Regulating Blockchain As the distributed architecture underpinning the initial Bitcoin anarcho-capitalist, libertarian project, ‘blockchain’ entered wider public imagination and vocabulary only very recently. Yet in a short space of time it has become more mainstream and synonymous with a spectacular variety of commercial and civic ‘problem’/ ‘solution’ concepts and ideals. From commodity provenance, to electoral fraud prevention, to a wholesale decentralisation of power and the banishing of the exploitativepracticesof‘middlemen’,blockchainstakeholdersarenothingshortof evangelical in their belief that it is a force for good. For these reasons and more the technology has captured the attention of entrepreneurs, venture capitalists, global corporations and governments the world over. Blockchain may indeed offer a unique technical opportunity to change cultures oftransparencyandtrustwithincyberspace,andas‘revolutionary’and‘disruptive’ has the potential to shift global socioeconomic and political conventions. But as a yetlargelyunregulated,solutionist-drivenphenomenon,blockchainexistssquarely within the boundaries of capitalist logic and reason, fast becoming central to the business models of many sources of financial and political power the technology was specifically designed to undo, and increasingly allied to neoliberal strategies withscantregardforcollective,politicalordemocraticaccountabilityinthepublic interest. Regulating Blockchain casts a critical eye over the technology, its ‘eco- system’ of stakeholders, and offers a challenge to the prevailing discourse pro- claiming it to be the great techno-social enabler of our times. Robert Herian is based in the Law School at The Open University. His teaching and research focus on private law, psychoanalysis, social, economic and political philosophy, and cultural theory. This page intentionally left blank Regulating Blockchain Critical Perspectives in Law and Technology Robert Herian Firstpublished2019 byRoutledge 2ParkSquare,MiltonPark,Abingdon,OxonOX144RN andbyRoutledge 711ThirdAvenue,NewYork,NY10017 RoutledgeisanimprintoftheTaylor&FrancisGroup,aninformabusiness ©2019RobertHerian TherightofRobertHeriantobeidentifiedasauthorofthisworkhasbeen assertedbyhiminaccordancewithsections77and78oftheCopyright, DesignsandPatentsAct1988. Allrightsreserved.Nopartofthisbookmaybereprintedorreproducedor utilisedinanyformorbyanyelectronic,mechanical,orothermeans,now knownorhereafterinvented,includingphotocopyingandrecording,orinany informationstorageorretrievalsystem,withoutpermissioninwritingfromthe publishers. Trademarknotice:Productorcorporatenamesmaybetrademarksorregistered trademarks,andareusedonlyforidentificationandexplanationwithoutintent toinfringe. BritishLibraryCataloguinginPublicationData AcataloguerecordforthisbookisavailablefromtheBritishLibrary LibraryofCongressCataloginginPublicationData Names:Herian,Robert,author. Title:Regulatingblockchain:criticalperspectivesinlawandtechnology/by RobertHerian. Description:Abingdon,Oxon;NewYork,NY:Routledge,2019.|Includes bibliographicalreferencesandindex. Identifiers:LCCN2018027455|ISBN9781138592766(hbk) Subjects:LCSH:Blockchains(Databases)--Governmentpolicy.|Blockchains (Databases)--Socialaspects.|Blockchains(Databases)--Economicaspects.| Internetgovernance.|Databases--Lawandlegislation. Classification:LCCQA76.9.B56H472019|DDC005.75--dc23 LCrecordavailableathttps://lccn.loc.gov/2018027455 ISBN:978-1-138-59276-6(hbk) ISBN:978-0-429-48981-5(ebk) TypesetinGalliard byTaylor&FrancisBooks For my father. This page intentionally left blank Contents Introduction 1 PARTI Regulating blockchain 11 1 Blockchain 13 InterludeI:Supplementingthememoryeconomic:…Wampum,memex, transcopyright, blockchain … 31 2 A regulatory conundrum 34 3 Regulatory tradition 52 4 Blockchain the regulator 76 Interlude II: Regulatory technology: Louis-Sebastien Mercier’s tax trunk 97 PARTII Critical perspectives 101 5 Setting the scene 103 Interlude III: Anarchic technologies for anarchic economies: the ‘yellow trade’ of the Yorkshire coiners 119 6 Blockchain as an ethics of neoliberal political economy 124 7 The psycho-politics of blockchain 139 Interlude IV: A dangerous lack of law: man with machine in Kurt Vonnegut’s Player Piano 157 8 Critical regulation 159 Index 171 This page intentionally left blank Introduction A report on the 2018 World Economic Forum in Davos, Switzerland, by the FinancialTimescarriedthesimpleheadline:‘blockchaincannolongerbeignored’ (Arnold, 2018). Global economic elites at Davos pulling sharper focus on block- chainisa signarguablyofitsemergencefromthedarkerrecessesoftheWeb,and corresponding emergence into the light of the mainstream. Yet there is far more totheunfoldingstoryof the‘blockchainecosystem’ andtheso-called‘disruption’ it heralds than a few nervous bankers contemplating the threats, challenges and opportunities it poses for legacy systems, networks and institutions of power and the control they have over the world’s financial resources and services. The ‘blockchain ecosystem’ at the centre of global activities is a broad if, I argue, somewhat univocal community engaged in developing blockchain concepts and practices. As Melanie Swan argues: ‘There is a need for a decentralized ecosystem surrounding the blockchain itself for full-solution operations’ (2015, p. 20). To paraphraseMichaelPower:blockchainisanideaasmuchasaconcretetechnology or technical practice and there is no communal investment in the technology without a commitment to this idea and the social norms and hopes which it embodies (1997, p. 4). Like much of the vocabulary and many of the terms that will be covered by this book, ‘ecosystem’ ought not to be considered neutral or apolitical.Insteadtheblockchainecosystemhasemergedfrompre-existingsitesof techno-solutionist ideology (à la Pierre Machery and Louis Althusser) that are programmed at the level of entrepreneurs, corporations and other likeminded stakeholdersofinnovationism.Iftheecosystemhasanethositisthat‘it’sallabout the blockchain’ (Robinson and Leising, 2015; Tapscott and Tapscott, 2016). But what does that really mean? This book takes blockchain seriously as a boon for private commercial and cor- porate self-interest and a corresponding threat to public interest, non-competitive forms of co-operation and the potential for expanding community generosity that extends beyond the closed circuits of entrepreneurial ecosystems. With respect to public interest regulation and political oversight, a meaningful counterbalance to prevailing modes of private and commercial self-regulation which engender narrow economic affordances (‘blockchain for good’ as a euphemism for block- chain being good for business) must find a place in the ongoing development of blockchain. In the present moment self-regulation and ‘rule by entrepreneur’ are