The Boston Federal Reserve released a white paper on Wednesday that hopes to tackle some of the problems regulators will face if blockchain technology is widely adopted.
Noting, in kinder words, that the nascent technology was once thought of as being something particular to anarchist kooks, the regulator said that the growing adoption of blockchain means it has to deal with it.
And one way the regulator has suggested this can be done is to have ‘supervisory nodes’ in blockchain systems.
As most of our blockchain-loving readers will know, systems that use the technology are made up of different nodes.
Any device with an IP address can be used as a node and each one maintains a copy of a specific blockchain and may be used to process transactions.
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New tech, new regulations
What the Boston Fed is saying is that regulators should take control of some nodes in order to monitor transactions.
The regulator claims that having access to blockchain nodes may give it the opportunity to monitor companies’ activity in the financial markets.
“We can’t alter the underlying fabric on which critical assets move without watching it for risks to the system or to individual banks related to technical problems, market weaknesses [and] liquidity problems,” said Jim Cunha, SVP treasury and financial services at the Boston Fed.
All of this is likely to be anathema to many people operating in the digital assets world, many of whom have consistently expressed the view that blockchain should be outside of government interference and traditional finance.
A large number of people in the blockchain ecosystem are now calling for regulation. Although banking relationships, investor uncertainty, and operational difficulties have convinced them that regulation is the only way to do blockchain business properly.
But it’s unlikely that regulatory nodes, which would be probably deeply invasive, are what they want to see happen.