In its first substantive output since being announced a year ago, the LawTech Delivery Panel last week posted good news for anyone developing, or working with, products based on blockchain encryption technology. A statement by a panel taskforce concluded that, in the existing law of England and Wales:
- Cryptoassets (including but not restricted to, virtual currencies) can be treated in principle as property; and
- Smart contracts are capable of satisfying the requirements of contracts in English law and are thus enforceable by the courts. Statutory requirements for a signature can be met by techniques such as private key encryption.
The headline finding was widely hailed as a fillip for innovators. The Law Society said the statement demonstrates the flexibility of English common law to grow and adapt. ‘It will increase confidence among law firms to adopt new technologies and among investors to invest,’ said president Simon Davis.
It is also well timed, given the current controversy about Facebook’s proposed digital currency and general economic uncertainties. And there was no disguising the smugness about its conclusion that common law, with its ability for judges to apply by analogy existing principles to entirely new concepts, is better placed than civil law to get to grips with the crypto revolution.
Taskforce chair Sir Geoffrey Vos, chancellor of the High Court, described the statement as ‘a watershed for English law and the UK’s jurisdictions. No other jurisdiction has attempted anything like it’.
But no one is pretending that the 46-page statement will be the last word on the subject. Speaking at the statement’s publication in the City, the lord chief justice, Lord Burnett of Maldon, observed: ‘Many believe smart contracts will not require the intervention of lawyers, much less of judges. I very much doubt that.’
Dorothy Livingston, a consultant in Herbert Smith Freehills’ competition practice and chair of the City of London…