The Responsible Digital Leadership Project hosted its seventh inspiration session on Wednesday, July 7th, focusing on the topic of blockchain technologies and cryptocurrency regulation. The day’s first speaker was Richard Turrin, best selling author of Innovation lab Excellence and author of new-release Cashless, about China’s central bank digital currency revolution. Turrin has lived in Shanghai for the last decade experiencing China going cashless first hand, “I saw culture and society change when people began paying each other virtually with no fee,” Turrin told the project’s researchers. Turrin presented numerous ethical dilemmas imposed by the adoption of Central Bank Digital Currencies (CBDG) linked to the question, ‘what right does the government have to understand and know your transactions?’ Considerations to this question include the fact that governments across the globe have not established the fundamental right to privacy in financial transactions, cryptocurrencies (even blockchain based currencies) are quickly losing anonymity, and the prospect of corporate based digital currencies. Turrin projects that in the next five years it will be normal for the average person to have digital wallets with their choice of currency on their phone. It will be an enormous challenge to create and agree upon government surveillance regulation to protect people from the ethical dilemmas posed by this reality.
The following guest presenting to the project was Chia Hock Lai, CEO of Switchnovate, senior blockchain advisor to Tembusu Partners, and founding president of Singapore Fintech Association. Hock Lai presented to the project how blockchain technologies are disrupting the way financial services are delivered to consumers and businesses using the city of Shanghai as a case study. Hock Lai said cryptocurrencies are threatening financial control of government’s citizens & enterprises put in place through monetary policy, thrusting countries in a race to incorporate and regulate cryptocurrencies. Now is the time to reimagine monetary regulation to confront the privacy, interoperability, standardisation, and legal challenges posed by cryptocurrency and blockchain.
The final speaker of the day was Lukas Repa, a Senior Policy Officer at the EU Commission, presenting on the same subject area of the challenges put forth by blockchain based cryptocurrencies from a regulators perspective. Repa explained serious concerns perpetuated by this novel technology including money laundering, terrorism and environmental harms. The EU does not want to make the same mistakes with cryptocurrency made when waiting 10-15 years before regulating the majority of ethical dilemmas. Although it is a problem that regulators struggle to keep pace implementing effective regulation to the tech industry, as by the time policy passes through a legislative process it’s in large part irrelevant. Repa mentioned a possible solution is the formation of a ‘super regulator’ which could swiftly enact policy without the lengthy legislative process similar to an executive order, though it was pointed out this has implications of its own as well.
Questions from today’s session:
- Given the “right to privacy” and “right to be forgotten” are not applicable with traceable crumbs left behind by digital currencies and digital payment, would customers have any resources to protect themselves, particularly against the state and disproportionate power at the hands of corporations?
- Will there be decreased adoption of central bank digital currency because people are afraid to use it?
- Regarding the current state of development of Chinese digital currency. Does such a technological option exist: to mark certain sums of digital currency as targeted, i.e. they could be used only for certain types of spending? Or such an option is not needed due to relevant transparency of payments?
- Do you think that the future of transparency is to transform all information into “open data” to mitigate the imbalance of information?
- Will we see a more or less equitable world with the increased adoption of crypto currencies?
- Is it actually possible to achieve unbiased data sets? Wouldn’t there always be a bias even if the “intelligent machine” would collect data itself? After all, there is always some part that a human has touched.
- Also, wonder about the aspect of explainability. Wouldn’t it also have some negative implications if we could adequately explain what happens in the decision-making process of algorithms? For instance, individuals may use these insights to circumvent specific outcomes.