Transatlantic Cooperation on Blockchain: Getting Ahead of the Curve
To great relief around the world, in mid-March Angela Merkel was sworn in as Federal Chancellor for the fourth consecutive time. This puts an end to the almost six-month long journey of exploratory talks, coalition negotiations, and votes on the coalition treaty. Political stability is back in Europe’s biggest economy.
The coalition government of Merkel’s Christian Democrats and the Social Democrats (or what is left of them after yet another historically bad election result) will focus on preserving the status quo, showing little ambition for change in key policy areas. There is one area, however, where the new government may act proactively: blockchain. The applicability of the blockchain technology is manifold. Apart from being the underpinning of virtual currencies, it can be used to execute contracts, modernize land registries, or provide new systems for identity management.
The coalition treaty promises that the legislative period will be used for developing a blockchain strategy and for standing up for a European and international legal framework for trading virtual currencies. The fact that the term blockchain appears seven times in the final text of the coalition treaty is a positive sign—it seems that the importance this technology will play in the next years is understood at least on paper. In addition, with Peter Altmaier as Minister for Economic Affairs and Helge Braun as Chancellery Minister, there are two people in Merkel’s cabinet who are known for their solid understanding of the blockchain technology and its disruptive potential.
In light of the momentum in Germany to politically engage with blockchain, it should also be on the agenda for the transatlantic partnership. Traditional fields of cooperation, most notably trade, security, and foreign policy, have turned very controversial since Donald Trump became president. At best, it will be possible to maintain the existing ties, but there is little to no political opportunity for pushing forward a revised form of TTIP, further developing NATO, or finding a joint transatlantic approach for resolving conflicts around the world.
Blockchain, in contrast, would be a new, less politicized area of cooperation where no “bad feelings” regarding the right arrangement of cooperation have accumulated over the past. Further, with the technology still in its infancy, cooperation can grow naturally with blockchain’s spread into more and more spheres of our lives. Starting now to build channels of dialogue across the Atlantic allows us to get ahead of the big curve of all sorts of regulatory and political questions blockchain applications will entail.
Apart from these slightly opportunistic reasons, it is the digital and thus border-transcending nature of blockchain technology that requires a joint transatlantic approach. Only together can the U.S. and EU create rules for a global level playing field. If regulation is not coordinated across the Atlantic, other players may strategically use this dividedness to push forward their own set of rules.
Lastly, the direction blockchain technology will take is not given, but it depends on defining values and convictions guiding its development: What is a good balance between the anonymity the technology can provide and law enforcement? How do we organize our society if there is a shift from central institutions to decentralized platforms? Do we need a human element built into smart contracts and if so, what would that look like? These questions are tough and there is no straightforward answer. However, the quest for adequate answers will be most successful if coordinated between both sides of the Atlantic. A transatlantic response will be rooted in the liberal values we share—and if formulated together, it is arguably the most convincing model to set global standards.