In this article, Shashwat Sarin discusses the need for a regulatory framework for Blockchain Technology and its application.

This paper evaluates the need for drafting a uniform regulatory framework around the realm of blockchains and its application including but not limited to virtual currencies with an aim to prevent a parallel-unregulated economy. The latter part of the article discusses all you need to know about Blockchain and its various applications.

Is the blockchain platform self-sustainable and fail proof?

It is assumed that virtual currencies are more stable than national government-backed currencies. It is believed to be so because national currencies can devalue when central banks keep printing money, whereas, the monetary value of virtual currencies will only increase over time. [3] Bitcoin and other virtual currencies are decentralized and distributed over peer-to-peer network. Hence, there is no no one server, that processes applications, that the protocol depends upon. Since virtual currencies are untraceable and provide a method for making large sums transactions without the authority’s approval in no time, the author believes that it is the fastest and most disruptive platform having multiple applications.

Inevitable Economic Collapse

A regular currency is used as a currency as well as a commodity. It is used for buying and selling of goods and services. It’s value is stable. On the other hand, value of a commodity is speculative in nature. When we talk about virtual currencies, a lot more of it is being used as a commodity. The economy based on virtual currencies is increasing rapidly. Since both its use, as commodity and currency, are unstable therefore economy at which goods are bought and sold, at the exponential rate, is unstable. Its use as a commodity is further destabilised due to a lot more people buying it, speculating increased price. More people investing in it for speculative purposes results in a bubble, the collapse of which will further lead to a state of recession. This is what the artificial inflation of prices results in eventually. The people using it as a currency is the entire economic structure behind cryptocurrency. The trade of people buying and selling it can be compared to the trade conducted by nations in economic terms.

Let’s take a hypothetical example of a country called bitcoin and its trade (import and export) with the United States. In a scenario where one bitcoin is equal to one dollar. The United States purchases bitcoin for import purposes. Now since the bitcoin like all virtual currencies undergoes exponential price fluctuations, let’s assume that one bitcoin becomes worth 2000 dollars. Then, to purchase the bitcoin currency for import trade purposes, the United States would have to spend 2000 times the amount spent earlier. Since the purchasing power decreases, the imports decreases. Therefore, the production of goods and services falls dramatically leading to a state of trade deficit.

Every virtual currency is limited in the number of units, for example, there are going to be a total of 21 million bitcoins out of which more than 17 million have already been mined as per this article. Since Bitcoin is not a national currency but a private enterprise, there is no incentive to increase the supply. Generally, in case of any national currency, the government increases the amount of currency in rotation. So when the mining reaches its final number on the current basis of an unregulated exponential shifting parallel economy, it will eventually collapse bursting the bubble. The private enterprise cannot control the exponential increase. Even if a small amount of supply is injected, it would result in rapid fall of prices because the systems would be that much more efficient to mine the small supply of bitcoin and cash it out which would bring it closer to the total number of bitcoins.

Let’s suppose, towards reaching the final number of bitcoins, that, people start divesting just before the price fall. They would divest large amounts of money which was a result of the artificial exponential price hike. These units of virtual currency would be diverted into either the next reliable virtual currency or a national currency like dollar, euro or pound. In case it is divested into the next reliable growing virtual currency, the value of that virtual currency will increase at (e^x) times the value at which the previous virtual currency was increasing. Here (e^x) is assumed to be the rate at which the next reliable virtual currency is growing. This next virtual currency will reach the maximum value that much sooner, which will result in the same process of divesting. If the virtual currency is divested into a national currency like dollar or pound, then the value of the national currency will inflate due to large amounts of influx of virtual currency getting traded at artificially inflated prices. In such a case, when the dollar is bought in large sums, it would result in a situation of economic inflation. This is also a reason for concern as to why regulation is needed in this realm. To avoid a situation of economic inflation, the government of the respective national currency will have to print more cash to decrease the price of national currency and thereby equalizing the effect of the inflated currency price. So the government will have no option but to print money to control dollar price influx. That is the only solution to prevent the trade deficit from exploding and the economy from crashing.

Potential financial, operational and security risk

Since virtual currencies are untraceable and provide a means for large sums of transactions without the authority’s approval in no time, making it is the fastest and most disruptive platform having different kinds of applications. It cannot be ignored that anonymous cross-border trade raises issues of illegal activities and transactions. Even though blockchain in principle is decentralized and encrypted, there are many countries which have not legally accepted virtual currencies. As a result, these virtual currencies exchanges are not registered, thereby conducting an illegal trade of virtual currencies. Furthermore, they cannot be held liable for any data loss or malware infection as there is no mandatory requirement of data security and data protection in India which is to be complied with by all. Therefore, it can be said that there is no validity that these operating exchanges have an encrypted and secure data exchange service. Since virtual currencies and other applications are not bound by any universal legislation, there are legal, economic and security concerns for the same. Transfer of virtual currencies into other currencies needs to be under-regulated supervision. Virtual currencies are vulnerable to malware, hacking and loss of personal data. There is an evident potential financial, operational risk coupled with lack of customer protection and security concerns.

Current Indian regulatory framework

The Central Board of Direct Taxes (CBDT) has not yet issued any guidelines on the tax regime of virtual currencies and other applications of the blockchain. The taxability of virtual currencies and other applications of blockchain depends on the definition of virtual currencies and other applications of the blockchain, whether it is an asset or a currency.

Nations such as Singapore, Norway and Canada have defined virtual currencies as an asset. However, there is no instruction on other private blockchain applications that are coming up. Japan has come up with a legislation for putting in place capital requirements for virtual currency exchanges. In addition, these exchanges will also be required to conduct employee training programs and submit to annual audits. However, there still exists a lack of consistency in the tax regulatory structure. [4]

Taxing Regulations for activities relating to Blockchain: Direct and Indirect Tax System in India

Anything that generates income is to be brought under the spectrum of taxation law through amendments. Trading of securities and commodities on blockchain platform, even if without virtual currency tokens, must be covered under the tax regulations. This also makes it imperative to define virtual currencies and other applications of blockchain as assets or currency. Different applications can be given different interpretations based on their purpose and function. There needs to be a consistent and detailed regulation which also identifies whether such income will be a capital gain or revenue gain.

Section 2(24) of the Income Tax Act defines the term ‘income’. This definition is considered to be an inclusive definition. The Hon’ble Supreme Court in the case of Bhagwan Das Jain v. Union of India [5], discussed the meaning of the term ‘income’ by stating its dictionary meaning i.e. ‘a thing that comes in’. The Court held that, “income can also be defined as the gain derived from land, capital or labour; or  any two or more of them. Even in its ordinary economic sense, the expression ‘income’ include not merely what  is received or what comes in by exploiting the use of a property but also what one saves by using it oneself. That  which can be converted into income  can be reasonably regarded as giving rise to income.”

Senator Chuck Grassley introduced the “Combating Money Laundering, Terrorist Financing, and Counterfeiting Act of 2017” in May in the United States. The Bill requires users to declare cryptocurrency assets exceeding $10,000 whenever they cross a U.S. border.[6]

If Characterized as Currency

• If virtual currency tokens are treated as “currency” in India, then income arising from the exchange of regulated currencies due to currency fluctuations would be treated as ‘income from other sources’ under the Income Tax Act. Income generated through regular trading in virtual currency tokens because of price fluctuations would be treated as ‘income from business’ under the Income Tax Act.
• Individuals, in order to be on the safer side, have preferred to treat it as ‘income from other sources’ where the relevant slab rate of Income Tax applies, as opposed to a 20% tax on long-term capital gains.
• The CBDT issued a circular in 2007 which sets out tests to determine whether shares are held as investment or stock-in-trade. The CBDT recommended that the same parameters can also be applied to virtual currency tokens. In case one is trading as well as selling virtual currency tokens, then the total income would include both the income generated from the sale as well as the difference of income generated from trade, unless the entire amount is traded for some other virtual currency tokens.

If characterized as Asset

• The digitized nature of bitcoin makes a stronger case for its characterization as an intangible asset. In India, such interpretation would imply that virtual currencies, whether sold for cash or in exchange for goods or services, would attract tax on ‘Income from Capital Gain’.
• Definition of Capital Assets under Section 2(14) of the Income Tax Act can be said to include virtual currency tokens. The purchase of virtual currency tokens for the purpose of investment, should be treated as a capital asset. Thus, any gain that arises on sale of the virtual currency would amount to ‘Income from Capital Gains’. Capital gain can further be classified into short-term capital gains and long-term capital gains. The short-term capital gain tax regulation invokes a 30% fee on income above Rs. 10 lakhs based on the income slab. Any time period more than one year amounts to long-term gain and invokes a 20% tax rate. Indexation benefit should be permitted to be availed.

Will mining of virtual currency tokens be counted under taxation?

Production of any virtual currency generates income. The cost of acquisition is generally subtracted from the income before calculating tax liability on the same. But in case of virtual currency, it must be clearly defined as to what all will be considered as legitimate expenses under the cost of production or acquisition. Whether it will be treated as capital gain or currency depends on how the virtual currency tokens and its uses are defined, as specified above.

Impact of GST on virtual currency tokens

• If virtual currency tokens are defined as currency, then the indirect tax implications do not arise.
• If virtual currency tokens are defined as assets, people having them may be compelled to give a monetary value to the holdings for ascertaining indirect tax implications. VAT implications may arise on the exchange of virtual currency tokens.

An important question that arises here is that, if virtual currency is treated as currency then would tax liability be invoked on barter transaction of bitcoin, ethereum or other tokens with some asset or services. Author believes that mining activities may be considered liable for service tax whereas transfer of tokens may be liable for service tax in case of stock or commodities exchanges, or web hosting services and other financial service providers. Intermediaries providing services should also be liable for the indirect tax.

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Regulations for blockchain technology across the Globe

Japan

• It is the first country to legalize bitcoin as a method of payment
• The Japanese legislation has defined bitcoin as an asset and not a currency
• The law strictly differentiates between the government-backed national currency and the different virtual currency tokens
• It invokes capital gains tax liability on virtual currency trading i.e. sale and purchase
• Japan has discontinued the levy of 8% consumption tax on virtual currency exchanges from July 2017 in an effort to reform the complex tax structure. However, the trade of virtual currency for assets or services is still liable for the consumption tax.

European Union Commission

• Recently the European Union Commission proposed a regulation to regulate virtual currency exchanges. The Commission suggested an amendment to the 4th Anti-Money Laundering Directive which will create a central database of virtual currency investors.

“Maintain a central database registering users’ identities and wallet addresses accessible to FIUs, as well as self-declaration forms for the use of virtual currency users”[13]

• This implies that virtual currency exchange transactions will be recorded against an individual’s identity, which will be recorded in a central database.
• There is a serious concern here of the security and integrity of that database and therefore all the personal information and transaction records. In case of a breach, sensitive personal data may be leaked.

Australia

• Reserve Bank of Australia has defined virtual currencies as digital currency and treats the same as an asset.
• Transactions of virtual currencies are subject to regulatory oversight.
• AUSTRAC is the Australian government financial intelligence agency. It has been set up to monitor financial transactions for security and prevention of criminal activities like money laundering, tax evasion, and fraud.
• Under the sections of the Bill, AUSTRAC will regulate virtual currency exchanges.[14]
• These regulations of preventing money laundering and other criminal activities are similar to that of Japan.

United States

In the United States, virtual currency tokens are treated as a commodity and widely accepted.

Many other countries have also begun the regulation of virtual currency and its broad-based applications.

CASE STUDY: State Laws in the U.S. regulating blockchains

Regulations in New York

New York State Department of Financial Services has established a comprehensive regulatory regime on blockchain and its applications. Corporations involving any sort of digital currency business require mandatory license according to regulation 23 NYCRR 200. There is a strict mandatory requirement for supervisory policies, compliance and due diligence in place. Anti-money laundering and cybersecurity regulations have also been enumerated in 23 NYCRR 200. Recently four Bills have been introduced in the New York State Legislature on blockchain and its applications in an attempt to regulate its research and functioning by the government. These proposed legislations cover the studies around different applications like state elections.

1. The first Bill proposes amendments to New York’s technology law which define blockchain technology and applications such as a smart contract. The Bill also provides information of digital signature which is stored on the blockchain. [7]
2. The second Bill deals with researching the use of blockchain technology in state elections. It can help in protection of voter records and election results. This application of blockchain has been given a year for evaluation to determine whether, it can in practical sense be used to prevent fraud, improve cybersecurity, maintain better records and make voting results calculation more efficient. [8]
3. The third Bill is also proposed for research purpose to determine whether blockchain platform can be used for recording state government information efficiently. A similar application got appreciated in Vermont in 2016.[9]
4. Lastly, the final Bill studies the impact of virtual currency tokens on the New York financial markets.[10]

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Guidelines by Securities Exchange Commission

• Securities Exchange Commission is the central authority governing virtual currencies and other applications such as securities trading and commodities trading in the state of New York.
• The Securities Exchange Commission (SEC) has declared that initial coin offerings will be treated as sale of securities for the purpose of regulating these transactions. These trades will be subject to the federal securities laws. [11]
• SEC has made it mandatory for corporations and initial coin offerings to be registered before they conduct trade. The corporations which participate in trading and exchange of virtual currencies without registration will be violating securities laws. Whether a coin offering is registered or not can be verified on the Securities Exchange Commission website (sec.gov through EDGAR).
• If a company claims an offering to be exempted from registration then non-institutional buyers need to be careful.
• Investors must know the purpose for which the blockchain application is having coin offerings. They should be informed about the nature of the blockchain application, whether it is an open or private distributed ledger system.
• There is no central authority that collects virtual currency user information. Law enforcement officials may have difficulty freezing or securing funds that are held in a virtual currency as it is an encrypted program. [12]

Other State Regulations

Within the United States, some states have issued warnings and guidance notices while others like Washington and New York have drafted rigorous and stringent regulations. On the contrary, there are some states with no specific enacted or pending regulation. While some states have specific financial regulatory bodies others have partially incorporated a few definitions of virtual currency and practices around it.

• Alabama has included virtual currencies in the definition of monetary currency. Under the Alaskan law, there is no virtual currency regulation or any specific regulation on the use of blockchain or its applications after the House Bill 180 was stalled.
• There are no virtual currency regulation or any specific regulation on the use of blockchain or its applications in states of Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Colorado, Minnesota, Mississippi, Missouri, New Mexico, North Dakota, South Dakota, South Carolina, Arkansas, and Tennessee.
• The state of Arizona has legislated two statutes for storing information on the blockchain. 44-7061 legally validates and ensures the security of digital signature, records and contracts on blockchain platform. The state introduced Assembly Bill 1123 which creates a database for all virtual currency businesses that store, transfer, exchange or make available for the purchase of virtual currencies.
• In the case of Connecticut, House Bill 7141 has been executed in October 2017, which mandates issuing of licensing before conducting business on any blockchain platform. The Bill states: “Each licensee that engages in the business of money transmission in this state by receiving, transmitting, storing or maintaining custody or control of virtual currency on behalf of another person shall at all times hold virtual currency of the same type and amount owed or obligated to such other person.”
• Delaware enacted Senate Bill 69 in July 2017. This enables corporations in Delaware to use blockchain database platforms for company records. The law expressly allows corporations to trade stock on blockchain platform on ensuring that three conditions are fulfilled, namely that the company prepares a list of stockholders, records information and every transfer of stock.
• Hawaiian Senate has a pending Bill 1481 on blockchain technology.
• Besides issuing guidance, the state of Illinois has no laws pending or currently in order. Any company engaged in exchange shall not need a license under Transmitters of Money Act. Virtual currency is not considered currency in the state of Illinois.
• Virtual currency is not authorized or adopted in any state legislation of the state of Kansas. It is not considered currency under the Kansas Money Transmitter Act.
• While other states are drafting and executing legislation to prevent money laundering and tax evasion, the state of Nevada is the first state to ban the local government from taxing blockchain applications and virtual currency tokens according to Senate Bill 398 in June 2017. The Bill has defined blockchain as an electronic record merely which is redundantly processed by computers. N.R.S. SB 398 § 1 prevents the government from levying any tax on the use of blockchain.
• State of New Jersey has issued guidelines that virtual currency will be treated as an intangible property and will be subject to sales tax.
• The state of Ohio has no regulatory framework on virtual currency or block chains but it has banned the trade of virtual currency for the purchase of alcohol.
• Oregon also has not clearly defined or given regulations for blockchain and virtual currency industry, however, it charges additional transmitter charges for virtual currency corporations. Michigan Department of Treasury has issued a notice on how sales tax will be levied for use of virtual currency but there is no consistent or detailed regulation on blockchain and its applications.
• Washington also has a heavy regulatory structure in place. The state includes virtual currency within its definition of money transmission in its Uniform Money Services Act. H.B. 1327, 63rd Leg., Reg. Sess. The regulations have become more exhaustive and comprehensive in terms of including applications of blockchains post-Senate Bill 5031. S.B. 5031, 65th Leg. Reg. Sess. There are mandatory license issuing requirements. Furthermore, the exhaustive and comprehensive regulatory structure has pushed out Kraken and other popular exchange sites.[15]

Policy suggestions

There is a need for regulating this space of blockchains for various reasons besides the ones mentioned over the course of this article.

• Securities Exchange Commission may be the central authority governing virtual currencies and other applications such as securities trading and commodities trading in the state of New York, however, there are no central authorities in other states in a country such as the United States which has accepted and recognized blockchain and its application. The Commission itself relies on other sources for compliance on information so it is not a full proof system as of now and may trigger technical lapses or mismanagement.
• There should be an independent cybersecurity auditing structure.
• There needs to be a minimum set of universally accepted and recognized data protection and data privacy norms.
• In case of failure to comply, there should be a heavy penalty and punishment otherwise who will ensure the safety of citizens in cyberspace.
• Liability needs to be clearly defined.
• Just like the General data protection regulations drafted and enacted by the European Union, there should be regulations in all countries for the same purpose.
• Virtual currencies can be accessed, bought, traded and sold from anywhere on the globe to anywhere else which by effect will be untraceable.
• All information about the public or private blockchain enterprise needs to be informed to the person conducting any sort of business on the platform. Not being able to trace transactions makes this system susceptible to a regulatory structure as it makes the economy of various nations from where large capital is flowing vulnerable to the blockchain based application.
• The Securities Exchange Commission, which has so far been able to come up with the most stringent regulation in this domain has indicated that it is getting information on transactions and people conducting those transactions from cross-border agreements and other sources for providing information. This is very vague, risky and unclear in terms of its legitimacy. If the Securities Exchange Commission is receiving all this information why is it not sharing with other governing authorities and how is the Securities Exchange Commission using this information has not been answered.
• The Securities Exchange Commission has also not shared what security parameters it is fixing for data protection and privacy. Law enforcement agencies in case of a scenario of criminal activity such as fraud or misrepresentation may find it difficult to lay a freeze on the virtual currency or blockchain assets owing to its nature of cross-border accessibility, high liquidity, anonymity, and highly encrypted nature.
• Virtual currency wallets connect and provide instant peer to peer transactions without the necessity of a third party intermediary so this parallel financial system can completely bypass any security measure out in place to safeguard against or prevent criminal activities.
• Virtual currency and other blockchain applications need to be issued a license in every state, that is currently regulating it, in which is it conducting business. It also needs to maintain compliance with the legal framework of the country in which it is conducting business.
• A more efficient system could be developed by having a single registration system for corporations conducting business over the globe in different countries but that would again not be feasible as different countries have a different legal framework, which is not in sync in terms of data protection and compliance.

Conclusion

As one can clearly observe from the facts scenario mentioned above case study, there is the major flaw in the regulatory structure implemented by a few states so far. In the given circumstances, it is possible that companies and ICO will opt for jurisdiction with lesser regulations or tax benefits and may set up the business in such a manner so as to completely circumvent the regulatory circumference. This issue is further broadened by the encrypted anonymous nature of the decentralized ledger system of blockchain and its applications. So based on the above case study all it would take to evade taxes altogether is to have a registered main office in Nevada. Since the state legislature is banned from levying any taxes on any business of virtual currencies and other applications. Similarly, they can do away with the mandatory requirement of having a license for trading and exchange businesses by incorporating a business in places that do not have any mandatory federal policy. A combination of favorable jurisdictions for different phases of business operations would completely escape any liability and bring jeopardy to the enormous amount of transactions that are being conducted off accounts containing private information. Even the interpretation of blockchain as an asset or a currency invokes a different percentage of tax liability. So, in that case, why wouldn’t a person prefer routing his purchase and sale of virtual currencies through such a jurisdiction? Now wouldn’t this count as a criminal activity because essentially the person is conducting wire fraud. This invokes the imperative need for a uniform code of regulations governing the dynamically evolving applications blockchain and virtual currencies. A rigorous, comprehensive but most important a universal policy. While drafting this universal policy, it is essential to categorize block and its applications stepwise. Firstly, is the virtual currency token meant to be considered an asset or a currency. That will formulate a uniform taxation system. Second would be the different services that these blockchain applications are providing from the exchange, transfer, purchase, storage of contracts, transactions, music, healthcare industry databases, trading securities and commodities, state functions etc. The third is whether such a service should be exempted from tax and even if so whether the blockchain service is conducting business in accordance with mandatory data protection, due diligence, compliance and other laws of the country.

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Understanding Blockchain

Blockchain technology lets many people access the same information, but not copy it: meaning that the same file exists with everyone, and all the holders of the file continuously validate its contents (as a peer-to-peer network). Thus, there is no true centre of this information, creating no one true file, but all the files being true. The crypto-application of blockchain technology is virtual currencies like bitcoin, ripple or ethereum, but to be able to understand the scope of its other applications, it is imperative to understand in detail what a blockchain system is and how does it work. The blockchain is a decentralized ledger system that stores and processes transaction without any intermediary. Due to its decentralized structure, it enjoys the benefit of evading any technical lapses, data breach, malfunctioning or system failure. Applications of blockchain are not backed by legal tenders posing a constant risk in investment. They enable people to exchange data, process calculations and record it on the ledger system. This coupled with the lack of regulatory regime and any intermediary including the government along with anonymity for people transacting on the ledger system.

The blockchain is secure because it is in encrypted form, hence the transactions are safeguarded from fraud and technical complication. As it is distributed and shared over a decentralized ledger system, this makes it theoretically impossible to penetrate the system or to hinder the functioning of storing data and executing transactions. Every transaction is recorded onto the ledger and cannot be changed afterwards. This helps the system to gain efficiency, speed and simplifies the operations, the expenditure and time. Furthermore, the new concept of initial coin offerings supports the growth of new business and research by providing substantial revenue. The way it works differs in its various applications but the raising of revenue can be compared to the practice of an initial public offering of equity of a company.

There are two different types of blockchain, a public blockchain and a private enterprise blockchain. A public blockchain like bitcoin is an open source ledger. This means that various anonymous people over the network can read and write on the ledger, making the processes conducted on the ledger foolproof. This is different from when a private enterprise wants to raise capital or initiate an application in the finance or any other sector. In the case of a private enterprise blockchain, the participating people are known entities and organizations thereby introducing liability and accountability. Since it is not an open ledger to alterations, it can be altered only with a combined effort of certain participants but can be read by everyone, thereby increasing transparency but restricting control of any changes only to known entities. Changes, which are made by a consensus of participants, are based on multiple algorithms, thereby making the structure more secure and safe.

Virtual Currencies

A virtual currency is a decentralized peer-to-peer currency, that is not issued, controlled or regulated by any single government or central bank. Virtual currencies can be traded as a commodity or security, but is valued as a currency. They are not backed by government fiat, which is the most crucial reason for their exponentially dynamic price fluctuations. They are primarily mined, bought, sold and traded for goods and services. As they can be traded for securities or commodities, their role as a currency is further strengthened. However, they have received a mixed response in terms of their definition and legality under different regulatory authorities.

As for how they work, pending verification, all transactions of a ledger are indexed. Any transaction occurring over the virtual currency network is verified by the distributed ledger system and is entered into the blockchain after verification.

Various applications of blockchain

Blockchain technologies have infinite potential to better our lives. Some of the applications of blockchain technologies are as follows:

• Banking (unique wallet address)
• Parallel processing in scientific procedure (quantum mechanics)
• Quantum computers (replicating entire networks) eg. Boston Dynamics
• Voting systems
• National virtual currencies
• Financial services like
  • Asset management
  • Cross-border transactions
  • Insurance
  • Money Lending
  • Trading assets
• Smart contracts
• Government transactions, tenders and ledgers
• Passports, certificates and other personal identification technology, for example, a national DNA and fingerprint database
• Revolutionizing the processes in the healthcare industry, music applications, and supply chain services [1]
• Cloud storage services
• Ethereum, a cryptocurrency, can also be used for incorporating smart contracts which essentially are contingent agreements written on software which can execute a transaction in accordance with the conditions of the agreement

Major developments have already started happening with respect to blockchain technologies in the following areas:

• Tunisia and Senegal have issued national digital currency on blockchain platform (e-Dinar, eCFA).
• Companies like Oracle and IBM are working on an open source ledger for cloud storage services
• Platforms are coming up for securities and commodities exchange based on a blockchain operating system.

• Swiss stock exchange is working on an over-the-counter prototype for asset trading based on the ethereal technology[2]
• Polymath is another example of a security trading platform coming up.

• The Commodity Future Trading Commission is studying the prospects of the blockchain tech and its applicability in future and derivatives market
• Travelflex cards enable direct secure superfast transactions worldwide. These cards can be used as ATMs or credit cards. They enable escrow services over the network. They also have a direct peer to peer wallet transaction on its digital platform which altogether bypasses the circumference of regulations and institutional banking systems.

References

[1] https://blockgeeks.com/guides/blockchain-applications/

[2] http://www.nasdaq.com/article/blockchain-regulation-in-finance-recent-developments-and-prospects-cm845843

[3] https://www.theguardian.com/money/2016/aug/22/bitcoin-investments-cryptocurrency-traded-digital-money

[4] http://www.coindesk.com/japan-bitcoin-law-effect-tomorrow/

[5] [1981] 128 ITR 315/5 Taxman 7

[6] http://www.investopedia.com/news/senate-antiterror-bill-1241-threat-bitcoin-declare-cryptocurrency-money-laundering/#ixzz4lH2MfpC8

[7] https://legiscan.com/NY/text/A08780/2017

[8] https://legiscan.com/NY/bill/A08792/2017

[9] https://legiscan.com/NY/bill/A08793/2017

[10] https://legiscan.com/NY/bill/A08783/2017

[11] http://bitlegal.io/2017/08/02/us-rules-icos-and-token-sales-are-sales-of-securities/

[12] https://www.sec.gov/oiea/investor-alerts-and-bulletins/ib_coinofferings

[13] http://bitlegal.io/2016/07/24/eu-commission-to-propose-central-database-of-virtual-currency-users/

[14] http://bitlegal.io/2017/09/19/australian-government-begins-regulation-of-cryptocurrency-exchanges/

[15]http://www.mondaq.com/unitedstates/x/645308/fin+tech/State+Regulations+On+Virtual+Currency+And+Blockchain+Technologies