blockchain - legal aspects of new technologies

Blockchain and cryptocurrencies based on it continue to fire the imagination. It’s no surprise that more and workers, particularly in IT, are interested in being paid in crypto. But is it permissible in Poland to pay workers and contractors in this form?

Crypto as a new employee benefit

According to various estimates, there is a shortage of about 50,000 IT specialists in Poland. So there is a pitched battle underway on the market to recruit and retain experienced programmers, forcing companies to offer various benefits to attract IT talent. Meanwhile, in Poland and around the world, despite huge declines in the value of cryptocurrencies in 2018–2020 (a period dubbed “crypto winter”) and again in recent weeks, the interest in digital currencies continues to grow. These trends are combining to cause more and more employers, particularly in the FinTech sector, to consider offering staff a portion of their salary in cryptocurrency or giving the choice of the currency in which they will receive their salary—fiduciary money or digital.

Staking-as-a-service (StaaS) providers are steadily growing on the crypto-assets market along with the increasing popularity of decentralised networks based on the proof-of-stake consensus mechanism. The growing profile of StaaS providers also raises legal questions about the nature of these business models and the regulatory risk associated with them. In this article we examine one of these risks: the risk of treating the activity of StaaS providers as the activity of an alternative investment fund (AIF).

The Polish regulations directly
referring to blockchain will be joined on 19 September 2020 by the Regulation of the Council of Ministers of
9 March 2020 on Documents Connected with Banking Activities on IT Data
Carriers. It expressly permits banks to store documents connected with
banking activities on blockchain.

Under §5(2) of the new regulation, “A document may be stored in the form of a distributed and decentralised database. The bank shall operate the database in a manner ensuring the security and integrity of the documents contained in the database.” The phrase “distributed and decentralised database” used in this provision refers to blockchain, as is expressly stated in the justification to the draft of the regulation. Moreover, the identical phrase is used in other legal acts to refer to blockchain technology (e.g. in the provisions of the Commercial Companies Code devoted to the ledger of stockholders).

Key strategic documents from the European Commission on data and AI—the European data strategy and Excellence and trust in artificial intelligence—were recently released for public consultation. They present a European vision for a new model of the economy.

According to these documents, the new model of the economy is to be founded on principles vital for European values, particularly human dignity and trust. This aspect should be stressed, as the European Union clearly is becoming the global leader in thinking about new technologies in light of humanistic values. This is a unique approach, but also entails several dilemmas. In adopting this approach, the EU risks eroding its competitive advantages, at least in the short-term perspective. Most likely, AI technologies will develop faster in places where their growth is not restrained by ethical doubts. The Commission thus proposes an ambitious but also risky approach.

Across all fields of life we witness groundbreaking changes brought by new technologies. Progressive digitalisation is not sparing the financial markets, which are indeed perceived as an area that will be shifted almost entirely into the digital world. The goods traded on financial markets rarely take material form, but are typically some type of abstract right.

The basic and most obvious challenge for digitalisation of financial markets is to eliminate paper where entries in IT systems prove to work better. Traditionally and historically, securities have taken paper form, but that clearly does not meet the requirements of contemporary trading on financial markets studded with state-of-the-art technologies.

Due to provisions implementing the simple
stock company into Polish law, and provisions on “dematerialisation of
private joint-stock companies”, the Commercial Companies Code contains
cryptic wording on the option of maintaining a shareholder register for these
two types of companies, “in electronic form, as a dispersed and
decentralised database”.

We have addressed the question of this option repeatedly because it is potentially an opening for “tokenisation” of shares. This means that in a simple stock company or joint-stock company, shares can be issued as blockchain tokens. Simple rewording of two identical provisions in the Commercial Companies Code could therefore connect the world of decentralised registers and shareholdings, the latter being a concept recognised in law, in both of these types of joint-stock companies.