What is the Blockchain Regulation Matrix?

The Blockchain Regulation Matrix (BRM) establishes a framework of the concerns of regulating the blockchain from both the government and the consumer perspective, and in doing so, provides a pragmatic and clear approach to Web3 regulation. The BRM outlines the blockchain stack in layers starting with the electricity that is physically supporting the blockchain at the base layer, all the way to the process of offloading crypto to fiat currency. The primary objective of the BRM is to understand where and how regulation of the blockchain should be developed specific to each layer, so on the left side of the matrix are centralized projects and on the right side are decentralized ones

The first row of the BRM is the electricity that powers the entire blockchain, and that includes both centralized and decentralized projects doing so. For example, if the electricity is produced by a private company or a municipality, then that would be a centralized project. For a decentralized electricity producing project, lets consider a group of individuals that build a solar farm together and use the electricity to power their bitcoin mining rigs. By viewing each layer in terms of centralization and decentralization, we can apply a framework that allows us to pinpoint the considerations needed in order to compose web3-friendly regulation. From the governments perspective, web3-friendly regulation is to clearly and distinctly outline what is taxable and what is criminal. From the consumers perspective, it means regulation that protects consumers from criminals and their governments while not inhibiting technological advancements, social advancements, and global consumerism.

The Blockchain Regulation Matrix

Row by row application

Now for each row above, we apply the below in order to understand the concerns from a broad perspective.

a) Government Concerns
  - example a
  - example b
  - example c

b) Consumer Risks
  - example a
  - example b
  - example c

c) Cons to over-regulation
  - example a
  - example b
  - example c

d) Cons to lack of regulation
  - example a
  - example b
  - example c

e) Does technology / terminology exist that meets all of the consumer and government risks?

    If so, what is it and what considerations above is it fulfilling?

An example of this is the Electricity layer, or the electricity being supplied to the blockchain. For the most part we know that the role of the government is to protect its citizens and then to tax them, so its safe to assume that the most of the governments concern's are going to be along those lines for every one of the layers in the BRM.

On the centralized side of the Electricity layer is:

Centralized Electricity Layer

- Government Concerns
  - Protecting consumers from loss of use due to a geopolitical situation
  - Amount of electricity required to maintain the blockchain and the amount per transaction
- Consumer Risks
  - Potential geopolitical risks leading to electricity access disruptions
- Cons to over-regulation
  - Potential risks of concentration and control by certain countries
- Cons to lack of regulation
  - Potential displacement of development activities to more permissive jurisdictions
- Does blockchain technology / terminology currently exist to fulfill these obligations, and if so, what is it?

Decentralized Electricity Layer

- Government Concerns
  - Protecting consumers from loss of use due to a geopolitical situation
  - Amount of electricity required to maintain the blockchain and the amount per transaction
- Consumer Risks
  - Potential geopolitical risks leading to electricity access disruptions
- Cons to over-regulation
  - Potential risks of concentration and control by certain countries
- Cons to lack of regulation
  - Potential displacement of development activities to more permissive jurisdictions
- Does blockchain technology / terminology currently exist to fulfill these obligations, and if so, what is it?

The goal is to create to clear, concise, principle-based legislation that fulfils each of the considerations above. So, once we have a firm understanding of what those concerns are, then the next step is to learn about anything that currently exists that fulfil those considerations and can be used as a template for principle-based legislation.The hope is that something currently fulfills those considerations and become a basis for understanding how to create pragmatic and principle-based legislation.