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Blockchain in the Energy Industry

regulated environments with real people and bona fide consumers. The entire pro­

cess is also free from threats of regulatory intervention or retaliation. Furthermore,

policymakers may have an opportunity to understand better the underlying tech­

nology in action and work closely with industry stakeholders to further refine and

fine-tune the enforcement procedure. The result here will be the formulation of a

regulatory framework that encourages and nurtures innovation without compromis­

ing security, privacy, accountability and forward-thinking solutions (Yeoh, 2017).

One challenge of regulatory sandboxes is to ensure that commercial energy sec­

tors are appealing to them. Sandboxes should be promoting innovation and enabling

energy start-ups to expand rather than merely offering legal value. The proliferation

of decentralized systems affords regulators discretionary powers that can be mis­

used or misapplied. For instance, participants may inadvertently fall into liability

of compliance breach traps. Delicate handling of these matters is complicated by a

lack of precedents in the legal materials. To further illustrate this point, let us con­

sider privacy issues in sensitive systems. A few years back, the French government

adopted a position that only participants actively injecting data into a system can be

treated as bona fide data miners. This discounts the roles of minders or nodes who

play a key role in transaction verification. Whether such positions will truly safe­

guard public interest in trustless systems is a matter of speculation. Whether or how

transparency and accountability will be ensured for privacy and personal data spaces

is another major concern.

The governance of any blockchain system is a critical issue, which is often over­

looked. How a blockchain is governed defines its success and adoption in many ways.

Interestingly, different aspects of a blockchain governance are analogous to how

an organization or a consortium of organizations distributes responsibilities among

themselves. Each organization/industry must understand this before they decide to

adopt blockchain for their solutions. This calls for a new governance model, which

itself might be challenging.

A regulatory framework surrounding any novel technology instils confidence

among the adopters. On the contrary, the lack of any such framework creates uncer­

tainties. Therefore, a blockchain-friendly regulatory framework can be an effec­

tive tool to overcome many challenges within an industry. It is evident that law and

enforcement would work as a significant determinant to either open blockchains in

the energy market or close them for good. The fast development of proactive regula­

tion remains a challenge to the regulators. Devising this environment would ensure

consumer protection and guarantee a secure and reliable supply of electricity. An

absence of law or regulation regarding blockchain just might make investors scepti­

cal about funding. Before investing in new technologies, it is common for the energy

industry to be patient and wait for a long time for technology to catch up; the same

goes for the emergence of policies too.

7.6  CONCLUSION

Recent policy actions concerning blockchain technologies are mostly concen­

trated into digital currencies and financial applications. Nevertheless, breaking the