Sandboxes and testnets as “trading zones” for blockchain governance

FinTech regulatory sandboxes and testnets use cases offer a hybrid model for integrating blockchain technologies with governance, connecting code with regulations, on-chain infrastructure with off-chain institutions. The hybrid models are an alternative to the reduction of governance to consensus mechanisms in the present libertarian but also anarcho-capitalist and communitarian blockchain projects. Inspired by the concepts of “innovation through dissonance” in the so-called “trading zones,” we claim that the regulatory sandboxes can integrate all four regulatory forces (law, social norms, market, and technical infrastructure) rather than only two (FinTech insistence on markets and technology). This evaluation criterium for sandboxes was defined and tested with a simulated ledger (testnet) for exploring near-future scenarios of blockchain governance. In 2019, we conducted five workshops with 35 participants using templates of smart contracts to decide upon regulations of novel services that use satellite data to trigger automatic transactions (change of ownership). In the workshop and following questionnaire, the participants expressed need for a better integration of their natural language, regulations, and code without prioritizing any regulatory force or domain (market, culture, technology, or law), but supporting what we describe as a playful “regulation through dissonance.”