptive innovation could always displace online platform leaders.[75] In this regard, could blockchain be the technology that will level the playing field in digital markets?

III. Potential Interplay Between Blockchain and Competition Law

Social media could be one of the sectors that will be affected by blockchain technology in the near future. Steemit is a blockchain-based content-sharing site, where contents are ranked by popularity.[76] What makes Steemit unique is that whenever users post content, they receive Steem tokens, which can be exchanged for any real-world currency or used to decide on how to improve the platform. As users data stored in the blockchain, which is tamper-proof, Steemit does not control user data, thereby, it is implausible that personal data to be sold to any third parties. Also, the transparent and decentralized nature of blockchains protects Steemit users from algorithmic manipulation, filtering, and censorship, which are the topics that often social media platforms are criticized.[77] Platforms like Steemit might be an alternative to dominant online platforms operating in the social media sector. Developments of blockchain-based platforms might increase the competition among social network platforms since they promise more privacy, resistance to censorship, and less digital manipulation.

Furthermore, blockchain platform models like Steemit’s which are referred to as a “token network” could also help to eliminate network effects for new entrants. In the “token network” context, network ownership distributed to participants via tokens which could be considered as shares in a company.[78] This way, as, participants also have a potential financial interest in platforms success, they promote the platform to others for the network to gain momentum and they, hence, create “network ownership effects” [79] Thus, startups employing a token network model might have a chance to enjoy network ownership effect via their eager micro-shareholders and challenge dominant online platforms.

Another crucial sector that blockchains might enhance competition could be digital advertisement. Circulation of digital ads contains advertiser, publisher, and user.[80] In this structure, today' advertisers excessively depend on online platforms for data to make better marketing decisions and to run ad campaigns. In this context, although, consumers are not paying money in exchange for using search engines or social media, they are paying attention to the online platforms providing these services and this way an “attention economy” emerges as online platforms monetize valuable personal data via profiling and trade to advertisers.[81] Blockchain could be the solution for this attention economy. By the help of pseudonymity [82] feature of Blockchain, consumers can use their own cryptographically secured wallet to store their data, prefer to remain anonymous to any other third party, and only share their data on a need to know basis. This way, online platforms like Google and Facebook won't be able to exploit and monetize personal data anymore. Therefore, increased usage of blockchain platforms could reduce online platforms access and control of data, and this might lead to a more competitive digital market. Moreover, with Blockchain, consumers will be able to monetize their attention. Indeed, Blockchain-based Basic Attention Token (“BAT”) awards consumers for the attention they have given to advertisements with BAT crypto-currency.[83] Parallelly, advertisers dependence on online platforms might also decrease, and digital advertisement giants like Facebook and Google could lose their dominant positions since advertisers will also be able to engage with consumers via blockchain platforms such as BAT.

Lastly, in order to enhance competition by increasing the access of SME’s and startups to non-personal datasets, which are held by other companies, blockchain-based “data market places” could be employed. Data market places can be defined as “electronic market places where the commodity data is traded.”[84] Theoretically, blockchain could be an appealing choice as an underlying technology for data marketplaces, as it could ensure transparency, the security of data via encryption and reduced transaction cost using smart contracts for sale and sharing of data.[85] Indeed, European Commission has indicated that usage of data marketplaces might unlock the economic value of data [86] and blockchain could be suitable for logging all data access and processing actions for data marketplaces. [87]

Nevertheless, it is important to note that, although blockchain has the potential to improve worldwide systems, access to datasets securely and increase competition in digital markets, centralized organizations could also utilize the technology to control people’s transactions and online communications. [88] Blockchain possibly be used, for example, to manage identity, surveil or monitor and keep track of certain online transactions. Since pseudonymity factor does not ensure anonymity, it is possible to trace back certain transactions to a specific individual or even, create identifiable profiles using big data analytics methods. Indeed, Coinalytics, for example, analysis Bitcoin blockchain through advanced data analytics methods to build up identifiable profiles.[89] Hence, States could use blockchain to conduct mass surveillance, and again, companies could use it to monetize consumers data via profiling activities. As a result, unfair usage of blockchain technology might also cause privacy harms and market failure in the digital sector as it is observed with online platforms and the internet. Moreover, recording every transfer or shared content permanently and publicly on blockchain, due to its nature, might clash data protection laws. For instance, implementing the “right to erasure” under GDPR to blockchain-based systems could be problematic. Within this scope, incompatibility with data protection laws might hinder the wide adoption and advancement of blockchain systems, and therefore, it might never be successful enough to challenge dominant online platforms in digital markets. On the other hand, using blockchain as an underlying technology might also be used to facilitate anticompetitive behavior. For instance, the creation of fast lanes to clear some transactions quicker and prioritize some content within blockchain networks for whose ability to pay more might severely affect SME's, startups, and consumers.[90]

IV. Conclusion

The resulting analysis concludes that digital markets need a dose of competition and blockchain technology has promising potential to level the playing field in digital markets. Further, blockchain could offer people alternative currencies, self-enforcing contracts, and financial inclusion. If appropriately designed, blockchain might become an underlying technology that provides data subjects more control over their data in accordance with GDPR’s objective.[91] However, blockchain's success relies on the correct regulatory method and efficient enforcement. According to this paper, regulators should avoid self-regulation for blockchains and focus on co-regulatory solutions. Although, blockchains are “self regulating entities” [92], as it observed with the internet, self-regulated blockchains could also cause competition law breaches, create a lack of transparency, and cause privacy harms to users. As Lawrence Lessig stated, "when a structure of code affects values implicit in the law, there is a good reason to ensure that these values don't become displaced.”[93] Hence, this paper reckons that blockchain and other nascent, dynamic technologies could be regulated with a data-driven co-regulatory approach supported with regulatory sandboxes. This way, a balance could be struck between public interest and innovation. Additionally, as it has previously stated, law and code complement each other. In this context, code can be used to implement legislation or ensure compliance. For instance, Regulators could enforce the law through code [94], and data harvesting & analysis could be used for instant feedback regarding regulatory compliance for blockchains.[95]

At the moment, there are many challenges surrounding blockchain technology like terminology, public policy concerns, and privacy. It is not possible to foresee the legal implications of blockchain innovation at this stage, and more interdisciplinary research is needed. However, for now, one thing is clear that; if we continue to innovate and accommodate to ‘blockchain space'[96], we need to create innovative legal frameworks that can capture the concepts shaping blockchain technology and public interest.

[1] Aaron Wright and Primavera De Filippi, ‘Decentralized Blockchain Technology And The Rise Of Lex Cryptographia’(SSRN , 10 March 2015 <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2580664> accessed 5 May 2019 56.
[2] David Lee and Robert H. Deng (eds), Handbook of Blockchain, Digital Finance, and Inclusion. Volume 2,ChinaTech, mobile security, and distributed ledger (London Academic Press 2018) 188.
[3] "Regulating the internet giants, The world’s most valuable resource is no longer oil, but data” The Economist (6 May 2017) <https://www.economist.com/leaders/2017/05/06/the-worlds-most-valuable-resource-is-nolonger-oil-but-data> accessed 10 May 2019.
[4] Julia Carrie Wong, “The Cambridge Analytica scandal changed the world – but it didn't change Facebook” The Guardian (San Francisco, 18 Mar 2019) <https:/www.theguardian.com/technology/2019/mar/17/the-cambridgeanalytica- scandal-changed-the-world-but-it-didnt-change-facebook > accessed 5 May 2019. Kate O’Flaherty, “This Is Why People No Longer Trust Google And Facebook With Their Data” (Forbes, 10 Oct 2018) https://www.forbes.com/sites/kateoflahertyuk/2018/10/10/this-is-why-people-no-longer-trust-google-andfacebook- with-their-data/#12baf28c4b09 > accessed 5 May 2019.
[5] OECD, “Paper for the Discussion on Blockchain and Competition Policy” (26 April 2018) DAF/COMP/WD(2018)47 5.
[6] ibid.
[7] Kevin Werbach, The Blockchain And The New Architecture Of Trust (The MIT Press 2018) 176.
[8] Lilian Edwards (ed), Law, Policy and the Internet (Hart Publishing 2019) 385.
[9] Werbach (n 7) 95,108.
[10] Lee et al. (n 2) 183.
[11] ibid.
[12] Werbach (n 7) 99,100.
[13] ibid 102.
[14] ibid 108.
[15] ibid 124.
[16] Max Raskin, “The Law and Legality of Smart Contracts” 2016 304 (2017) Georgetown L Technology Rev <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2959166> accessed 6 May 2019 309.
[17] Andres Guadamuz, “Smart contracts and intellectual property: challenges and reality”. In Heath, Kamperman Sanders and Moerland (eds), Intellectual Property and the 4th Industrial Revolution, Kluwer International Law (2019) 4.
[18] Stephan Tual, ‘Customer protection on the blockchain is ensured via smart contracts, not legal systems. Code is law.' [Twitter, 21 May 2019 ] <https://twitter.com/stephantual/status/711874685156376576> accessed 15 May 2019.
[19] Alexander Savelyev, “Contract Law 2.0: Contracts as the Beginning of the End of Classic Contract Law (2016) Higher School of Economics Research Paper No. WP BRP 71/LAW/2016.
[20] Michele Finck, Blockchain Regulation and Governance in Europe (Cambridge University Press 2019) 37.
[21] John Perry Barlow, “A Declaration of the Independence of Cyberspace” (Electronic Frontier Foundation, 8 February 1996) < https://www.eff.org/cyberspace-independence> accessed 10 May 2016.
[22] Werbach (n 7) 153. Finck (n 20) 35.
[23] “The future of the blockchain: Interview with Ethereum co-founder Gavin Wood” (Simpleweb, 18 September 2017) <https://simpleweb.co.uk/the-future-of-the-blockchain-interview-with-ethereum-co-founder-gavinwood/> accessed 3 May 2019.
[24] Finck (n 20) 44, 47.
[25] Ian Brown and Christopher T. Marsden, Regulating Code (The MIT Press 2013) 95.
[26] ibid 110.
[27] Federal Communications Commission Enforcement Bureau Region One Letter to Victor Rosario, February 15, 2018, Case Number EB-FIELDNER-17–00025658 <https://apps.fcc.gov/edocs_public/attachmatch/DOC- 349258A1.pdf> accessed 9 May 2019.
[28] Finck (n 20) 52.
[29] Matthijs Koot, ‘EU Commission Says It Does Not Seek Crypto Backdoors, Will Propose Legal Framework in Early 2018 for the Member States to Help Each Other Access Encrypted Devices' (19 October 2017).
[30] Joon Ian Wong and Ian Kar, ‘Everything you need to know about the Ethereum ‘hard fork’ Quartz (18 July 2016)< https://qz.com/730004/everything-you-need-to-know-about-the-ethereum-hard-fork/>accessed 27 April 2019.
[31] Angela Walch, “In Code(Rs) We Trust:Software Developers As Fiduciaries In Public Blockchains” (June 27, 2018) Regulating Blockchain: Techno-Social and Legal Challenges, edited by Philipp Hacker, Loannis Lianos, Georgios Dimitropoulos & Stefan Eich, Oxford University Press, 2019 (forthcoming) <https://ssrn.com/abstract=3203198> accessed May 7 2019 19.
[32] Bernstein v Department of Justice United States Court of Appeals, Ninth Circuit 176 F.3d 1132 (1999) [23],[24].
[33] Walch (n 31) 18.
[34] Finck (n 20) 165.
[35] Amy Castor, "Vermont Lawyer Warns of Legal Complications Ahead for Cryptocurrency Miners" (Bitcoin Magazine,2018) <https://bitcoinmagazine.com/articles/vermont-lawyer-warns-legal-complications-aheadcryptocurrency- miners/>accessed 7 May 2019.
[36] Kevin Werbach, "Trust, But Verify: Why The Blockchain Needs Law" (2018) Berkley Technology Law Journal 487, 533.
[37] Uniform Regulation Of Virtual-Currency Businesses Act Article 1 Sec 102(23) and Article 1 Sec 102(25).
[38] Alex Chisholm and Nelson Jung, “Platform regulation—ex-ante versus ex-post intervention: evolving our antitrust tools and practices to meet the challenges" (Competition Policy International, 20 march 2016) < www.competitionpolicyinternational.com/platform-regulation-ex-ante-versus-ex-post-intervention-evolvingour- antitrust-tools-and-practices-to-meet-the-challenges/> accessed 10 May 2019 5.
[39] Adrianne Jeffries, ‘Blockchain is Meaningless’ (The Verge, 7 March 2018) <https://www.theverge.com/2018/3/7/17091766/blockchain-bitcoin-ethereum-cryptocurrency-meaning> accessed 10 May 2019.
[40] Angela Walch, “The Path of the Blockchain Lexicon (And The Law)”(2017) 36 Review of Banking&Financial Law 713,728.
[41] Finck (n 20 )166.
[42] Carla Reyes, ”If Rockefeller Were A Coder” (2019) The George Washington Law Review 373,400.
[43] Falk Schöning and Myrto Tagara, "Blockchain: Mind the gap! Lessons learned from the net neutrality debate and competition law-related aspects" Competition Law Review" (2018) Concurrences Competition Law Review < www.hoganlovells.com/~/media/hogan-lovells/pdf/2018/07_09_2018_07_concurrences_3- 2018_pratiques_schoning-tagara.pdf?la=en> accessed 10 May 2019 8.
[44] European Banking Authority, “Report with advice for the European Commission on crypto-assets” (9 January 2019).
[45] Erik Vermeulen, Mark Fenwick, Wulf A. Kaal, “Regulation Tomorrow: What Happens when Technology is Faster than the Law?” (2016) TILEC Discussion Paper DP 2016-024, < https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2834531> accessed 10 May 2019 18.
[46] ibid 20.
[47] Finck (n 2 )174.
[48] Brown et al (n 25) 2, 3.
[49] Finck (n 20 ) 174.
[50] Brown et al. (n 25) 8.
[51] Khusboo Agarwal, “Playing in the Regulatory Sandbox” (NYU JLB, 8 January 2018) < www.nyujlb.org/singlepost/ 2018/01/08/Playing-in-the-Regulatory-Sandbox.
[52] Financial Conduct Authority, “Regulatory sandbox lessons learned report”<https://www.fca.org.uk/publication/research-and-data/regulatory-sandbox-lessons-learned-report.pdf> Chapter 4,11.
[53] Werbach ( n 7) 203.
[54] International Finance Corporation, “Blockchain Governance and Regulation as an Enabler for Market Creation in Emerging Market” (EM Compass, September 2018) <https://openknowledge.worldbank.org/bitstream/handle/10986/30658/131343-BRI-EMCompass-Note-57- Blockchain-Governance-v1-PUBLIC.pdf?sequence=1> accessed 10 May 2019.
[55] David S. Evans, “Why the Dynamics of Competition for Online Platforms Leads to Sleepless Nights But Not Sleepy Monopolies” (25 July 2017) < https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3009438&download=yes> accessed 10 May 2019 13.
[56] Lina M. Khan, “Amazon’s Antitrust Paradox” (2016) 126 Yale Law Journal 710, 803.
[57] ibid.
[58] European Commission, Press Release of 3 October 2014 IP/14/1088.
[59] Ryan Calo, "Digital Market Manipulation" (2014) 82 The George Washington Law Review 995, 1030.
[60] Evans (n 55) 13.
[61] Rob Frieden, “The Internet of Platforms and Two-Sided Markets: Legal and Regulatory Implications for Competition and Consumers” (October 2017) < https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3051766> accessed 10 May 2019 57.
[62] Article 20 of Regulation (EU) 2016/679 — protection of natural persons with regard to the processing of personal data and the free movement of such data [2016] OJ L 119.
[63] Finck ( n 20) 129.
[64] Committee on Communications, Regulating in a digital world (HL Paper,9 March 2019, vol 299) 46.
[65] Wolfgang Kerber, Heike Schweitzer, Interoperability in the Digital Economy, 8 (2017) JIPITEC 39 < www.jipitec.eu/issues/jipitec-8-1-2017/4531> accessed 10 May 2019.
[66] UK Competition and Markets Authority, a press release of 9 August 2016 "CMA pave the way for Open Banking revolution” < www.gov.uk/government/news/cma-paves-the-way-for-open-banking-revolution > accessed 10 May 2019.
[67] Urs Gasser, “Interoperability in the Digital Ecosystem” < https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2639210> accessed 10 May 2019 14.
[68] Brown et al (n 25) 38,39.
[69] Khan (n 56) 792.
[70] Nathan Newman, “Search, Antitrust, and the Economics of the Control of User Data” (2014) 31 Yale J. on Regulation. 401, 411.
[71] Frieden (n 61) 57.
[72] Khan (n 56) 803.
[73] ibid 793.
[74] Diana Coyle, "Practical competition policy implications of digital platforms" (2018) Bennett Institute for Public Policy working paper no: 01/2018, < www.bennettinstitute.cam.ac.uk/media/uploads/files/Practical_competition_policy_tools_for_digital_platforms. pdf> accessed 10 May 2019 12.
[75] Evans (n 55) 27,33.
[76] Jelena Dzakula, “Your next social network could pay you for posting” (Information Law and Policy Center, 31 July 2017 <https://infolawcentre.blogs.sas.ac.uk/2017/01/31/your-next-social-network-could-pay-you-forposting/> accessed 8 May 2019.
[77] ibid.
[78] ibid.
[79] Adnan Veysel Ertemel, “Implications of Blockchain Technology On Marketing” (2018) 4 Journal of International Trade 35,42.
[80] Moses Kim, “Blockchain-Powered Ads To Disrupt Digital Marketing” (Medium, 2 Aug 2018) <https://medium.com/swlh/blockchain-powered-ads-to-disrupt-digital-marketing e690d75f9839> accessed 10 May 2019.
[81] Ertemel (n 79) 40.
[82] “Pseudonymity” means, the processing of personal data in such a manner that the personal data can no longer be attributed to a specific data subject without the use of additional information, provided that such additional information is kept separately and is subject to technical and organizational measures to ensure that the personal data are not attributed to an identified or identifiable natural person; see Article 4(5) of Regulation (EU) 2016/679 — protection of natural persons with regard to the processing of personal data and the free movement of such data [2016] OJ L 119.
[83] Ertemel (n 79) 41.
[84] Lara Vomfell et al., ‘A Classification Framework for Data Marketplaces’ (2015) ERCIS –Research Center for Information Systems, No. 23 <www.econstor.eu/handle/10419/118643> accessed 9 May 2019 5.
[85] Finck (n 20) 136.
[86] European Commission, ‘Commission Staff Working Document on the free flow of data and emerging issues of the European data economy’ (Commission Staff Working Document) SWD (2017) 2 Final, 12,13.
[87] European Commission Staff Working Document, ‘Guidance on sharing private sector data in the European data economy,' SWD (2018) 125 final, 11.
[88] Wright et al (n 1) 53.
[89] ibid 54.
[90] Schöning et al. (n 43) 6.
[91] Aaron Wright and Primavera De Filippi, ‘Decentralized Blockchain Technology And The Rise Of Lex Cryptographia’(SSRN , 10 March 2015) <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2580664> accessed 5 May 2019 56.
[92] Finck (n 20) 167.
[93] Lawrence Lessig, “The Law of the horse What Cyberlaw Might Teach” (1999) Harvard Law Review 501,548.
[94] Carla L. Reyes, “Moving Beyond Bitcoin to an Endogenous Theory of Decentralized Ledger Technology Regulation: An Initial Proposal” (2016) Villanova Law Review 191, 195.
[95] Finck (n 20) 180.
[96] Walch (n 40) 24.

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