Insights

Trends in regulatory technology and decentralisation

Many regulations envisage the existence of a managing intermediary, who is responsible and accountable for regulatory outcomes, such as the prevention of systemic harms.

In this context, the evolution of novel regulatory approaches which adopt machine-readable frameworks and structured data is essential to allow the development of safe connected systems that take best and full advantage of emergent technology.

In the context of technological advancement, it is increasingly difficult to system participants and regulators to control complex systems.

Open standards could address the gap between control and responsibility

Web3 and AI regulation continue to look for intermediaries to be allocated responsibility for system management. However, developers may only control or have power to alter a component of a system, and may not have the influence materially to affect systemic risk outcomes.

There is a clear need to evolve detailed frameworks that can be embedded transparently into decentralised and multi-stakeholder systems, allowing compliance to be checked quickly and in real time. This can provide a platform to support new regtech or civil society initiatives, broadening oversight and creating new ways to supervise the outcomes of complex socio-technical systems.

Possible developments

Positive progress in this area could include the creation of new technical frameworks, maintained jointly by industry bodies and regulators.

Laws written in code and requirements to provide regulatory disclosures in machine-readable form can all assist progress in this area.