Congressional Privacy Proposals Could Kill Scores of Blockchain Projects

Lawmakers may be on the brink of scaring blockchain projects into moving offshore or causing them to shut down altogether. Recent congressional privacy bills could have a dramatic impact on the world of blockchain development. The proposed laws would force blockchain startups to place restrictions on personal data collection and use, making it difficult or nearly impossible to launch a project without risking legal repercussions. For many smaller blockchain projects, which often rely on trustless systems and permissionless networks, these regulations could become too onerous to navigate. Part of the issue is the vague language contained within many of the proposed bills. With unclear parameters for what is considered acceptable use of personal data, it can be hard for projects to know where to draw the line. In addition, the cost of keeping up with the ever-changing regulations could quickly outpace the resources of most startups. Amidst this uncertainty, many blockchain projects are making the decision to relocate offshore. While the technology may be able to function within the U.S. jurisdiction, the introduction of this new legislation creates an environment of risk that startups may not be willing to navigate. Furthermore, if existing blockchain projects do decide to stay within the United States, they may find they have little room to grow or evolve as the technology evolves. In an attempt to adhere to the laws, projects could end up imposing restrictions on their own usage and growth, stifling innovation within certain areas. The long-term ramifications of these proposed policies, if implemented, could mean the death of scores of promising blockchain projects in the United States. Developers may instead choose to migrate their projects offshore in an effort to escape the oversight and punitive measures associated with the laws. The introduction of these proposed laws could pose an existential threat to the blockchain industry. Recently popular projects may find that, in this new regulatory environment, staying in the U.S. could expose them to costly risks, pushing them to move offshore and reduce investment in U.S.-based development. Whether these proposed laws become a reality or not, it is clear that Congress is taking steps to regulate the blockchain space, and projects will need to adapt in order to remain viable. As lawmakers refine their ideas, blockchain startups should continue to keep a close eye on proposed regulations, lest they become a victim of a privacy proposal. Categories: Congress