Framing Regulation Around the Potential Liabilities of Parties in the Blockchain & Smart Contract Industry

Blockchains, which have been most significantly utilized by the technology, media, and telecommunication industry (TMT) and the financial sector, amassed global attention in the 2010s. This surging popularity may, however, cause the public to overlook the core characteristics of blockchain technology, and to consequently be unaware of the inherent risks at play when engaging with blockchains. Simply put, blockchain technology is an information storing technology that can be utilized in various ways, such as services to facilitate cryptocurrency exchanges and smart contracts. The recent widespread use of blockchain technology by unique parties has raised questions of how to deal with the regulatory issues specific to the blockchain industry. This Note first identifies the significant parties in the blockchain and smart contract industry. This identification is crucial in determining the potential liabilities that could attach to each party. Moreover, this Note recognizes that with greater use come greater issues. Recently, international and domestic jurisdictions have taken differing stances on regulatory frameworks to address the issues posed by blockchain technology. By virtue of the parties identified, this Note seeks to analyze the distinct approaches in determining the potential liabilities that should attach to blockchain administrators and its operatives to provide users and investors with better protections in light of recent events. Blockchain users, its operatives, and participatory nodes are vulnerable to systemic failures, hacks, and errors that may have no available means for remedy. Despite the difficulties of advocating for regulation of the blockchain industry, this Note advocates for some degree of centralization, which should be an essential component of the regulation required to properly protect the involved parties and to allow growth in the industry