Insights on regulation and Blockchain in Brasil
Much of the increase in living standards in society is due to innovation.
Today, innovative performance is a crucial factor in determining the competitiveness and progress of any country that desires the best for its citizens. And this is not just a matter of quality of life. Encouraging and mastering new technologies is essential in addressing global challenges such as climate change, food shortage and sustainable economic development.
It is the application of cutting-edge technology, coupled with entrepreneurship and innovative approaches in the creation of goods and services delivery, which enables economic growth, job creation and revenues.
For this, however, it is necessary to make Brazil overcome some issues and challenges.
The first question to be overcome is the “lack” of circulation and diffusion of knowledge. A broader and more effective system of knowledge creation and diffusion is essential for productivity growth.
More intense collaboration between companies and universities promotes greater diffusion of foreign technologies. In order to foster dissemination and encourage collaboration, policy makers should facilitate knowledge flows and foster the development of networks and markets that enable the efficient creation, circulation and dissemination of knowledge.
Public research marketing policies must go beyond “faster” licensing of trademarks and patents, including public-private collaborative research, student and faculty mobility, contractual research, teacher consulting, and student entrepreneurship.
Yet a solid and effective system of Intellectual Property Rights is equally important to promote the creation and diffusion of knowledge.
And last but not least, in order for innovation to really enable economic growth, and more productive activities to expand, Brazil needs to improve market structures and the regulatory environment.
Regarding the regulatory environment, the use of “legislative tools” can, and should, be used to enable, or at least facilitate, the development of new technologies such as blockchain.
In our increasingly globalized world, this has been done mainly by Europe, Asian countries such as Singapore and South Korea, to create competitive advantages and attract companies operating in the blockchain ecosystem to establish operations in the country, attracting new business and creating opportunities employment and investment.
In China, the government recently established key strategic technology priorities in its 13th five-year plan for IT. A paper published by the Ministry of Industry and Information Technology cited blockchain as a key driver of economic development.
As an example of how countries have legislated on blockchain to benefit citizens and businesses, we can cite the USA, where several American states, including Arizona, Illinois,Tennessee, Delaware e Wyoming, have implemented laws related to blockchain technology.
In fact, among the American states, Wyoming has been the most aggressive in passing blockchain laws, and has now enacted a total of 13 blockchain-enabling laws that, among other legal propositions, declaring that “public utility tokens” would not be governed by state securities laws, exempting property tax codes , adjusting its monetary remittance regulations to accommodate exchanges of Crypto-Coins in the State, allowing the registration of Limited Liability Companies (LLCs) and their corporate acts in blockchain.
Here, before proceeding with the article, a parenthesis is necessary.
Although each political entity has its own particular focus (development of talents, skills and education, form of adoption by the public and private sectors, ethics, standardization of digital and data infrastructure standards, etc.), what must always be taken into account are three basic premises.
The first premise is: “the environment of the ecosystem must be regulated, not the technology itself”. As an example, laws that force everyone to drive on the same side of the road can speed up travel and improve traffic safety; standardized weights and measures make it easier and more efficient to manufacture products and services.
As a second premise: “the regulation can not be done hastily and in isolation”. The ideal is the creation of Sandboxes and task forces to study the technology together with industry players, before elaborating a legislative project.
And as a third premise: “a legislation of new technologies must be essentially principological in nature”.
This is because tax laws, with definitions for terms like “blockchain” and smart contract, for example, can quickly become obsolete and end up causing problems in the future if any future changes to a blockchain or a smart contract do not strictly meet the set of definitions in the law.
Continuing with the subject in focus, it has been concluded that Brazil needs to focus and intensify its efforts in creating an environment conducive to the development of the blockchain ecosystem.
While there are many initiatives, including in the public sector, we need a “state strategy” to address the issue, and go beyond well-intentioned cryptoassets bills. The blockchain structures have impact not only in the financial sector, but in several sectors such as logistics, energy, health, voting, public services, real estate, just to name a few. And the common denominator is that such industries manage large amounts of information, transactions, and have high demand for security, efficiency and transparency.
In exports, of commodities for example, the country will certainly suffer losses in the near future. Just as there are significant losses in the quality of our grains due to the lack of an efficient logistics network, many countries may stop importing from Brazilian industries that do not implement blockchain technology in the life cycle of their products — and lack of clear and supportive legislation is an obstacle to such implementation. Blockchain solutions have already been used successfully in supply chains, helping companies reduce operational risks, ensuring continuous, reliable and invulnerable global flows.
The question now is: will there be strong, agile and efficient political leadership capable of developing a holistic and clear understanding of the challenges and proposing the necessary solutions? Or will we just continue with the speech that the country urgently needs economic growth, job creation and revenues?
