DLT or Distributed Ledger Technology is the concept behind blockchain stated Bahaa Abdul Hussein. DLT is a system that allows for a distributed ledger to record transactions securely. The powerful security benefits is which DLT is used in cryptocurrency. It is also used in other applications too. A key issue in DLT is regulatory mechanism. It is an important issue that needs to be understood.

Regulatory Aspects of DLT

Before getting into the regulatory aspects of DLT, it is essential to know more about this system. Distributed Ledger Technology is a system that records transactions on a distributed database that is not centralized. It is a highly secure system where transaction records cannot be modified or deleted. It ensures highest levels of transparency and security, which is why it has become popular.

DLT has been extensively used by cryptocurrencies in the form of blockchain. Cryptocurrencies are virtual currencies and transactions in these currencies is highly secure thanks to DLT. However, there are many regulatory issues involved. We look at these issues in detail:

  • When we look at cryptocurrencies, some countries have outright banned it making it illegal to deal with such currencies. Other countries have some regulations in place. The regulations are not uniform and vary from country to country.
  • Even for DLT, there is no common regulatory framework available. Some places have no regulatory mechanism in place, while others have regulations.
  • To ensure standardization, there are attempts to frame a DLT law. In fact, a lot of work has gone into this field to ensure there is a proper framework in place to regulate DLT and its use.
  • As of date, there is no formal DLT law in place. DLT is being considered under various existing laws related to contracts, finance, banking, etc. A common law would make it easier and ensure better transparency.
  • In the US, states have laws related to blockchain. There are regulations in states like Arizona, Vermont, Nevada, and Illinois that govern the use of blockchain.
  • Efforts are on to create a framework, which can then be followed universally with modifications where required. It is expected that such a framework would be developed in the coming years.

Conclusion

There is no universal standard for regulating DLT. Regulations vary from one country to another. There is also no regulatory framework in place. Attempts are being made to evolve a regulatory framework that would be universally recognized. When such a framework comes into existence, it would ensure DLT grows faster and its benefits reach more people. Thank you for your information in Bahaa Abdul Hussein blogs. For more information, please visit www.bahaaabdulhussein.com.