UK Takes Step Closer to Framework for Legal Smart Contracts

Avi Rosten

In a significant endorsement of blockchain technology, the Law Commission for England & Wales - the independent government-appointed body that suggests regular reforms to law - has said that it is actively researching smart contracts in a legal context.

In its annual report published yesterday, the body explains that it is already in the process of researching the subject and recognises the potential for smart contracts to revolutionise legal agreements:

The use of smart contracts to execute legal contracts is expected to increase efficiency in business transactions and it is suggested that the use of blockchain technology will increase trust and certainty.

Emphasising that “it is important to ensure that English courts and law remain a competitive choice for business,” the report explains that it is conducting research to ensure the law is sufficiently “certain and flexible” and that there is “ a serious intention" to move reform forward for this area.

Smart Contracts and the Legal Industry

This latest report comes after the Law Commission in December of last year detailed several areas that it believes are ripe for reform, explaining with respect to smart contracts:

There are questions about how this feature (smart contract) would interact with contract law concepts such as implied terms or contracts which are held to have been void from the outset. There are also questions about data protection law.

The legal industry too has been increasingly interested in the space.

In April, three out of five of the UK’s “Magic Circle” of elite law firms joined the Accord Project – a group launched in 2017 that aims to set industry standards for legal smart contracts.

Shruti Ajitsaria, head of tech innovation space “Fuse” at Magic Circle firm Allen & Overy, explained how the firms are rapidly warming to the tech:

We recognise that smart contracts and blockchain infrastructure have the potential to revolutionize the markets in which we work, so it’s vital that we establish robust standards for their use and ensure consistency

Could President Trump Ban Bitcoin? Experts Weigh In

  • Experts weigh in on the possibility of President Trump banning bitcoin.
  • Increasing concern over libra and large platform digital currencies is driving political agenda. 

Following last week’s attack on bitcoin and Facebook’s libra, experts have voiced their opinion on whether US President Donald Trump could realistically impose a ban on cryptocurrency. 

Not a Fan of Bitcoin

On July 11, President Donald Trump published a series of tweets attacking bitcoin and digital currencies, while championing the dollar. 

President Trump’s comments come in the midst of growing concern over Facebook’s libra, as political regulators around the world scramble to enact policies to deal with the rise of digital currencies. 

Members of the crypto community have questioned the impact of the US President taking an unfavorable stance towards bitcoin. Some crypto pundits predicted the tweets would be good for the price of BTC and ultimately increase exposure to cryptoassets. However, others worry that political influence may lead to a crackdown on cryptocurrency usage. 

Scenarios for Banning Crypto

Alex Kruger, economist and market analyst, published a tweet thread examining the legality and possibility of President Trump banning bitcoin. 

According to Kruger, It would be almost impossible for the US government to outlaw bitcoin as a technological instrument. Aside from the Herculean task of eradicating a decentralized, digital technology, bitcoin is code, which is protected under the first amendment.

However, that same protection is not extended to third-party operators, including cryptocurrency exchanges. 

Kruger quoted Abra CEO and Founder BIll Barhydt, who explained in a Forbes article how the government could target fiat onramps to exchanges, 

“You can’t prevent people from holding ones and zeroes on a device in their pocket. That ship has sailed. We already know that. The question is: What can they do at the edge of the network -- the onramps and offramps, the places where they exert control over the banking system, the exchanges, [and the] stablecoins.”

The US government could prevent retail investors from having access to crypto-assets through exchanges and prevent banks from allowing transfer of funds. Users would still be able to buy crypto through alternative channels, but the current ease of investing would be severely hampered. 

Unlikely, But Not Impossible

President Trump could also issue an executive order banning citizens from dealing in bitcoin, similar to the one he issued against the Petro. While there is a precedent for this route, Kruger claims the order could be easily overturned by Congress, 

Ultimately, Kruger believes that it is unlikley the President or Congress would move to ban bitcoin, and it would be difficult to enact fool-proof policy. However, it's worth considering the political landscape as regulatory concerns mount over Facebook's libra.

Just last week, a copy of a bill reportedly drafted by the House Financial Services Committee surfaced online, under the title "Keep Big Tech Out of Finance." The bill would put an end to Facebook and other large platforms from issuing digital currencies without incurring a severe penalty.

The same could be extended to bitcoin in the event the government finds crypto-assets no longer tolerable for the general public.