British Blockchain Taskforce Reports Smart Contracts Valid
The UK LawTech Delivery Panel has released a Legal Statement on cryptoassets and smart contracts which has some very interesting comments.
The UK Jurisdiction Taskforce is a powerhouse of British legal knowledge with the Chancellor of the High Court, Sir Geoffrey Vos leading the report and Mr Christopher Woolard of the Financial Conduct Authority involved as well as an incredible array of leading law firms and lawyers in digital law.
The report provides some insightful views on English common law and cryptoassets including under the following areas, with a heavy focus on the property side of law and cryptoassets.
Cryptoassets have all the indicia of property;
The features of some crypto assets, do not disqualify them from being property;
Despite the assets being "virtual" there is no impediment to parties granting security over cryptoassets;
Cryptoassets are property for the purposes of insolvency law;
Crypto assets are not instruments under the Bills of Exchange Act; and
A blockchain ledger cannot act a definitive record of legal rights unless by agreement or statute that ledger has been given such a status, similarly a cryptoasset isn't (today) a document of title under UK law.
Smart contracts are capable of satisfying the requirements of English law just as well as a more traditional or natural language contract;
English law does not struggle with the concept of anonymous or pseudonymous parties contracting;
English common law is equipped to deal not only with bilateral smart contracts but also Decentralised Autonomous Organisations (essentially treating them as unincorporated associations);
In principle, a legal requirement for a "signature" can be met by the signing of a transaction by use of a private key and a requirement for something to be "in writing" can be met by code for a smart contract being recorded.
The report sticks to the Common Law and does not get into taxation, money laundering or financial services, but the core legal principles discussed are all relevant for these more highly regulated areas.
Given the similarities between UK and Australian law, the report is sure to be closely examined in Australia and considered by regulators as crypto assets and blockchain are more widely adopted.