Business law, legal considerations, and regulatory compliance are important to setting up and running an enterprise business. The blockchain business network enables enterprises to interact among their stakeholders across geography with trust and traceability. Hence, the blockchain business network must comply with a required set of business laws, geography-specific standards, and a global set of standards, government regulations, taxation, and other rules.
We have previously laid out the four dimensions framework — business, operations, legal, and technology (BOLT) which are key considerations to building effective business networks. We want to take this opportunity to look at the legal dimension in more detail.
While building a network it is important to adhere to data privacy, legal aspects of using smart contracts, geography-specific legal considerations are distributed as nodes across different geographies. Cross-border regulatory and governance plays a key role in the success of the blockchain business network execution.
Legislative, regulatory challenges and compliance are critical to the network
While building your blockchain platform-centric business network, it is important to make sure that all relevant business rules and regulations are met. Evaluate the current contracting practices and choose based on what can be automated through smart contracts without breaching the agreed terms.
Data privacy to improve the confidentiality of data and transactions
Define the access control rules, certificate mapping to create trusted and secure access based on persona and participant stake on the network. It is always required to preserve the secret and use zero-knowledge proof (ZKP) between two parties (prover and verifier) without revealing the actual secret.
Data residency and data protection compliance
Data residency is associated with the laws in certain countries and plays a key role in physical data storage within a specific country’s border. Assess and choose the data centers based on the geography-specific data restriction rules for the entire solution including the application components (data files persistence point, object storage, and others) and off-chain database. Validate the data residency rules of a specific country before choosing the hosting location of the peer or nodes. This applies to data distributed across the nodes of the network.
Cross-border trade regulations to remain in compliance
There are legal frameworks and institutions responsible for enforcing cross-border rules and regulations in international business and trade. So, this needs to be focused from the blockchain business network perspective to remain on regulatory compliance. Identify the cross regulatory bodies and their validation rules. Create a common set of (smart) contracts that can be reviewed and agreed upon by all interested regulatory bodies to automate it for easy validation and compliance. This helps to create a dashboard for auditing.
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