November 18, 2019

Legal status of cryptoassets and smart contracts confirmed in UK

By Ellen Daniel

The UK Jurisdiction Taskforce has today confirmed the legal status of cryptoassets and smart contracts in a landmark statement.

Despite the growing prevalence of blockchain and smart contracts, with the worldwide smart contract market expected to reach $300m by 2023 and 10% of global GDP set to be stored on the blockchain by 2027 according to the the World Economic Forum, many are hesitant to invest in the technology due to uncertainties over their legal rights.

The UK Jurisdiction Taskforce of the Lawtech Delivery Panel, chaired by Chancellor of the High Court Sir Geoffrey Vos, has published a statement clarifying the legal status of cryptoassets and smart contracts.

The statement has confirmed that cryptoassets are to be viewed the same as tradeable property and smart contracts are enforceable under English law. According to The Times, the statement confirms that cryptoassets “have all of the indicia [signs] of property”.

Smart contracts, cryptoassets receive legal assurance in UK

A smart contract is a digital contract stored on the blockchain, making them traceable and meaning that the contract cannot be altered. Although they offer a secure way of recording an agreement between two parties, whether or not they are legally binding in the same way as a physical contract has until now been uncertain.

It is hoped that the statement will help boost the UK’s blockchain ecosystem and will encourage greater investment and adoption in this area.

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 and Linklaters LLP.

Chancellor to the High Court, the Rt Hon Sir Geoffrey Vos, chair of the UKJT believes that having a legal foundation for these new technologies will be beneficial in “providing much needed market confidence”:

‘‘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.’’

Read More: Techxit: British blockchain urged to reject “harsh” EU crypto law for tech-friendly Brexit.

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