Law is a tool of ‘social engineering’ which may be used to create, modify or mould social norms. Even the other way round is true as the society also induces introduction, amendment and repeal of laws to reflect the present state of the society. Technology in different forms has always been a part of our society and share a similar symbiotic relationship with Law. Sometimes Law requires innovation and change in the technology, while on other occasions, technology forces changes in law to appropriately regulate interaction of the society with a particular technology. It will be useful to consider one example from each of these categories to appreciate this symbiotic relationship between Law and Technology.
Illustration 1- Card Tokenization
RBI has introduced card tokenization which prohibits merchants from storing customer card details on their servers and mandates the adoption of card-on-file (CoF) tokenization as an alternative to card storage. Enforcing adoption of this new technology will safeguard customers from the security vulnerability of their card details getting stored and misused by the merchants. This will help the customer be safer while online shopping as the actual card details will not be shared with the merchant, instead, a token that is unique to each card, device and token requestor, would be used to verify the credentials. RBI’s push towards technology for implementation of regulations is a big step for a digital, advanced India.
Illustration 2- Regulation of Cryptocurrencies
Technology advancements, if not backed by the law, remain dubious and reflect uncertainty amongst the masses. Blockchain technology has already revolutionized many sectors of our economy including finance, banking and logistics and supply-chain and has huge potential to change the way value is presently created and transferred through the Internet. Cryptocurrencies, which are based on Blockchain technology, have exponentially grown in popularity and adoption. Though cryptocurrencies are issued by decentralized communities and do not have backing from any government, common people, corporations and even the Governments of few countries seem convinced about the potential of this new technology. El Salvador has in fact declared Bitcoin, the first cryptocurrency, to be the legal tender in the country.
Increasing adoption of this technology by society has forced Governments across the globe to come up with regulations around cryptocurrencies. Most of the countries in the world have either passed regulations or are at some stage of formulating regulations around cryptocurrencies.
Thus, Law and Technology regularly interact, complement, and influence the progress and development of each-other in a symbiotic manner.
We, at Crypto Legal, assist Blockchain and Cryptocurrency related projects in navigating through the uncertain and complex regulatory regime. Though there is no specific legislation regulating cryptocurrencies in India; however, a cryptocurrency project needs to ensure compliance with all other laws and regulations which may relate to corporate law, banking and payment laws, tax laws and other laws which may apply to the business model of the project. For instance, we assisted a metaverse gaming company is structuring its gaming token and preparing agreement for sale of tokens ensuring that the project complies with applicable laws and at the same time offers incentives to the players in form of tokens.
The symbiotic relationship between law and technology mandates that regulatory regime for any emerging technology like cryptocurrency must evolve gradually through an iterative process between the regulators and the society/community.