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CHAPTER 4 Blockchain and consumer payment mechanisms

Blockchain Technology and the Law

Page 73 4 Blockchain and consumer payment mechanisms Blockchain and consumer payment mechanisms The origins of Blockchain are rooted in consumer payment mechanisms through the development of Bitcoin. This is still true at the present, as nowadays, there are numerous cryptocurrencies that are competing for a dominant position in the payment landscape. Moreover, the emergence of Blockchain technology has made significant advances in reducing some of the costs of regulatory compliance, particularly in the context of Know Your Customer or KYC requirements that existing payment mechanism providers need to meet in order to help prevent money laundering or terrorist financing. However, the emergence of cryptocurrencies has presented additional legal and monetary policy challenges beyond complying with KYC or money transmission laws. The response to these legal challenges and the ability of these cryptocurrencies to meet consumer expectations in the marketplace is what will ultimately decide whether they are successful in displacing the established providers of payment services, or whether the technology (with respect to its suitability as a payment mechanism) will meet the same fate as some of the insurgents who attempted to displace the existing dominant players on the consumer side (that is to say, existing credit card and debit card providers).

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