Digitization and Remote Agency: A New Era

Insights from “Blockchain Smart Contracts and the Law”

Digitization and remote agency have continued to accelerate as software eats the world. With the advent of advanced technologies, businesses are now able to operate remotely, transcending geographical boundaries and time zones.

The digitization of business processes has revolutionized the way organizations operate. It has enabled them to streamline operations, improve efficiency, and deliver better customer experiences. From cloud computing to artificial intelligence, digital technologies are reshaping the business landscape. One of the most significant developments in this digital revolution is the emergence of blockchain technology. Blockchain, with its decentralized and transparent nature, offers a secure platform for conducting business transactions. It eliminates the need for intermediaries, thereby reducing costs and increasing efficiency.

A key application of blockchain technology is smart contracts. These are self-executing contracts with the terms of the agreement directly written into code. They automatically execute transactions when predefined conditions are met, eliminating the need for manual intervention. However, as with any new technology, blockchain and smart contracts present legal challenges. Understanding these challenges and how to navigate them is crucial for businesses looking to leverage these technologies.

This is where the book “Blockchain Smart Contracts and the Law” comes in. This comprehensive guide provides an in-depth understanding of the legal aspects of blockchain and smart contracts. It offers valuable insights into how businesses can mitigate risks and ensure compliance while reaping the benefits of these technologies. As we move further into the digital age, the role of remote agency will continue to evolve. Businesses that adapt to these changes and leverage new technologies will be the ones that thrive.

In conclusion, the digitization of business processes and the advent of technologies like blockchain and smart contracts are transforming the concept of remote agency. To navigate this new landscape, it is essential to understand the legal implications of these technologies.Equip yourself with the knowledge to navigate this new era. Get your copy of “Blockchain Smart Contracts and the Law” today and stay ahead of the curve.

Ethical considerations of technology adoption

for engineering students

Engineering students are the future of technology development and deployment. As such, they need to consider the ethical implications of technology adoption. Ethical considerations of technology adoption ensure that technology is used responsibly. One of the primary reasons why ethics is important in technology adoption is that technology can have significant impacts on society. For example, algorithms based on commercial data can allow firms to sell products they assume we can afford and avoid showing us products they assume we cannot. Technologies can also be morally contentious by “forcing deep reflection on personal values and societal norms”. Technologies have embedded values or politics, as they make some actions easier or more difficult, or even work differently for different groups of people. Therefore, engineering students must ensure that technology is developed and deployed in a way that is fair and equitable.

Another reason why ethics is important in technology adoption is that technology can have adverse effects on people. Technology can threaten individual autonomy, violate privacy rights, and directly harm individuals financially and physically. Therefore, engineering students must ensure that technology is developed and deployed in a way that is safe and secure for all.

If you’re an engineering student interested in learning more about the ethical considerations of technology adoption, you might want to check out the book “Ethics, Law and Technology Adoption: Navigating Technology Adoption Challenges” by Dr. Steven A. WrightThe book provides insights into the main ethical frameworks and principles that can inform decision-making and accountability in technology development and deployment, as well as the key legal issues and challenges that emerge from the interaction of new technologies and old lawsYou can purchase the book on Amazon.

Ethics is an essential consideration for engineering students when adopting new technologies. It is important to ensure that technology is developed and deployed in a way that is fair, equitable, safe, and secure for all. By considering the ethical implications of technology adoption, engineering students can help to ensure that technology is used responsibly. Ultimately, this will help to build trust between organizations and the public and ensure that technology is used to benefit society as a whole.

Deontic Ethics

Ethics in Action

A Deontic ethical framework is a normative ethical theory that judges the morality of an action based on whether it follows a set of rules or principles, rather than on its consequences. The word deontic comes from the Greek word deon, meaning duty or obligation. Deontic ethics is also known as duty-based ethics or deontology. According to deontic ethics, actions are morally right or wrong in themselves, regardless of the outcomes they produce. The motives of the agent who performs the action are also irrelevant to its moral value. What matters is whether the action conforms to a moral rule that is binding on all rational beings. For example, lying is always wrong according to deontic ethics, even if it saves someone’s life or prevents harm.

There are different versions of deontic ethics, depending on how they specify the source and content of the moral rules. Some deontologists derive the rules from a divine command, a natural law, a social contract, or a rational intuition. Some deontologists are monists, meaning they believe there is one supreme rule that governs all moral decisions, such as the categorical imperative of Immanuel Kant. Other deontologists are pluralists, meaning they believe there are multiple rules that sometimes conflict with each other, such as the prima facie duties of W.D. Ross (See e.g., [Ross 1939]).

Image Credit: Adobe StockDeontic Ethics - Duty

Deontic Ethics – Duty

The main advantage of deontic ethics is that it provides clear and objective guidance for moral action. It does not depend on subjective preferences, emotions, or consequences that are uncertain or unpredictable. It also respects the dignity and autonomy of rational agents by treating them as ends in themselves, not as means to an end. The main weakness of deontic ethics is that it can lead to morally problematic results when the rules conflict with each other or with common sense. It can also be rigid and inflexible in dealing with complex and changing situations. It may not account for the moral relevance of circumstances, intentions, or relationships. It may also be difficult to justify or agree on the origin and validity of the moral rules. The following are some of the different deontic ethic frameworks:

Kantianism: This is the most influential and well-known deontic ethic framework, developed by Immanuel Kant ( see e.g., [Kant 1785]). It holds that the only thing that is good in itself is a good will, which acts from a sense of duty. Duty is determined by the categorical imperative, a universal and rational principle that commands us to act in such a way that we can will our maxim to become a universal law. Kantianism respects the dignity and autonomy of rational beings by treating them as ends in themselves, not as means to an end.
Contractarianism: This is a deontic ethic framework that bases morality on a hypothetical social contract, a rational agreement among free and equal persons to abide by certain rules or principles for their mutual benefit. The contract can be seen as a way of justifying or deriving moral rules, or as a way of testing their validity. Contractarianism can take different forms, such as the original position of John Rawls (See e.g., [Rawls 1971]), the state of nature of Thomas Hobbes (See e.g., [Hobbes 1651]), or the veil of ignorance of John Harsanyi (See e.g.,Harsanyi 1977]).
Natural rights theory: This is a deontic ethic framework that holds that every individual has certain universal and inalienable rights, such as life, liberty, and property, that are inherent to human nature and independent of any actions or ethics. These rights are derived from natural law, a moral order that is discoverable by reason and binds all rational beings. Natural rights theory can be traced back to the works of John Locke (See e.g., [Locke 1689]), Hugo Grotius (See e.g., [Grotius 1625]), and Samuel Pufendorf (See e.g., [Pufendorf 1673]).
Divine command theory: This is a deontic ethic framework that holds that an action is right if and only if God has commanded it to be right, and wrong if and only if God has forbidden it. God’s commands are the ultimate source and standard of morality, and human reason and conscience are subordinate to divine revelation. Divine command theory can be found in various religious traditions, such as Judaism, Christianity, and Islam.
Pluralistic deontology This is a deontic ethic framework that holds that there are multiple moral rules or principles that sometimes conflict with each other, and that there is no single supreme rule that can resolve these conflicts. Instead, we have to use our judgment and intuition to weigh and balance the different rules in each situation. One example of pluralistic deontology is the prima facie duties of W.D. Ross, such as fidelity, gratitude, justice, beneficence, self-improvement, and non-maleficence.
Agent-centered deontology: This is a deontic ethic framework that focuses on the moral obligations and permissions of the agent who performs an action, rather than on the rights or interests of the patient who is affected by the action. Agent-centered deontology can include special duties to oneself or to specific others, such as friends or family, or special permissions to act in self-defense or out of partiality. Agent-centered deontology can also involve agent-relative reasons or values, such as honor, integrity, or loyalty.
Patient-centered deontology: This is a deontic ethic framework that focuses on the moral rights or interests of the patient who is affected by an action, rather than on the obligations or permissions of the agent who performs the action. Patient-centered deontology can include negative rights to be free from harm or interference, or positive rights to receive aid or assistance. Patient-centered deontology can also involve patient-relative reasons or values, such as dignity, respect, or welfare.
Monistic deontology: This is a deontic ethic framework that holds that there is one supreme moral rule or principle that governs all moral decisions, and that all other rules or principles are derived from or subordinate to it. The supreme rule can be formulated in different ways, such as the golden rule of doing unto others as you would have them do unto you, or the principle of universalizability of R.M. Hare (See e.g., [Hare 1981]).
Rule deontology: This is a deontic ethic framework that holds that morality consists of following a set of general and abstract rules or principles that apply to all situations and circumstances. The rules can be derived from various sources, such as reason, intuition, tradition, or authority.

Deontic ethics has some advantages over consequentialist and virtue ethics. One advantage is that deontic ethics can provide clear and objective guidance for moral action, based on a set of rules or principles that are binding on all rational beings. Consequentialist ethics – even the seemingly quantitative utilitarianism, by contrast, can be vague and uncertain, as it depends on predicting and evaluating the outcomes of actions, which can be complex and unpredictable. Virtue ethics, by contrast, can be subjective and relative, as it depends on cultivating and expressing certain character traits, which can vary across cultures and situations. Another advantage of deontic ethics is that it respects the dignity and autonomy of rational beings, by treating them as ends in themselves, not as means to an end. Consequentialist ethics, by contrast, can violate the rights and interests of individuals or minorities, by sacrificing them for the sake of maximizing the good for the majority or the whole. Virtue ethics, by contrast, can neglect the rights and interests of others, by focusing on one’s own moral excellence or happiness. A third advantage of deontic ethics is that it can account for strong and widely shared moral intuitions about our duties, such as not lying, stealing, killing, or harming others, even when good consequences are in the offing. Consequentialist ethics, by contrast, can justify immoral actions, such as lying, stealing, killing, or harming others, if they produce better consequences overall. Virtue ethics, by contrast, can ignore immoral actions, such as lying, stealing, killing, or harming others, if they are consistent with one’s moral character or ideals.

[Grotius 1625]     Grotius, H. (2005). The rights of war and peace (R. Tuck, Ed.). Liberty Fund. (Original work published 1625)

[Harsanyi 1977]  Harsanyi, J. C. (1977). Rational behavior and bargaining equilibrium in games and social situations. Cambridge University Press.

[Hare 1981]           Hare, R.M. (1981). Moral thinking: Its levels, method and point. Oxford University Press.

[Hobbes 1651]     Hobbes, T. (1996). Leviathan (R. Tuck, Ed.). Cambridge University Press. (Original work published 1651)

[Kant 1785]          Kant, I. (1998). Groundwork of the metaphysics of morals (M. Gregor, Trans.). Cambridge University Press. (Original work published 1785)

[Locke1689]         Locke, J. (1988). Two treatises of government (P. Laslett, Ed.). Cambridge University Press. (Original work published 1689)

[Pufendorf 1673] Pufendorf, S. (2003). The whole duty of man according to the law of nature (I. Hunter & D. Saunders, Trans.). Liberty Fund. (Original work published 1673)

[Rawls 1977]         Rawls, J. (1971). A theory of justice. Harvard University Press.

[Ross 1939]           Ross, W.D. (1939). Foundations of ethics. Oxford University Press

 

AML Primer for Crypto Enthusiasts

Money laundering is a process of taking the proceeds of criminal activity and making them appear as if they have been lawfully obtained (criminalized in the US under  18 U.S. Code § 1957). UNODC estimates the scale of money laundering at 2-5% of global GDP. Criminal activities in narcotics and later terrorism were the primary motivation for increased surveillance of financial transactions in the US and abroad under the rubric of Anti Money Laundering (AML) enabling legislation, starting with the Bank Secrecy Act of 1970 (BSA), (31 U.S.C.A. §§ 5311 et seq.). 

UN activities through the Office on Drugs and crime have a global program encouraging similar legislation and regulation in other countries as well as related UN conventions starting with the 1988 UN convention against Illegal traffic in Narcotic drugs. These international legal coordination activities are relevant for crypto enthusiasts because the peer-peer networks underlying many cryptocurrencies are inherently international.  UN resolutions in 2005 and 2006 also recognized the importance of more specific recommendations from the Financial Action Task Force (FATF). FATF recently issued their Guidance for a risk based approach to Virtual Assets and Virtual Asset Service Providers; this provides common terminology and interpretation of how other FATF regulations should be interpreted in the case of virtual assets such as crypto currencies (whether fiat backed or not) and considering the roles of virtual asset service providers that provide services to exchange cryptocurrencies (whether to fiat currencies or other virtual assets), as well as some comparisons of the relevant regulatory regimes in several different countries. All of the enabling legislation predates the release of Nakamoto’s Bitcoin whitepaper in 2008.

At the federal level, FINCEN  regulates  money transmission in coordination with State regulations and laws on money transmission. To the extent that a virtual asset is a security, the SEC has regulatory and enforcement authority and securities require registration with FINRA. Virtual assets that may qualify as commodities or derivatives (e.g. futures) would be within the jurisdiction of the CFTC; and require registration with the National Futures Association (NFA). US financial sanctions (which apply to transactions in cryptocurrencies as well as fiat currency)  are administered by OFAC.

Many cryptocurrency exchanges fall within the category of Money Transmitters under the BSA, thus requiring registration with FINCEN and additional state licensing. State money transmitter laws vary and not all State address cryptocurrencies explicitly. The money transmitter laws and regulations are not specific to cryptocurrencies and include some potentially broad categories such as Money Service Businesses (MSBs). The MSB definition in §1010.100 (ff) is fairly complex and broad interpretation may imply that even businesses accepting cryptocurrencies need to register as MSBs.

FINCEN registration and AML reporting  and other AML compliance program requirements are identified under 31 CFR Chapter X. In particular, reporting by MSBs is required for Currency Transaction Reports (CTRs) (under §1022.310) and Suspicious Activity Reports(SARs) (under §1022.320), with threshold transaction amounts and red flag indicators triggering reporting. Money transmitters have been required to submit electronic SARs and CTRs since 2013.  The number of CTRs is largely driven by economic transaction activity; SARs are more driven by the compliance programs of the Money Transmitters. While SARs are not specific to cryptocurrency transactions, FINCEN publishes aggregate statistics on SARs; and, 10s of thousands of SARs are generated in a year within a single state.

FINCEN also recently issued an advisory on illicit activity involving convertible virtual currency. They have also initiated enforcement actions against cryptocurrency exchanges that failed to register as MSBs.

Businesses involved with cryptocurrencies clearly need to review their registration and compliance procedures for conformance with the relevant AML regulations in their jurisdictions. This is not just a US phenomenon – since the FATF’s Guidance for a risk based approach to Virtual Assets and Virtual Asset Service Providers, other jurisdictions  (e.g., the Swiss FINMA) are issuing similar AML guidance even as they proceed with licensing crypto exchanges.

Blockchain Loyalty: Disrupting loyalty and reinventing marketing using blockchain and cryptocurrencies 2ed (Loyalty & Reward Co Pty. Ltd., 2019)

Philip Shelper surveys the intersection of blockchain and customer loyalty programs. Beyond transferring cryptocurrency as a customer reward in place of miles or points, he considers other enterprise loyalty strategies including:

  • A loyalty program powered by a single token
  • A loyalty program powered by an existing cryptocurrency
  • Many loyalty programs powered by multiple new cryptotokens on a single platform
  • A security token supported by a loyalty program
  • A loyalty program enhanced by an enterprise blockchain loyalty solution.

The regulations on blockchains and cryptocurrencies are continuing to evolve and may impact loyalty programs based on them. See e.g. Blockchain Loyalty Programs.