Microsoft calls for ‘dialogue’ on blockchain security issues

Microsoft has published a whitepaper that provides policy recommendations for dealing with blockchain security. The company said that regulators and industry should engage with each other to better understand the risks and align incentives to improve.

The whitepaper, released earlier this week, was written by Microsoft and the Chamber of Digital Commerce. The Chamber is a leading trade association that represents the digital asset and blockchain industries. The two parties said they intend to “deepen the cybersecurity policy dialogue” by examining ways to reduce the risks of blockchain tech.

The paper’s recommendations target blockchain users and regulators. It also provides advice for government bodies and finance industry members as they begin to engage with blockchain-based technologies. It advocates the adoption of a modified cybersecurity framework, based on the U.S. National Institute of Standards and Technology Cybersecurity Framework, to facilitate the creation of permissioned blockchains.

The paper also calls for greater alignment between international blockchain regulations. Standards should be “harmonized” to maintain a consistent risk level and enable interoperability. Communication between bodies, such as government regulators and fintech providers, is one way to mitigate cybersecurity risks by improving coordination.

According to Microsoft, regulators need to acknowledge that blockchain also has unique cybersecurity benefits. Innovations such as smart contracts can offer a more secure data storage layer than other technologies, provided they are implemented correctly. Few regulators currently have the resources to acquire a detailed understanding of how the blockchain works, which can cause the loss of regulatory opportunities that would make the tech safer.

“No technology is immune from cyberattacks, and identifying and understanding risk is a critical step in deploying blockchain securely,” said Microsoft. “By providing recommendations for industry as well as government, we reinforce the notion that cybersecurity is a shared responsibility. Technology users have a role to play alongside government bodies, particularly with regard to cyber risk management.”

Microsoft said it “welcomes” opportunities to engage with blockchain users and regulators across industries. Its approach to the technology has so far been optimistic but restrained, with the company regularly reminding blockchain providers and regulators of the need to maintain security. Microsoft said improved cybersecurity policies will support “growth and innovation” in blockchain.