Last year's blockchain pilot projects are rapidly becoming this year's live implementations in a variety of industries, and even sectors that have until now been vexed by the distributed ledger technology are following suit.
Case in point: Governments, which are moving to regulate blockchain technology and the cryptocurrencies it underpins.
Cryptocurrencies such as bitcoin that live in open networks, have so far inhabited a regulatory gray area, because there's no way for a central authority to track users. The distributed ledgers, however, are useful because they can enable cross-border transactions over peer-to-peer networks in real time, anywhere in the world – without a central governing authority such as a bank or credit card company.
In recent months, however, the U.S., China and other countries have begun to adopt a more hands-on regulatory approach to cryptocurrencies.
One reason for regulating blockchain-based cryptocurrencies, also known as digital tokens, is the growing concern that the virtual money they represent could be used for nefarious activities, such as money laundering. Cryptocurrencies could also be a threat to the current financial system because they have at times encouraged unbridled speculation and unsecured borrowing by consumers looking for a piece of the crypot action.
"We have seen increasing evidence that people are borrowing to invest in cryptocurrencies, and in some cases borrowing on credit cards to invest in it," said Martha Bennett, a principal analyst at Forrester Research. "That could lead to a credit collapse."
Last year, China outright banned initial coin offerings, a form of crowdfunding for cryptocurrencies, and later put the kibosh on trading in electronic currencies. More recently, the government began shutting off the power faucet for bitcoin mining pools, the large server farms that perform cryptocurrency processing.
In the U.S., various state agencies have also reacted to what they see as fraudulent activities by cryptocurrency companies by ordering them to cease sales of bitcoin. One Nebraska lawmaker filed three bills to amend the state's money-laundering laws to cover cryptocurrencies and, more broadly, blockchain applications.
The Securities and Exchange Commission (SEC) has ordered the suspensionof cryptocurrency trading by one company due to "unusual and unexplained market activity." More generally, SEC regulators around the country have regularly tweeted out warnings about cryptocurrencies.
