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Blockchain project legal issues

There are three main issues that a blockchain project should take into consideration, from a legal point of view.

Blockchain technologies thrive everywhere around the globe. This includes the famous crypto currencies (also called crypto), i.e. virtual currencies that use decentralized control and are based on the distributed ledger technology. However, other blockchain based solutions are currently emerging. According to one of its definitions, blockchain is a growing list of records, called blocks, which are linked using cryptography. At the same time, it is an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way.

Currently, there are three main issues that a blockchain project should take into consideration, from a legal point of view. All are encountered when the distributed ledger technology meets the real world – usually the customer or a fiat currency. First, it is the question of KYC (Know Your Customer) and AML (Anti-Money Laundering) regulations. Each blockchain project, with its focus on its peers, must find a suitable way to identify its “customer”/peer. This goes hand in hand with the AML. Even though it is an unregulated market, there are good reasons to follow this regulation voluntarily. From our point of view, without following this regulation, the blockchain project will not be considered a serious one.

The second issue relates to the bookkeeping and taxing of crypto. There are many tax questions, usually with no good answers, that a person running a blockchain project will face.

The third issue relates to the brick and mortar banks. How can you prevent a bank from barring your account when the transferred fiat currency hits your account? Again, there are no easy answers here.

These issues are the same for each blockchain project. However, further legal questions will emerge when dealing with an individual blockchain project. Maybe your blockchain project relates to a specific legal area like data transfer, or energy consumption. Each requires a specific legal check, too.