Regulatory Compliance and Legal Frameworks in Blockchain BBLC Practice Questions (Page 4)

Questions 16–20

1. 16expert · hard

   A multinational company deploys a permissioned blockchain to store employee HR records, including personal data of EU residents. The blockchain uses a shared ledger with multiple nodes in different countries. The company must comply with GDPR. Which approach best addresses GDPR's data minimization and erasure requirements?

   • AUse a public blockchain because it is decentralized and therefore outside GDPR jurisdiction.
   • BEncrypt personal data on-chain and keep the decryption keys with a trusted third party.
   • CObtain consent from all employees to store their data permanently on-chain.
   • DStore only hashes of personal data on-chain and keep the actual data in an off-chain encrypted database that supports deletion.
   Reveal Solution Discussion Select an answer first
2. 17expert · hard

   A smart contract automatically executes a loan agreement between a lender in the EU and a borrower in the U.S. The contract includes a clause that says 'this agreement is governed by the laws of the State of New York.' A dispute arises over whether the smart contract is enforceable. Which factor is most critical?

   • AWhether the parties had the legal capacity to enter into the contract and whether the choice-of-law clause is valid.
   • BWhether the smart contract code is publicly visible on the blockchain.
   • CWhether the smart contract was executed on a permissioned blockchain.
   • DWhether the smart contract includes an arbitration clause.
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4. 18foundation · easy

   In the United States, which regulatory agency has asserted jurisdiction over certain digital assets as securities, particularly through its application of the Howey Test?

   • AFinancial Crimes Enforcement Network (FinCEN)
   • BCommodity Futures Trading Commission (CFTC)
   • CSecurities and Exchange Commission (SEC)
   • DFederal Reserve
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5. 19foundation · easy

   What is the primary purpose of Know Your Customer (KYC) requirements in the context of blockchain businesses?

   • ATo provide customers with investment advice
   • BTo verify the identity of customers to prevent money laundering and terrorist financing
   • CTo ensure that customers are legally allowed to trade cryptocurrencies
   • DTo track the price of digital assets for tax purposes
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6. 20expert · hard

   A multinational company deploys a permissioned blockchain to process employee payroll data for EU residents. The blockchain stores personal data immutably, and smart contracts automate salary payments. The company must comply with GDPR. What is the most significant compliance challenge?

   • AThe blockchain must be public to ensure transparency, which violates GDPR's data minimization principle.
   • BSmart contracts cannot be legally enforced under EU law, so the payroll automation is invalid.
   • CThe immutability of the ledger conflicts with the right to erasure, making it difficult to delete personal data when requested.
   • DCross-border data transfers are prohibited because the blockchain nodes are outside the EU.
   Reveal Solution Discussion Select an answer first