Analysis: How block chains help the industry address global regulatory challenges

nnnThe author of this article is the deputy director of VirtusaPolaris’ Financial Technology Laboratory. He explores the important role of block chains in helping global industry to address increasingly stringent regulatory challenges, pointing out that such solutions can help reduce compliance with regulatory and reporting costs and automate some of the business processes. But to achieve the application of the technology in this area, the block chain must be widely recognized by regulators, which also takes some time.n
nnTranslated by: Inan
nToday, we are talking about every day of the contemporary global industry is facing increasingly severe regulatory barriers.n
nThe solution to any risk is to impose more and more regulation on the industry to ensure that past mistakes do not recur, and politicians can showcase the specific steps of their statutory elections to prevent future disasters.n
nThe burden of supervisionn
nThe problem faced by the firm is that the burden of regulation is getting heavier and increases the cost.n
nUS Department of Commerce Economic Analysis Bureau (BEA) said that in 2016 the US regulatory costs of 1.9 trillion US dollars, accounting for gross domestic product (about 18.8 trillion US dollars) of about 10%.n
nIn addition, according to the Competitive Enterprise Institute study, 21% of the average US household income (approximately $ 14,809 per year) is used to pay for all of the costs of federal regulation and intervention, which will eventually be borne by the average family Kind of regulatory stealth tax.n
nPreviously, these regulations were subject to global competition and the need to maintain a competitive advantage at the national level.n
nAnd today’s situation is that we live in a global economy where the industry has universal standards wherever it operates.n
nFailure to comply with these standards and regulations would leave the company out of the global economy, which would have a strong economic justification for meeting these standards and participating in regulatory activities.n
nReduce compliance costsn
nHow do we mitigate the burden and cost of compliance? How can we be transparent in the increasingly popular regulatory environment around the world?n
nFor example, if you produce drugs, you will need to comply with the US Food and Drug Administration (FDA) regulations and go through regular audits to enter the market.n
nIf you trade in dollars, even if you only deal with an American financial institution, you must follow the US financial regulation on a global scale.n
nIf you plan to sell any merchandise to EU citizens, you must comply with the forthcoming General Data Protection Regulation (GDPR) standard (even if you are not operating in the European Union).n
nTo comply with the rules, you need to prove that you are doing the right thing, and provide the auditor with a clear audit trail.n
nThere is a growing number of cross-border auditors; you need to provide information on a regular basis in the standard format it defines. This makes it necessary for a process to repeat this operation and to find out how to automate it to the greatest extent possible.n
nBlock chain as a solutionn
nBlock chains are a solution that provides a way to generate information and share it economically and effectively, while at the same time reducing the burden of “struggling to report” that many organizations are currently facing.n
nThe two key attributes that the chain chain can provide are the chain of assets and the custody chain of asset operations.n
nThe source of the asset is critical to most industries. Assets can be expressed in digital form.n
nHowever, this form is special and records where and when it was created. In order to ensure the authenticity of the assets, need to be checked.n
nIt can be called “know your assets” (Know Your Asset) process. Without this step, “fake” assets may be placed on the chain.n
nIdentity and rights management standardsn
nThe chain of custody is a vital reporting element. It will record who was doing what activity. Some industries are more affected by the current regulatory requirements than other industries.n
nHowever, its development is to implement such programs in all industries and to provide distributed tamper-resistant books for digital asset activities.n
nAll of this depends on identity and rights management standards – currently set by most government agencies. General standards have not yet appeared. However, in the licensed private chain, these criteria can be set and implemented.n
nBlock chains can play a role in the world, and some of its key agreements (such as assets that do not appear double pay) are immutable and executed so that they have auditable real-time records, and any local regulators can check them.n
nThe cost advantage for the enterprise is that the report becomes the job of the regulator. The metadata on assets and processes it provides will be routinely returned to the business and make some of the business processes more automated.n
nYou may be curious, this method of implementation also need what? The answer is that the block chain is to be recognized by the regulatory agency as an automated reporting platform and is adopted as a global standard.n
nConsidering that the entire process of reporting to regulators requires large-scale changes, block chains can prove their importance in providing solutions for mutually beneficial solutions, including US taxpayers.n

Leave a Reply

Your email address will not be published. Required fields are marked *