This article explores the legal ambiguity and concerns regarding current regulations in the expanding Web3 market. It delves into expert perspectives on the potential stifling of innovation and discusses proposed solutions.
It is no secret that the Web3 market is expanding quickly, but as the industry develops, there has been an increase in the level of legal ambiguity surrounding current restrictions. What do experts think should be done about concerns that current regulations are stifling innovation?
The market for Web3 blockchains was valued at $1.73 billion globally in 2022, and it is anticipated to grow at a CAGR of 47.1% from 2023 to 2030. This industry’s growth is anticipated to be further fueled by enterprises’ increasing use of Web3 technology in areas like smart contracts, digital identity, and documentation.
The authorities, however, have failed to keep up with the rate of development, as has frequently been observed in the past in a variety of other areas.
A discussion panel on the situation of Web3 regulation in the EU was hosted at Polkadot Decoded by the Web3 Foundation, a tech organization that funds research and development teams in the Web3 sector.
The panelists talked about the advantages of Web3 blockchain technology, which may be able to help with present Web2 problems such internet privacy, security, and intellectual property utilization. The panelists concurred that laws for web3 technology should be specifically adapted to the uses of blockchain technology and should put a greater emphasis on behavior than on technology.
The topic of legal clarity for Web3 entrepreneurs was covered, along with the reasons why fast-moving nations like the EU are outpacing slower-moving states that seem to be mired in definitional and jurisdictional uncertainty.
US regulation of digital assets
The panel discussed Daniel Schoenberger’s evidence before the US Congress regarding the regulation of digital assets. Daniel Schoenberger is the chief legal officer of the Web3 Foundation. Schoenberger suggested that the Web3 industry’s innovation has ultimately been hampered by the current regulatory framework.
From the Securities and Exchange Commission of the United States’ regulatory enforcement activities to the EU’s most recent legislation, the Market in Crypto-Assets (MiCA) Regulation, which enters into force this month, regulators around the world take various approaches to regulation.
“The Web3 Foundation sees its role as helping regulators understand blockchain technology,” Schoenberger stated during the session. Companies ought to be governed according to who they are and what they do. The way some jurisdictions have adapted their policies to the realities of the technology gives us hope.
“The EU’s MiCA regulation, which has its own class of utility token and has taken a crucial step toward recognizing the different classes of tokens based on their functionalities, is a good example of this deep understanding.”
Blockchain is a revolution in society
During the panel, Joachim Schwerin, the director-general internal market, industry, entrepreneurship and SEMs of the European Commission, provided his perspective on blockchain technology as the unit’s primary economist. Blockchain is a revolution in society, according to Schwerin. When we proclaimed that blockchain is an innovation priority for Europe for the ensuing decades in every area of policy, we already showed that it prioritizes decentralization and bottom-up empowerment.
We have never before in the history of the European Union made a statement about a technology so soon after it had first appeared.
Web3’s function in reducing privacy threats was described by Paige Collings, senior speech and privacy activist at the Electronic Frontier Foundation: “It is crucial that any regulation should be addressing behaviors rather than technologies. The mere fact that something is decentralized does not eliminate bad actors. The decentralized web requires the same considerations as the centralized web, so we need to make sure that they are also applied there. We also need to make sure that any new developments prioritize protecting people’s speech and privacy rather than just using this as an excuse to innovate.