The UK is running out of time to establish itself as the legal jurisdiction of choice for governing transactions involving new technologies, such as blockchain, cryptoassets and smart contracts, the Master of the Rolls told an expert panel this week.
Meanwhile, he is investigating how to make litigation involving certain cybercrime – ‘cryptofraud’ – easier.
Speaking at the launch of an updated and expanded regulatory guidance on blockchain published by Tech London Advocates (TLA), Sir Geoffrey Vos said the opportunity for English law and the UK’s jurisdictions to lead in the field “will not last forever” and that those concerned must “strain every sinew” to educate lawyers and others about its importance.
Quite senior people tended “to glaze over” when confronted with the subject of distributed ledger technologies, which hampered their willingness to address issues around it, he said.
He continued: “We need to explain in the simplest possible language what blockchain technology does, why it is important and how it will affect every aspect of our lives, whether we are in commerce, finance, banking, government or simply consumers.
“People do not need to understand the technical details, they need to understand how distributed ledgers − recording immutably every aspect of every transaction, and smart documentation and contracts − will change legal business, transactional or litigious, the consumer world… the way financial and insurance markets work…[and] the way people’s personal finances will operate. And that’s just a few sectors for a start.”
The Master of the Rolls revealed that he and the deputy head of civil justice, Sir Colin Birss, had set up a sub-committee of the Civil Procedure Rule Committee to look at “amending or expanding the grounds on which proceedings can be served out of the jurisdiction”, which was an obstacle to pursuing litigation on smart contracts and cryptoassets.
The cases had increased significantly, he reported, and dispute resolution was “proving complex” because of the difficulty of “applying analogue rules to the digital world”.
He added: “In the world of cryptofraud, there are no national barriers and unlawfully obtained cryptoassets can be difficult to trace.”
The panel discussion, hosted by law firm Mishcon de Reya, also heard from practitioners in the field.
Tom Grogan, head of Mishcon’s tech consultancy MDRxTECH, likened the development of digital assets to the progress of the early days of the Internet. He predicted only leadership from legislators to create the “guardrails” that would reassure businesses new technologies were safe would herald the entry of mainstream commerce.
Will Foulkes, associate director of Stephenson Law, recounted how some clients were finding the regulatory regime for new technologies in the US was faster and less complicated to deal with. The UK was approaching the issue “cautiously”, which added time to registrations.
The new TLA guidance, issued in conjunction with the Law Society, following the first version issued in 2020, has a new section on non-fungible tokens (commonly known as NFT) – often linked to a collectible object such as digital art or an in-game asset using blockchain technology to autheticate ownership – and far greater detail on types of cryptoassets.