Blockchain-Concept Credit: Sashkin/Shutterstock.com

Polish company Billon has built blockchain infrastructure it hopes can support regulation within transaction systems, hoping to head off the problems regulators face in trying to keep tabs on cryptocurrency markets. The company, which works with existing regulated currencies, is emerging out of “stealth mode,” hoping that its distributed ledger “engine” can help organizations find new ways to balance demand for cryptocurrency against regulatory needs.

Billon chief operating officer Robert Kaluza explained that because the world's financial infrastructure has changed so rarely over history, blockchain could enable a sweeping set of reforms in financial systems. Kaluza noted, however, that regulation provides an important backbone to this technology.

“Blockchain needs to get away from cryptocurrency,” Kaluza said. “Cryptocurrency has so many issues in legal and regulatory; it needs to be regulated. When we are talking about mass market solutions, whether we're talking about document or payments, it needs to be regulated.”

Billon's infrastructure, without getting overly technical, differs from the blockchain undergirding most cryptocurrency in that its “blocks” are created by sanctioned users like financial institutions rather than individual data “miners.” Once the block is imbued with value established by those financial institutions, it circulates through peer-to-peer transactions, much like a cryptocurrency would.

Robert Kaluza , COO with Billon Group. Robert Kaluza , COO with Billon Group.

Kaluza is certainly not alone in the belief that financial technology requires a rethinking of regulatory frameworks. Former U.S. Securities and Exchange Commission chair Mary Jo White presented the recommendations from a fintech-focused SEC working group before her departure from the agency in 2016, including a need to shore up “communications about existing regulations and interpretations that are not widely understood among innovators.” The group ultimately concluded that, at least in part, the SEC's “existing regulatory approach is already suitable to address new developments.”

Kaluza said that the key change he'd hope to see from regulators moving forward is that same commitment to communication. Dialogue, he said, can help regulators support financial industry innovators while still finding ways to ensure that legal frameworks are being appropriately retained.

Billon's infrastructure also offers a potential solution for companies preparing for the General Data Protection Regulation, set to take effect May 25 of this year. For organizations that need to find ways to get rid of client data upon request, Kaluza explained that Billon's cryptographers have devised a way to essentially encrypt data and throw away the key, allowing data to be rendered illegible to companies.

The company last year picked up a €2 million investment from European research group Horizon 2020, the organization's first blockchain-based investment.