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CBCP Blockchain Governance and Regulation Flashcards

6 cards from real CBCP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

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  1. Which blockchain governance challenge arises when a small group of large token holders can dominate voting outcomes?

    Answer: Plutocracy

    Plutocracy in blockchain governance occurs when wealthy token holders disproportionately control voting outcomes, undermining decentralization.

  2. What is the main role of a blockchain 'improvement proposal' process (e.g., BIP, EIP)?

    Answer: To provide a structured way for the community to propose and discuss protocol changes

    Improvement proposal processes (such as Bitcoin's BIPs or Ethereum's EIPs) provide a structured, community-driven method to propose, discuss, and implement protocol changes.

  3. In the US, the CFTC primarily regulates cryptocurrencies that are classified as:

    Answer: Commodities

    The Commodity Futures Trading Commission (CFTC) primarily regulates cryptocurrencies classified as commodities, such as Bitcoin and Ether, and their derivatives markets.

  4. What is 'regulatory arbitrage' in the context of blockchain businesses?

    Answer: Deliberately operating in jurisdictions with more favorable regulations to minimize compliance burdens

    Regulatory arbitrage involves blockchain businesses strategically incorporating or operating in jurisdictions with lighter regulatory requirements to avoid stricter rules elsewhere.

  5. Which principle in blockchain governance ensures that changes to the protocol are backward-compatible and older nodes can still function?

    Answer: Soft fork compatibility

    Soft fork compatibility ensures that protocol upgrades are backward-compatible, meaning nodes that have not upgraded can still participate in the network without being split off.

  6. What is the primary compliance concern with 'privacy coins' like Monero or Zcash for US-regulated exchanges?

    Answer: Inability to meet AML/KYC requirements due to transaction obfuscation

    Privacy coins obfuscate sender, recipient, and transaction amounts, making it extremely difficult for exchanges to comply with AML/KYC monitoring and reporting requirements.