Regulators Should Look at New Things Objectively to Benefit Innovations – Guenther Dobrauz-Saldapenna, Partner & Leader PwC Legal Switzerland
The right kind of regulation is enforced if new things are considered individually, believes Guenther Dobrauz-Saldapenna, Partner & Leader PwC Legal Switzerland.
In the interview to the Blockchain Conference Moscow, the expert talked about smart contracts, GDPR compliance and the right way to issue regulations.
Interviewer: Blockchain Conference Moscow (BCM).
Speaker: Guenther Dobrauz-Saldapenna (GDS).
BCM: When GDPR became effective in May, it was questioned whether it would influence blockchain-based businesses positively or negatively. In your opinion, what changes have already taken place?
GDS: It is probably fair to say that when GDPR was conceptualized, blockchain technology was not yet at the centre of attention. There are conceptual contradictions between GDPR and blockchain. On the one hand, GDPR has proven to be quite challenging to align for some promotors of blockchain-based ventures. On the other hand, there is an immutability of the blockchain.
But since then, workable solutions have been devised. For instance, only keeping generic data on the chain and specific data off the chain. Also, solutions include using pointers which can be severed or using encryption to which the key can be destroyed upon request.
BCM: Can the existing regulatory framework and rules stimulate more innovations and how?
GDS: Usually innovation first arises and flourishes in an innovation-friendly, unregulated space. But as the new industry matures and the audience changes from early adopters to more mainstream users, trust becomes essential, and regulation is often the basis for trust.
As such, the right kind of regulation – a business model-neutral, principles-based regulation enforced by an approachable regulator who is willing to objectively look at new things on a case-by-case basis. These regulations can actually be beneficial.
BCM: As the nodes are located all over the world, blockchain crosses jurisdictional boundaries and may face jurisdictional problems. How serious is the issue and how can the technology deal with it?
GDS: With most technologies which are rolled out cross-border, one challenge is that we currently do not have one single global rulebook to address this issue. This leads to sometimes even contradictory treatment and significant uncertainty for the promoters. Questions such as where taxation should occur, which regulator is competent, and so on, arise. But solutions will be devised, it is just very early days.
BCM: As for smart contracts, is it possible to mention all the elements of traditional contracts? What are the legal issues and difficulties connected with smart contracts?
GDS: Smart contracts are an exciting new opportunity to solve complex issues. In particular, they build trust between parties who do not know each other by eliminating the need for an intermediary. It is done by providing a computerized transaction protocol that executes the terms of the contract with the general objective of satisfying common contractual conditions and minimizing exceptions.
This is a compelling proposition, but what may already work well for standardized processes, is still not the norm for complex tailor-made relationships and transactions. Hence, I foresee the two worlds to co-exist for some more time.
BCM: PwC is providing certain tax services. Could you tell us more about your assistance with taxation of blockchain-based companies?
GDS: PwC provides the full range of services across all our areas of expertise which include strategy, legal, regulatory, tax, accounting, audit, corporate finance and technology, to name a few.
For example, at least in Switzerland, for ICOs we often perform the full suite of services (minus audit if we are the advisors). For legal, this means setting up the entities and necessary contract work, obtaining regulatory approval and also performing the overall tax structuring and obtaining tax clearance on all relevant levels.
BCM: What are you going to talk about at the Blockchain Conference Moscow?
GDS: I look forward to speaking in Moscow – a city I truly love, and it will also be my fifth time speaking at a Blockchain & Bitcoin Conference. I will essentially present my “greatest hits” if you will – I will speak about the dynamics of innovation and regulation, the key ingredients for a successful ICO and explain how to best invest into exponential technologies such as blockchain.
On November 20, at the Blockchain Conference Moscow, Guenther Dobrauz-Saldapenna will deliver a presentation “Legal and Regulatory Challenges with Innovation.”
Use an opportunity to learn more about the blockchain technology and its legal side from the expert at the conference!