Blockchain Regulation Matrix

The Blockchain Regulation Matrix (BRM) establishes a framework outlining 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 regulation aspects of the blockchain by viewing it as a blockchain stack in many layers starting with the electricity physically supporting the blockchain at the base layer, all the way to the process of offloading crypto to fiat currency. With centralization and decentralization on either side of the matrix, the primary objective of the BRM is to understand where and how regulation of the blockchain should be developed specific to each layer.

Beginning with the electricty supporting the blockchain, as you hover over the images of each row, you'll see the specifics for that topic within that layer. The left side refers to projects that are centralized, while the right side refers to projects that are decentralized. For example, if there was an organization or business that wanted to provide electricity to miners in their area, that would be a centralized project. However, if there was a solar farm operating as a DAO that wanted to provide electricity to miners, that could be a decentralized project.

Regulatory heat map

All jurisdictionsUnited StatesEuropean UnionGlobal & other

CentralizedBlockchain LayerDecentralized

ElectricitySettlement LayerNode / Validator LayerComputation-intensive Consensus MechanismsCapabilities-based Consensus MechanismsVoting-based Consensus MechanismsTransaction LayerOn-chain Data StorageAsset Layer - StablecoinsAsset Layer - Fungible TokensAsset Layer - Non-Fungible Tokens (NFTs)Exchange LayerProtocol LayerApplication LayerPermanent Storage LayerInternet BrowserThe DeveloperProgramming Language AuditorDeFi Architecture and SecurityDeFi Architecture Standards / AuditorFiat Onboarding / Offboarding Access

DeFi Architecture Standards / Auditordecentralized

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This row applies to creating standards for the DeFi Stack and its Architecture, and for future DeFi Interopability Auditors.

UnaddressedThe EIP process works, but nothing formally recognizes or backstops it.

Government Concerns

• De-facto standards are set through informal open processes (EIPs) with no accountable authority
• Standards flaws propagate to every implementing protocol simultaneously

Consumer Risks

• Unlimited token approvals turning one bad signature into a total drain
• Incompatible standard implementations causing silent integration failures

Cons to over-regulation

• Government-mandated standards would ossify slower than open processes evolve, freezing yesterday's flaws in place

Cons to lack of regulation

• Known-dangerous patterns (infinite approvals) persist as defaults for years
• No recall or deprecation mechanism retires flawed standards from live use

Does blockchain technology currently exist to fulfill these obligations, and if so, what is it?

• The EIP/ERC process itself: open, adversarial, reference-implementation-driven standardization
• ERC-4626 unifying vault behavior so audits and integrations transfer across protocols
• Wallet-level allowance dashboards and auto-revocation tooling

Current regulatory landscape

• guidanceOpen standards process (EIP/ERC) — Global — self-regulatory, ongoing. The functioning model of decentralized standard-setting regulators could recognize rather than replace.

Notable incidents

• ERC-777 reentrancy incidents (2020) — A newer token standard's callback hooks enabled reentrancy against integrations built for ERC-20 assumptions — standards interaction as an attack surface.
• Unlimited-approval drains (ongoing) — The default infinite-allowance pattern turns one phished signature into a full wallet drain — a standards-level flaw no single protocol can fix.

Auditor LiabilitySuggest an addition (GitHub)About contributing