The latest annual report from The Law Commission (an independent body responsible for reviewing existing laws and proposing legal reforms in England and Wales) included the announcement of a new effort to review the way in which the current English legal framework applies to smart contracts.
In the latest Rzeczpospolita Report on the legal aspects of blockchain and its applications, I briefly discussed the challenges related to applying data protection regulations in this context. It is a complicated issue as it appears that blockchain can potentially challenge the basic assumptions and regulatory approaches provided by the GDPR.
We have been writing about the legal issues surrounding tokens and ICOs/token sales for quite some time now. However, there’s still a lack of clarity regarding many legal and tax issues regarding the sale and exchange of tokens. The subject is not directly regulated by either EU or Polish laws. While the European Securities and Markets Authority and numerous national regulators (including the Polish Financial Supervision Authority) have issued statements on the subject, numerous issues remain unresolved creating uncertainty for blockchain entrepreneurs and their lawyers.
Each legal analysis requires a prior determination of the underlying facts. The more precise the factual description of the subject to be analysed, the better the likelihood that the legal conclusions reached will be comprehensive and correct. This is one of the reasons why lawyers’ work in the field of new technologies is challenging and fascinating. Within the rapidly changing realities of new technologies, a lawyer’s ability to identify and understand the most legally relevant facts is a critically important skill. Of course, this skill must be supplemented with the knowledge that the facts are subject to dynamic changes.
New applications for blockchain, such as decentralised exchanges and unique tokens, bring new legal challenges. But sometimes even well-known uses of this technology present interesting legal issues never raised before or for some reason overlooked in the legal debate.
Undoubtedly cryptocurrencies and other crypto assets will not remain outside the legal system for long. Although they cannot be directly tied to many existing regulatory regimes, as we discussed in 2014 in our virtual currencies report, this does not mean that activity involving crypto assets will never be regulated. This is evident from the example of blockchain tokens, which in certain situations may be regarded as financial instruments.
Blockchain does not function in a legal vacuum. Depending on how the technology is used, various legal regulations may be applicable. As blockchain is often used for cooperation between unaffiliated entities, it is worth considering the consequences that may arise under competition law.