In our experience, when a group of companies comes together to explore the development of an ambitious blockchain use case, it is often not the technical or legal issues that are the biggest challenges, but the age-old question of how to get a group of different organizations to work together effectively to achieve their goal (even agreeing on what that goal should be, may be more difficult than you think). For the 2022 guidelines, we heard from experts, including the Legal Commissioner for Commercial and Customary Law, Professor Sarah Green, and Alessandro Palombo, CEO of Jur. Perhaps the most interesting aspect of the report and the need for a second edition so soon are the changes we have already seen in terms of crypto asset regulation and the growth of NFTs since the first edition. Crypto assets remain the main use case of blockchain at this point. There are more than 100 mentions of NFT in the new report. NFT madness is certainly a bubble at this point, but the question is, as with the ICO bubble, what remains when the initial hype disappears. If ICOs are a guide, the answer is that there will be a clear market for crypto assets (including NFTs) that is unlikely to disappear, especially as big brands, companies, and influencers continue to increase the adoption and spread of mainstream awareness. It will be important for lawyers to continue to apply regulations in this area. In addition to developments from financial regulators, we have seen that the ASA has issued a crackdown on crypto ads, and the Legal Commission plans to release a consultation paper on NFTs and crypto tokens in the summer of 2022. Our team at Baker McKenzie was pleased to contribute to the chapter of the guide that provides guidance on the practical challenges of building effective blockchain consortia and multi-stakeholder contracts related to blockchain use cases. Over the past 18 months, the coronavirus (COVID-19) pandemic has accelerated the deployment and development of distributed ledger technology (DLT) such as blockchain. The guidelines contained in the report “cover a wide range of key issues that legal professionals should consider when advising on DLT-related issues” and cover various areas of practice and sectors, as well as the legal advice process.
As the complexity of DLT increases, so does the need for lawyers to understand it. This guide is intended to be a useful springboard in this process. The report will provide a clear framework and much-needed guidance on the use of blockchain in the legal services industry. It`s clear that lawyers are starting to become familiar with DLT and other emerging technologies such as smart legal contracts and cryptoassets. The conflicting range of opinions on this area was recently highlighted in conflicting comments from Shapeshift`s chief legal officer after the announcement that the crypto exchange would become a DAO and the new chairman of the SEC. The first said: “Shapeshift is not a stock exchange, a financial intermediary and does not hold any funds. It is simply an open source interface that allows users to interact with their own digital assets. Marc states in the report that “from this point of view, a DAO is just software, not an entity.” For the law, while there are certainly tricky legal issues to navigate when it comes to certain use cases involving blockchain and crypto assets, especially when there are gray areas because the existing law was not designed for technology (this is almost never the case), there are often analogous circumstances on which we, as lawyers, we can rely to guide our clients. But how to ensure effective governance and project management, well, it`s an eternal favorite in tech projects and continues to give practical headaches to ambitious multi-stakeholder tech projects. The report contains important recommendations and aims to “create a useful springboard in the process of decentralization and smart contracts that is changing the way financial, real estate and legal services are delivered.” In addition to lawyers, the recommendations also aim to support all those who work in professional services, including technologists and academics. This is a useful guide for lawyers who want to learn more about DLT and crypto and the potential legal issues that need to be addressed. In contrast, the chairman of the Securities and Exchange Commission expressed the view that decentralized financial platforms actually have some degree of centralization, saying, “It`s an abuse of language to say it`s just software that`s published on the Internet.
Marc says in the report that this contrast highlights the opposing positions converging in DAOs: some proponents of decentralized finance are not simply trying to disrupt traditional financial services/markets, but to evade the regulations that apply to them (and even the legal system); But the reality is that all activities take place within a legal system. This guide is intended to be a useful springboard in this process. We produced a report with Tech London Advocates` (TLA) Blockchain Legal and Regulatory Group outlining important issues lawyers should consider when advising on distributed ledger technologies (DLT). A report containing legal and regulatory advice on distributed ledger technology (DLT) has been published by the Law Society in collaboration with Tech London Advocates` Blockchain Legal and Regulatory Group. The report follows the legal opinion on the state of cryptoassets and smart contracts published by the UK Jurisdiction Working Group in November 2019. It offers best practices for lawyers working on transactions with cryptoassets, smart contracts and other DLT applications, and addresses key legal and regulatory issues related to these technologies, including the interaction between intellectual property and cryptoassets, cryptoasset regulation, dispute resolution mechanisms and data protection and data governance in DLT systems. Since the publication of the first edition of this guide, the hype around blockchain technologies has continued, with ideas such as “metaverse,” “decentralized finance (DeFi),” and “non-fungible tokens (NFT)” attracting significant attention. But it is becoming increasingly clear that the economy is catching up; The ecosystem has changed. Venture capitalists are increasingly comfortable investing in technology, as evidenced by the huge cryptocurrency-focused fund created by Andreessen Horowitz`s venture capital firm ($2.2 billion), blockchain-focused software companies like ConsenSys have rapidly grown to evolve and beyond, and real-world use cases are now being used by clients in various industries. All this shows that technology is more than just a fad.
The TLA Blockchain Legal and Regulatory Group has compiled the second edition of the legal and regulatory guidelines for blockchain. TLA`s blockchain working group was established in 2018 and serves as a hub for DLT`s multidisciplinary experts. Craig Orr QC is co-author of the Dispute Resolution Mechanism Guidelines, which (among other things) address jurisdictional issues and applicable laws related to cryptoassets and other DLT applications. www.lawsociety.org.uk/topics/research/blockchain-l content is provided for educational and informational purposes only and is not intended to be legal advice and should not be construed as such.
