Czarnecki - legal aspects of new technologies

The rapid growth of decentralised exchanges poses new challenges for market regulators and raises new legal questions.

One of the key attributes of blockchains is the ability to achieving a consensus in distributed networks. This allows the Bitcoin network transaction record to be maintained by thousands of servers across the world, without any centralised coordination. It also makes it possible for complex smart contract transactions (such as ones on the Ethereum platform) to be entered into and executed directly by network users.

In the beginning, blockchain technology’s sole use was for Bitcoin. This first truly decentralised digital currency launched an accelerating stream of innovations. For several years now, it has been leading the way for alternative means of payment (the summary of our 2014 crypto-currencies report is available here), through to smart contracts and DAO (decentralised autonomous organisation – our report on this is available here), up to, perhaps, a revolution in how the internet operates.

The world of blockchain technology does not cease to surprise and fascinate. Over the last year, one of the most frequently discussed blockchain-associated concepts has been tokens.

I wrote about tokens for the first time in “Legal Aspects of Initial Coin Offerings and Token Crowdsales” in the report on blockchain, smart contracts and DAO of 2016.

Let’s take a closer look at tokens. We can consider them from three perspectives: technological, economic and legal.

The Act on Trust Services and Electronic Identification is intended to adapt Polish law to the EU’s eIDAS Regulation. Among other things, it repeals the Electronic Signature Act. The new act is part of a broad trend toward creation of a new regulatory framework for digital commerce.

It has been known for some time that the European Commission plans to extend the EU’s regulations on anti-money laundering and combating of terrorism financing (AML/CTF) to cover digital currencies. In February 2016 the Commission announced that it would present a proposal for changes in law in this area by the middle of the year.

The legislative proposal was presented in July 2016. It may bring about many changes for individuals and firms operating in the area of digital currencies, and perhaps also for those involved in distributed ledger (blockchain) technology.

There are lots of indications that financial technology, or FinTech, is one of the next chapters in the digital revolution unrolling before our eyes.