The UK Law Commission, responsible for overseeing laws in the UK and recommending reforms, has said England and Wales do not need legislative reform for smart legal contracts in the asset space digital.
In an announcement on Thursday, the commission noted Smart contracts built using distributed ledger technology are permitted under current England and Wales legal frameworks. The Law Commission recommended only “progressive development of the common law” according to the needs of existing frameworks, but also encouraged all parties to smart contracts to explain the risks associated with “code execution” and to any other term required.
The commission said the findings were based on those of the UK Jurisdiction Task Force, which in 2019 recognized smart contracts as binding agreements under local laws, in addition to labeling crypto assets as goods. negotiable. However, the group added that it aimed to work with the UK government on a project to investigate any potential conflict of laws regarding emerging technologies in 2022.
“The Law Commission’s analysis demonstrates the flexibility of the common law to adapt to technological developments, particularly in the context of smart legal contracts,” the announcement said. “This confirms that the jurisdiction of England and Wales provides an ideal platform for business and innovation.”
“As smart legal contracts become more prevalent, the Commission predicts that the market will develop established practices and model clauses that parties can use to simplify the process of negotiating and drafting their smart legal contracts. “
Related: Evolve or Die: How smart contracts are shifting the balance of power in the crypto industry
Determining which regulations and laws apply to emerging markets, including cryptocurrencies and blockchain, has been largely limited to individual governments despite the apparent need for a framework for cross-border transactions and other actions affecting more people. a country. Some, in both the public and private sectors, have argued that regulatory oversight and crackdowns will ultimately benefit the crypto space, while others argue that regulators should adapt existing frameworks to digital assets, and not the reverse.