In 2019, blockchain presents the following challenges to regulators:
1) There are no borders in blockchain, there are most definitely borders around the modern nation states and unions.
Geographical distribution of blockchain projects is something regulators of today cannot cope with, and in most cases cannot even comprehend.
To regulate blockchain technologies, a global legal network is needed.
What regulators of today don’t understand, is that blockchain will eventually replace regulators through direct democracy, as blockchain provides a voting button to everyone.
2) In most countries, regulators are reactive, they tend to wait for new laws to be proposed and administered by other countries first. Few regulators dare take the first move. This wait-and-see approach inevitably creates role models. To most, it is the USA. In the universe of financial instruments, it is the SEC of the USA.
3) Recognition of digital assets spreads throughout the world, here two different approaches are employed: inclusion in the current asset classes or creating new ones. The first approach leads to numerous problems, however most regulators are too conservative to create anything new.
4) Regulators cannot follow the speed of evolvement in blockchain. Discussions at policy committes who gather even monthly make the blockchain community laugh. Here new protocols, ideas, business models appear daily.