Jurat’s CEO, Mike Kanovitz, recently filed comments with the U.S. Department of Commerce discussing the responsible development of digital assets.
To implement effective regulations that carry out the Executive Order’s policy initiatives, it will be important to address root causes of the lawlessness problem plaguing blockchain consumers and businesses. These include a lack of access to official courts (thereby preventing users from protecting their own legal rights), the inability to reverse illegal or mistaken transactions, and an overbroad application of the “code is law” architecture which needlessly burdens legitimate exercises of governmental authority.
Technological solutions already exist to remedy each of these problems, in particular, decentralized methods to enforce the law directly on blockchains through court-order blockchain transactions. Unfortunately, industry adoption has lagged because operators externalize the costs of blockchain-based crime, much as a factory might treat the air pollution it generates. Thoughtful regulation is needed to address these market failures.
We propose that Treasury require minimum standards for on-chain legal enforcement based on currently-available technologies and also encourage industry innovation. At a minimum, blockchain networks and other decentralized services must include protocols that can implement the judgments of state and federal courts in like manner as centralized providers (such as banks or other intermediaries) do. Minimum standards should also include the ability to reverse the effects of illegal or mistaken transactions, as well as a method for smart contracts (and by extension, DeFi and Web3) to enforce legal remedies.
