The Law Commission has recently been aiding authorities in dealing with regulating technological innovations. The Law Commission is a legal advisory body, inaugurated in 1965 by the British government, and is currently dealing with significant matters concerning technology and its anticipated influence on the economic transformations arising as a result.
The increased adoption of the Blockchain technologies into the international trading platform is consequently requiring essential legal frameworks to govern its use worldwide. The UK is one of the developed countries where technology is widely accepted and adopted. The use of Smart Contract is utilised within the public and private sectors due to its attractive opportunities and has therefore triggered the attention of the authorities.
Law on Smart Contracts
There has not been a clear inclusion of Smart Contracting in the legal frameworks in the UK. It is apparent that the legislation processes for Blockchain adoption are long overdue and something needs to be done in order to bring it up to speed with the new technological developments. However, there are some firms that are already utilising the use of Smart Contracts in engaging their clients.
Smart Contracts have greatly revolutionised the role of Lawyers in authenticating contracts. It offers a great computerised transaction protocol through which the terms of a contract are executed. All users or stakeholders to the contract are able to view its contents from remote locations and can negotiate them in real-time. Ultimately, the parties reach an agreement and the contract is sealed and started. However, lack of legal frameworks has seen the abuse of security loopholes since there has not been any legal protection.
The presence of thriving business in the UK private sector and beyond, triggers the necessity to review Smart Contracts applicability in the regional market. The Financial Conduct Authority (FCA) has been regulating financial undertakings, ensuring that all engagements are subjected to the legal system. Unfortunately, the legislation of Blockchain technology has not entered the legal letters.
Application of Smart Contract
Since the magical launch of Bitcoin and subsequent rise of cryptocurrencies, the use of Blockchain technology has proved inevitable in the financial system. Moreover, great companies such as Oracle and IBM have now brought about the use of ‘Blockchain-as-a-service’. This changes the way Blockchain will be operating. The platforms forming now differentiate the use of crypto currencies and the application of Blockchain technology for other purposes.
In the USA, the use of Propy, a Blockchain based company, is seen as a great real estate undertaking. The organisation has been able to capture the market, with one of the landmark achievements being the sale of a home worth $60,000. The success of that transaction helped place the organisation on the global distributed ledger map. This is an example of numerous industries that are pioneering the use of Smart Contracting, others include sectors such as assets holdings, proof of identity, insurance, private consulting and handling general contractual engagements.
Law Commission Scoping Study
Retaining a mandate from the UK government, the UK Law Commission has a task to evaluate the essential elements in formulating a legal framework for adoption and use of Blockchain technologies in the market.
The scoping study was launched in July 2018, whereby the commission is expected to explore the use of Smart Contracts.
The Commission is expected to review what needs to the done to intake flexible legislation into current law so as to allow the adoption of digital contexts influencing the global financial industry.
One of the greatest tasks that the Commission is expected to undertake is a review of the current application of Smart Contracting. The scoping study will look at how the use of Smart Contracts came into play in the regional and global markets. This will be simulated and evaluated on the UK’s framework.
Expected Outcomes in Scoping Study by UK Law Commission
Ultimately, the Commission will then check the essential frameworks that would be used in ensuring authentic implementation of the Blockchain platform as a trading platform in the UK. The UK will be one of the few countries undertaking legislation of Blockchain technology. This will help the economy in moving to a new level of trading.
The Blockchain platform is more expansive than it appeared initially. The use of Ethereum based distributed ledger technology is now becoming a great changer in business. The ability to access a shared platform where everyone has the ability to connect to the same ledger from across the globe, has eased the processes of having to engage brokerage firms.
After the scoping study, the Law Commission will work closely with the Financial Conduct Authority in ensuring that the legal elements noted get embedded in UK Financial law. The Bill will then be evaluated in UK Parliament, firstly in the House of Commons and then the House of Lords for further legislation review.
Once there is a set framework, the UK residents and non-residents stand to benefit from an expansive investment market. They will be able to invest more in Blockchain technology investments. Others will be able to innovate in Blockchain technology and help place the UK on the Blockchain map.