Cryptoasset Anti-Financial Crime Specialist (CCAS) Certification Practice Test

What term describes data privacy and regulatory risks associated with blockchain?

1. Legal risks

2. Security risks

3. Technical risks

4. Operational risks

The correct answer is: Legal risks

The term that best describes data privacy and regulatory risks associated with blockchain is legal risks. This is because the legal landscape surrounding blockchain technology and cryptoassets is still evolving. Various jurisdictions have different regulations regarding data privacy, user consent, and compliance with existing financial laws. These legal risks can arise from potential non-compliance with regulations such as the General Data Protection Regulation (GDPR) in Europe or other similar privacy laws. As blockchain technology allows for the immutable recording of transactions, maintaining user confidentiality and data privacy can present significant challenges, potentially leading to legal consequences. Security risks pertain more to the protection of data from cyber threats and hacking attempts, while technical risks involve the potential for system failures or vulnerabilities in the underlying technology. Operational risks relate to the internal processes and personnel within an organization. Although these aspects are relevant to blockchain and cryptoasset operations, they do not specifically focus on the legal implications of data privacy and regulatory compliance.