What is the principle of technological neutrality?

Technological neutrality is the principle whereby the State must not impose a preference for or against a given technology.

This principle has been notably applied in the context of Internet regulation.

The OECD recommended, for example, taking into account the “fundamentally open nature of the internet and the free flow of information, while ensuring that privacy, children and intellectual property are adequately protected.”

The objective of the OECD’s recommendations is to propose a common framework for businesses and governments when considering new initiatives regarding access to information, its dissemination, its portability, and the use of platforms and networks.

This principle is also mentioned in Recital 15 of the General Data Protection Regulation developed by the European Union in these terms:

In order to prevent creating a serious risk of circumvention, the protection of natural persons should be technologically neutral and should not depend on the techniques used.

It is moreover possible to challenge a law that does not respect this principle. As an example, France had legislated on copyright and neighboring rights. A provision then sanctioned differently the use of peer-to-peer exchange software for acts of reproduction or making available of protected works that would constitute counterfeiting offenses (see the Constitutional Court ruling).

Traditionally, the principle of technological neutrality is applied in 3 situations:

1. To limit undesirable effects: standards are put in place. In this framework, the purpose of the regulation and the objective to be achieved are specified, without mentioning or constraining actors to specific means to achieve said objective. This approach allows each actor to implement a means, their own means, to achieve the objective defined by the legislator.

   As you will have understood, this “freedom” to achieve the objective can be (is) a catalyst for innovation. Thanks to this freedom, the means implemented by regulated actors are adapted to their needs and activities. There are therefore potentially several means implemented that converge toward the defined objective.

2. To define the scope of regulation: intuitively, this situation is obvious. Technological evolution is fast, even hyper-fast in certain sectors. Without respecting the principle of technological neutrality, we would fall into a sort of "planned legal obsolescence" where each law passed would become outdated in the short or medium term due to technological evolution.

3. To structure the market: here, it’s somewhat of a counter-example where the legislator, to promote the development of a technology, will legislate to “compel” actors to use this technology. This approach is interesting provided the technological objective is relevant.

More info on the principle of neutrality: see Vincent Gautrais, Neutralite Technologique, redaction et interpretation des lois face aux changements technologiques or here.

Technological neutrality and crypto-assets.

You may understand where I’m going with this.

The discussions of certain politicians tend toward a regulation of crypto-assets that disregards the principle of technological neutrality. The debates on banning crypto-assets created by the consensus mechanism using proof of work are a perfect illustration of this situation.

To summarize the position of some, they consider that proof of work is a consensus mechanism using a significant amount of energy, so crypto-assets issued by this consensus mechanism should be banned.

Unfortunately, despite my best efforts to find a relevant and intelligent argument that would support this thesis, I struggle to find one (if you have any, feel free to share them).

In reality, if we were to think correctly about this question, it is necessary to ask different questions that are, to my knowledge, avoided at worst, ignored at best.

First, one must ask what this energy expenditure implemented in a public blockchain is for: it is an expenditure that allows a system to maintain a transaction ledger without a trusted third party. The values underlying the use of these systems are all defended in international texts (to cite a few: property rights, free movement of capital, presumption of innocence,…). By prohibiting the use of a technology because of its energy consumption, one interferes with the freedoms of individuals in a very likely disproportionate manner and in a way that is not adequate for what is necessary in a democratic society (to use the ECHR concepts). Furthermore, it is counter-intuitive for a legislator to restrict the use of a system that promotes protected values.

There is a form of schizophrenia that is taking hold in the debates on the subject, and when it is called out or an olive branch is extended, some cut things short. (see notably here where a European deputy blocked me on Twitter… what a fine democracy we have).

Next, this failure to take into account the principle of technological neutrality will necessarily lead to a distortion of competition. Web 3.0, which is taking shape before our eyes, advocates decentralization, disintermediation, and individual freedom.

I have already said here: believing that prohibition in this sector is the solution is an aberration. Prohibition will inevitably create a pull toward opportunistic or more “thoughtful” states. Everyone knows that if BTC can no longer be sold on European platforms, foreign platforms will recover the crypto-believers who want it. We then arrive at comical situations where under the cover of fine virtues, an uncontrollable monster is created (i.e., consumers of derivatives offered by Binance rushed to exotic platforms after the removal of these products upon its arrival in Europe).

Also, the principle of “reverse solicitation” or the “provision of services solely at the client’s initiative” allows placing oneself outside the scope of financial regulations and in the future, the MiCA regulation. Thanks to aggregators, the search for information is facilitated and the principle of “reverse solicitation” will find all its “power.” What is the point of prohibiting in this context if not to demonstrate a form of nauseating demagoguery?

Finally, prohibiting the use of a technology for ecological reasons could be valid and accepted if all political decisions are inspired by such motives. However, in ecological/energy matters, the lack of consistency is an understatement and the starting premise is debatable… We will also try to discuss this on March 17, 2023 during a round table at HEC LIEGE.

To go further on the subject:

Bitcoin: Cryptopayments Energy Efficiency or Regulate Web3 Apps, Not Protocols (Part 1, Part 2)

To go further: cryptomonnaie.be — The Belgian cryptocurrency blog | Newsletter CryptoBelgique — Stay informed of news and updates