DRD recently attended the London Blockchain Summit hosted at the London Business School. DRD talked to the industry about their views on the development of the sector and the regulatory implications of the turbulent last year.

What is clear is that the industry recognises that regulation is impending, and in some cases welcome. Blockchain is, after all, an emerging technology with numerous positive applications. However, the ability to drive investment in, and the mass adoption of, the technology will depend on people and investors feeling it is safe, secure and trustworthy.

The controversies that have plagued the cryptoasset space have therefore deeply undermined the blockchain industry at large. Regulation to remove bad actors within the industry, and provide clarity on good practice, is seen by many in the sector as a path to reputational renewal and legitimisation of a technology that has significant potential.

This attitude is not shared by all. However, the blockchain industry should recognise that the last year has fired the starting gun on inevitable regulation. Engaging and working with government now is the best way to shape the agenda and support smart, mutually beneficial policy.

As it stands, governments around the world are discussing internally their positions on blockchain technology, often with deep internal divisions between departments. However, it is not long before these internal divisions are resolved and governments decide on a direction of travel, with or without industry buy-in.

The experience of social media should serve as an example to the blockchain industry that once perceptions in government are reached and the direction of travel is set, it becomes very hard to a promote self-responsibility. The immensely strong EU Digital Services Act is without doubt a response to years of unconstructive engagement on behalf of social media firms.

As well as avoiding legislative risks, there are significant opportunities to be gained from government engagement. Throughout the London Blockchain Summit various industry insiders were keen to emphasise the opportunities to the industry of government adopting measures such as regulatory sandboxes and more liberal rules for those investing in blockchain start-ups.

Regulatory sandboxes specifically are a great way for industry to partner with government, to both develop themselves and address any public policy concerns that arise from blockchain activities. As the technology develops, for example with the creation of Web3 Social Media, regulatory sandboxes will be crucial to industry success. After all, how does a D.A.O operate a social media in alignment with the Online Safety Act?

This question, like many that exist in the blockchain space, has no clear answer and cooperation is therefore needed for the sake of both government and industry.