fintech - legal aspects of new technologies

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.

This will not be another article about cryptocurrencies. Instead, I want to focus on a dangerous precedent we may have overlooked in the broader debate over cryptocurrencies. Cryptocurrency exchanges and other enterprises operating on the cryptocurrency market have been targeted by the highly controversial practice of banks shutting down their accounts. This practice displays the universal threats arising along with the increasing digitalisation of commerce.

In September 2016 we wrote an article (in Polish) on the relevance of EU law for the FinTech sector. FinTech has seen intensive growth on a global scale in the dozen or so months since then.

The Global Legal Hackathon last weekend (23–25 February 2018) offered an excellent opportunity to grasp the potential that can be released from cooperation between lawyers and IT specialists. Legal Tech solutions are more than just technological novelties. They are solutions that can protect our legal system against a serious crisis.

While the market is captivated by initial coin offerings as they continue to attract dizzying returns on invested capital, the capabilities of blockchain technology reach much further. Indeed, some blockchain solutions currently in development or already available throw into question the sense of existing financial regulations.

Recent unofficial reports that Estonia is working on a possible initial coin offering for participants in the country’s e-Residency programme have sparked a debate on whether EU law permits a country in the eurozone to offer a cryptocurrency.