Impact of Data Protection Bill 2022 on Blockchain technology: Research paper released

The Digital Data Protection Bill 2022 was released for public consideration by the Union Ministry of Electronics and Information Technology on 18 November. 

Experts claim that this new bill performed better than its predecessor in terms of removing restrictions and ease of implementation. 

On the introduction of the bill, Crypto Legal, a Bangalore-based Legal, Regulatory, and Policy Advisory for Blockchain Companies, published a paper on 12 December to emphasise on the current bill’s effectiveness .  

Paper focuses on ‘data fiduciary,' 'data anonymization,' 'right to erasure’

After the announcement, Crypto Legal released a paper in December which highlighted how the bill will affect the blockchain industry. It was written by Purshottam Anand, the founder of Crypto Legal, Anshuman Singh, who oversees research and policy, and Sharat Chandra, vice president of Earthid, a platform for decentralised identities.

The published paper emphasised tech neutrality, specific blockchain issues, and key areas of the bill that have an impact on the blockchain. The researchers focused on "data fiduciary,' 'data anonymization,' 'right to erasure," and "international transfers" in their research. 

Current bill is ineffective in many ways, stated researchers 

Concerning data fiduciary, the authors of this paper noted that the current bill is unable to focus on the issues encountered by blockchain technology. A data fiduciary is someone who chooses how and why personal data is processed. The paper further focused on the problems faced by blockchain to offer an individual or group of people to get control of data, as it's based on decentralised technology. 

“This creates a problem for the bill, which calls for the identification of a data fiduciary to be responsible for the data. It may be difficult to enforce the bill's provisions without a clear data fiduciary,” said the report. 

In the aforementioned issues, the authors stressed the requirement for data protection on the blockchain. They added that the bill does not provide enough guidance on the use of anonymization, pseudonymization, and encryption which are important for ensuring data security on the blockchain. 

The authors stated, "To support the point concerning international transfers, the current bill does not effectively address them." They further stated, "Since blockchains are jurisdiction-free, securing international transfers through trusted channels and abiding by crucial disclosure rules becomes a priority."