How impactful is the Data Protection Bill 2022 for blockchain technology?

In the recently released paper, Crypto Legal and the Indian Blockchain Forum discussed the impact of the Data Protection Act on the Blockchain system.

How impactful is the Data Protection Bill 2022 for blockchain technology?

By Nidhi Bhardwaj: The Union Department of Electronics and Information Technology published the Digital Data Protection Bill 2022 for public consideration on November 18. According to experts, this new bill surpassed its predecessor in terms of removing restrictions and ease of implementation. But is this true for the blockchain industry?

Following the introduction of this bill, Crypto Legal, a Bangalore-based legal, regulatory and policy consultancy for blockchain companies, published an article on December 12. The company released this article in collaboration with the India Blockchain Forum, which jointly discussed the impact of the bill on the Blockchain industry in this article. It was written by Purshottam Anand, Founder of Crypto legal, along with Anshuman Singh, Research and Policy at Crypto Legal and Sharat Chandra, Vice President, Earthid, decentralized identity platform.

What does the newspaper highlight?

The released paper emphasized technology neutrality and specific blockchain issues, as well as the key areas of the bill affecting blockchain. In their research, the authors emphasized the aspects of ‘data trust’, ‘data anonymisation’, ‘right to erasure’ and ‘international transfers’.

While referring to data trust, the authors of this article stated that “the current bill is unable to focus on the challenges facing blockchain technology.” A data controller is a person who decides how and why personal data is processed. And the problems indicate the lack of blockchain to allow an individual or a group of people to always be in control of data, since it is based on decentralized technologies.

“This creates a problem for the bill, which requires the identification of a data controller who will be responsible for the data. It may be difficult to enforce the bill’s provisions without a clear data controller,” the report says.

The authors focused on the need to protect data on the blockchain in the above issues. “Technologies such as anonymization, pseudonymization, and encryption are critical to ensuring the security of data on a blockchain, but the bill does not provide sufficient guidance on its use,” they further wrote.

“To back up the point about international transfers, the current bill does not adequately address them,” the authors said. “As blockchains are jurisdictional, securing international transfers through reputable channels while complying with important disclosure norms becomes a priority. It goes on to say that the current version of the bill is based on the ‘notification via fiat’ paradigm, which is expensive and difficult to manage, says the report.