Regulatory complexity is having a significant impact on widespread blockchain adoption, according to an EY poll of senior professionals who attended the EY Global Blockchain Summit in New York.
According to the poll, 61% cited regulatory complexity as the biggest barrier to adoption, followed by integration with legacy technology (51%) and a lack of general understanding of blockchain’s capabilities (49%).
Despite that regulatory complexity, respondents cite changes to regulation as the primary driver for the integration of blockchain technology into the broader enterprise ecosystem (37%), followed by adoption of blockchain as a digital currency by top companies (23%) and acceptance of the technology among central banks (18%).
As blockchain platforms become more mainstream, putting a robust governance model in place will be key, said Paul Brody, EY Global Innovation Leader for blockchain technology.
“This – coupled with establishing best practices for reviewing the integrity of cryptocurrencies and their applications – can help build trust in the company’s underlying assets, ensuring stakeholder voices are heard and ultimately instilling greater investor confidence,” he said.
EY recently announced the pilot of the EY Blockchain Analyzer, a suite of blockchain audit technologies for clients that enhances the ability to perform in-depth reviews of cryptocurrency business transactions.”
The poll also revealed that the US is expected to see the greatest adoption of blockchain globally within the next two years. Almost one-third of respondents (28%) expect the US to experience the highest surge, far ahead of China which ranked second with 18%. Japan (13%) and the UK (12%) came further behind in third and fourth positions.
Key blockchain transitions on the horizon
Organizations are making an active effort to integrate blockchain into their business functions as they look to reap the benefits of the technology, with 60% expecting the financial/professional services industry to see the most blockchain breakthroughs in the next two years. Within finance, 60% of respondents believe that the industry will gradually adopt blockchain technology within the next year, while a further 17% anticipate rapid adoption in this timeframe.
Respondents also stated that increased operational efficiencies is the main advantage of blockchain technology (28%), followed by a high level of transparency (18%) and trust in data integrity (16%).
With industry blockchain adoption expected to progress, EY announced four upcoming transitions for the technology, which it anticipates will drive blockchain’s growth to become a standard enterprise tool:
- Transitioning from private to public networks to create an open system for all users
- Shifting from synchronization to tokenization to improve accuracy and reduce risk
- Moving from cryptocurrency to tokenized fiat currency to transfer value on public networks
- Shifting from parallel separate systems to integration with laws and regulation from central banks and governments.
“With these developments blockchain could become fully operationalized into enterprises, leading to a surge in applications across industries,” Brody said.