The increasing use of encrypted, decentralized digital currencies – also known as “cryptocurrencies” – influences state systems and societies. As current legislation is not prepared for this development, tensions are quite likely to arise.
The workshop “Cryptocurrencies – Digital Transactions – Transformations of the State: interdisciplinary perspectives” was hosted at University of Graz on 10 March 2017 by Professor Tina Ehrke-Rabel (University of Graz), Professor Iris Eisenberger M.Sc. (LSE) (University of Natural Resources and Life Sciences, Vienna) and Professor Richard Sturn (University of Graz) as part of the research project ‘KryptoStaat’.
This project stems from a cooperation between the University of Graz, the University of Natural Resources and Life Sciences, Vienna and the Technical University, Munich. The project analyses public transformations triggered by technological progress. Moreover, it aims at developing new regulatory models for these phenomena. Research assistants and postgraduate students of the respective institutes presented their research results covering data protection issues, taxation of innovative technology, monetary aspects from an economic perspective as well as democratic implications of the blockchain.
First, Paula Resch (University of Natural Resources and Life Sciences, Vienna) presented her views on the blockchain and its correlation with data protection laws. In Europe, the protection of personal data is a fundamental right. It is arguable, whether data stored in the blockchain can be qualified as “personal data”. In her talk, the speaker focused on the question of whether the right to be forgotten applied to cryptocurrencies and the blockchain technology as such. She emphasised that this technology could create difficulties for law enforcement of data protection provisions.
Lily Zechner (University of Graz) analysed cryptocurrencies from a tax and private law perspective. She addressed the question of whether the existing Austrian legal framework can provide for an appropriate legal classification of mining activities and cryptocurrency-networks as such. In her presentation, the speaker highlighted how trying to define contractual relations within the blockchain puts to the test traditional legal paradigms.
Daniel Konrad (University of Graz) gave a presentation on monetary aspects of cryptocurrencies. According to the European Court of Justice (ECJ) bitcoins are a virtual currency to be treated the same way as fiat currencies (judgment Hedqvist, 22.10.2015, C-264/14), because they have no other purpose than to be a means of payment and are accepted for that purpose by certain operators. Given that Bitcoin is a distributed system for encrypted digital payments, this legal classification is controversial. The speaker underlined, that for this reason, it is difficult to make a direct comparison.
In his research Martin Sumper (University of Graz) focuses on the impact of tax systems on democratic processes. He stated that tax policies, which are efficient and fair, would support the establishment and maintenance of democratic governments. Furthermore, states, which finance their budget solely with raw materials, are marked by low democratic co-determination. Public authorities encounter several difficulties in controlling cryptocurrencies, which for this reason represent a challenge to tax systems and democratic processes.
In close connection to Mr. Sumper’s presentation, Elisabeth Hödl (ubifacts) addressed the question of whether cryptocurrencies are ‘democratic’. Most digital currencies were developed from a libertarian viewpoint. Yet, cryptocurrencies raise questions in relation to democratic policies. In addition to minority rights, aspects such as transparency and co-determination are relevant here. Particularly, the use of innovative technologies within the public administration must be critically assessed. It is crucial to evaluate the effects of using the blockchain in, for example, public registers, election processes or taxation, on a democracy.
In the last presentation, Luisa Scarcella (University of Graz) gave insights into her research results on the taxation of artificial intelligence. Through the use of new technologies in the private sector, the labor market is changing. It is yet unclear if and if yes, which mechanisms might have a positive impact on these developments. That said it is vital to take into account economic aspects. Even though the European Union has adopted a first set of rules trying to regulate artificial intelligence (European Parliament resolution of 16 February 2017 with recommendations to the Commission on Civil Law in the field of Robotics (2015/2103 (INL)), there is still no provision on the taxation of artificial intelligence.
As guest presenter Professor Djalel Maherzi (University of Algiers) offered an out-of-the-way perspective by describing special features of Algerian law, such as the entrepreneurial oil tax during the workshop.
In conclusion, the workshop highlighted the variety of questions that still need to be explored. The discussion made clear that an interdisciplinary approach is indispensable in order to find answers to these questions.
Paula Resch/ Translation: Annemarie Hofer
