The UK has launched the first step in its bid to make English law the bedrock of a future where digital smart contracts and distributed ledger technology (DLT) are the norm in the global trading of goods.
In a consultation paper on the status of cryptoassets, DLT – of which blockchain is an example – and smart contracts under English private law, the government panel charged with devising the best possible legal regime to ensure investor confidence asks whether digital assets and private (encryption) keys should be characterised as personal property.
Secondly, it addresses the circumstances under which smart contracts written partly or entirely in computer code should give rise to binding legal obligations.
The UK jurisdiction taskforce (UKJT), one of six components of the government’s lawtech delivery panel – formed with the judiciary and the Law Society – said it believed making digital assets enforceable was the key to unlocking widespread use of the technology.
Earlier this month, the Chancellor of the High Court Sir Geoffrey Vos, chair of the UKJT, said in a speech that English law could be popular as an underpinning of “trillions” of smart legal contracts with only relatively minor legislative tweaks.
The consultation, which closes on 21 June, examines different types of DLT and implications for the enforceability of contracts based on them, such as the need for consensus to enable recording and validation of the database, preventing any attempt to ‘spend the same data twice’ – so-called ‘double-spend’.
Likewise it contemplates the legal significance of different kinds of cryptoasset – such as the currencies Bitcoin and Ether.
The consultation adds: “For the purposes of English private law, there is no general definition of a cryptoasset, and the UKJT recognises that there may exist a great deal of uncertainty as to what is meant, or what is being described, when the term is used.
“We do not seek to address the semantic uncertainties of the term ‘cryptoasset’ in this consultation paper by advancing a legal definition of the term.”