Elliott Fellowes, commercial and financial services litigation have outlined the statements published by the UKJT and the Chancellor of the High Court regarding the status of cryptoassets and smart contracts under English law
Elliott Fellowes, commercial and financial services litigation associate at Signature Litigation, have initially outlined the statements published by the UK Jurisdiction Taskforce (UKJT) and the Chancellor of the High Court, Sir Geoffrey Vos, in regards to the status of cryptoassets and smart contracts under English law on 18 November 2019.
He will now go on to highlight how the statement clearly details that cryptoassets are to be considered property under both common laws and under s436 Insolvency Act 198 and so can be treated the same as any other personal property under English Law. This positive conclusion, Elliott argues, should encourage the proliferation of cryptoassets, in particular in the financial services sector, and increase the investment in potential use cases and the blockchain technology which underpin them.
Elliott will discuss, however, that increased use of cyrptoassets brings with it increased risk, especially in cases of fraud, and this is something Elliott will suggest investors need to take into consideration, along with the conflicts of jurisdiction that naturally arise, given the decentralized nature of cryptoassets.
Elliott will further highlight how the UKJT’s decision also allows for smart contracts to be deemed legally binding under English Law and that any requirement for signing a contract in writing can be met effectively by using a private key to effect signing of the document.
Elliott will conclude that, in respect of cryptoassets, there remain questions as to identifying ownership, and the transfer of ownership, of an asset but does not that the UKJT does attempt to combat this with the use of private keys. He also notes that there are similar practical issues with smart contracts however that the UKJT’s statement clarifies much of the previous uncertainty surrounding cryptoassets and smart contracts. This, Elliott maintains, should provide comfort to market participants, as their rights and obligations in respect of these new technologies are now much more clearly defined.
