3 min read
UK takes significant step in legal certainty for smart contracts and cryptocurrencies
The landmark statement seeks to address legal uncertainty by recognising cryptoassets as tradable property and smart contracts as enforceable agreements under English law.
Jenifer Swallow, Director – Lawtech Delivery Panel, said: “The worldwide smart contract market is expected to reach $300m by 2023 and the World Economic Forum predicts 10% of global GDP will be stored on the blockchain by 2027. It is great to see the adaptability of our common law system to fast-changing technology, demonstrated in this landmark legal statement from the UKJT. Tech Nation is excited to work with the Lawtech Delivery Panel on leading initiatives such as this, to support business growth, clarity in law and the evolution of new tech.”
While the smart contract and cryptoasset markets are seeing significant growth, their legal uncertainty is often cited as the most barrier to adoption, investment and development. This legal statement takes significant steps to address this uncertainty, answering critical questions as to their classification and characterisation. By providing investors with increased confidence of their rights, the statement helps to provide a dependable foundation for mainstream utilisation of cryptoassets and smart contracts.
Chancellor to the High Court, the Rt Hon Sir Geoffrey Vos, chair of the UKJT, said: ‘‘I am delighted to welcome the publication by the UK Jurisdiction Taskforce of a Legal Statement on the Status of Cryptoassets and Smart Contracts.”
‘‘In legal terms, cryptoassets and smart contracts undoubtedly represent the future. I hope that the Legal Statement will go a long way towards providing much needed market confidence, legal certainty and predictability in areas that are of great importance to the technological and legal communities and to the global financial services industry.’’
Smart contracts can be used to create more secure and more efficient ways of implementing (and automating performance of) contracts between parties. This could revolutionise agreements, from mortgages and medical research to property ownership, as smart contracts automatically execute transactions and remove the need for a middle man.
Not only will this legal statement be beneficial for consumers but also for investors. Cryptoassets are already demonstrating considerable traction, with the top 100 cryptoassets worth a collective quarter of a trillion dollars. This statement will provide more certainty to investors in the UK market providing them with a greater understanding of their legal rights when they trade in cryptoassets.
The statement will also provide a dependable foundation for the mainstream adoption of cryptoassets and smart contracts, in particular offering a strategic boost to startups and scaleups operating in this space. The UK already has an established Blockchain ecosystem and community. London is home to more blockchain and crypto meetup members than San Francisco, Berlin and Seoul.
The common law system of England and Wales makes the UK well-suited to adapting to and dealing with fast-changing technologies, as well as expertly positioned to provide a sound legal foundation for their development – with 40% of all arbitration cases globally applying English and Welsh Law.
Christina Blacklaws, Chair of the Lawtech Delivery Panel said: “It is excellent to see that English and Welsh law has no issue embracing new technology – recognising cryptoassets as tradable property and smart contracts as enforceable. That this work was initiated and powered by the UKJT is a great example of how the Lawtech Delivery Panel can support the growth of new technology.”
The legal statement has been drafted by Lawrence Akka QC, David Quest QC, Matthew Lavy and Sam Goodman and supported by members of the UKJT, Linklaters LLP and the respondents to a public consultation which included businesses, academics and the wider legal sector.