Regulation is considered one of the most significant challenges that need to be addressed.
The core issue is that blockchains and especially cryptocurrencies are not recognized as a legal currency by any government.
How Governments Are Responding to Crypto and DLT
Even though in some cases, it has been classified as money in the US and Germany, it is still far from being accepted as a regular currency.
Moreover, blockchains in their current state are not recognized as a platform that can be used by financial institutions.
No financial regulatory body has yet accepted it as a platform that can be authorized to be used.
There are, however, various initiatives taken by regulatory authorities around the world to research and propose regulations.
Bitcoin in its current state is fully unregulated, even though some attempts have been made by governments to tax the bitcoin.
In the UK, under the EU VAT directive, bitcoin transactions are exempt from Value Added Tax (VAT), but this may change after Brexit.
Why This Matters for Blockchain Technology
However, Capital Gains Tax (CGT) may still be applicable in some scenarios.
Some regulation attempt is expected very soon from financial regulatory authorities generally regarding blockchain technology, especially after the recent announcement by the Financial Conduct Authority (FCA) in the UK that it may approve some companies that are using blockchain.
It is a general concern that the blockchain technology is not ready for production deployments.
Even though the Bitcoin blockchain has evolved into a solid blockchain platform and is used in production, it is not suitable for every scenario.
Key Points to Remember
- Regulation Regulation is considered one of the most significant challenges that need to be addressed.
- The core issue is that blockchains and especially cryptocurrencies are not recognized as a legal currency by any government.
- Even though in some cases, it has been classified as money in the US and Germany, it is still far from being accepted as a regular currency.
- Moreover, blockchains in their current state are not recognized as a platform that can be used by financial institutions.
Going Deeper: Advanced Concepts
This is especially true in the case of sensitive environments such as finance and health.
However, this situation is changing very quickly and we’ve already seen various examples of new blockchain projects, that have been implemented in real life such as ASX blockchain post trade solution.
This trend is expected to grow as ample efforts discussed previously are being made to improve the technology and address any technical limitations such as scalability and privacy.
Security is also another general concern which has been highlighted by many researchers and is especially applicable to the finance and health sectors.
Conclusion
Regulation represents one of the many innovative layers that make blockchain technology so powerful and transformative. As distributed systems continue to evolve, a solid understanding of these core concepts becomes increasingly valuable — not just for developers, but for anyone building, investing in, or working alongside blockchain-powered systems.
Whether you are just starting your blockchain journey or deepening existing expertise, mastering these fundamentals gives you the tools to think clearly about decentralized systems and make smarter decisions in this rapidly evolving space.