Regulation on blockchain in Mongolia

Regulation on blockchain in Mongolia

Blockchain technology was invented for bitcoin as its fundamental technology. It is a particular type or subset of so-called distributed ledger technology (“DLT”). The DLT is a way of recording and sharing data across multiple data stores (also known as ledgers), which each have the exact same data records and collectively maintained and controlled by a distributed network of computer servers, which are called nodes. Blockchain is a mechanism that employs an encryption method known as cryptography and uses (a set of) specific mathematical algorithms to create and verify a continuously growing data structure – to which data can only be added and from which existing data cannot be removed – that takes the form of a chain of “transaction blocks”, which functions as distributed ledger[1].

The most countries support this technology as it cannot be corrupted and is decentralized, has enhanced security, distributed ledgers, consensus and faster settlement (read more at For instance, in 2016, France recognized the use of blockchain technology as a registry in support of “minibons” through the publication of an executive order. Also known as interest-bearing notes, minibons are non-negotiable securities that contain a trader’s undertaking to effect payment on a specific maturity date in return for a loan. In 2017, a second executive order was published, extending the list of financial instruments that can leverage blockchain technology as a registry. A reference to blockchain was added to the French commercial code as compliant method for the registration of financial instruments.[2]

[1] Cryptocurrencies and Blockchain, European Parliament, 2018

[2] pp12. Legal Regulatory Framework of Blockchains and smart contracts, The European Union Blockchain observatory and forum, 2019

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