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Some doubts about the Italian legislation on smart contracts and blockchains
Some doubts about the Italian legislation on smart contracts and blockchains
Blockchain

Some doubts about the Italian legislation on smart contracts and blockchains

By Marco Cavicchioli - 2 Feb 2019

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The Italian Parliament is about to approve legislation that would legally define what are smart contracts and blockchains, or rather distributed ledger technologies (DLT), but there are many doubts.

The doubts on the legislation obviously concern the text, which defines what will be considered “distributed ledger” under Italian law.

These doubts are not shared by all, and there are several positions for and against this legislative text.

Some criticisms, raised for example by Davide Carboni and Massimo Simbula, argue that the definition included in the legislation is wrong. In fact, the definition of distributed ledger technologies (DLT) included in the legislation would be the following:

“Technologies and computer protocols that use a shared, distributed, replicable, simultaneously accessible, architecturally decentralised ledger based on cryptography, such as to allow the registration, validation, updating and storage of data both in a public way and further protected by cryptography. This data is not alterable, not modifiable and can be verified by each participant”.

The use of the definition “architecturally decentralised ledger based on cryptography” would be ambiguous and inconsistent, both because there is no certain definition of what “based on cryptography” means, and because it is the access to the ledger that is decentralised and not the ledger itself.

Moreover, inalterability and unchangeability would not be absolute characteristics, besides, the various distributed ledgers have different levels of inalterability and unchangeability.

Finally, the rule first mentions the possibility that data may be updated but then states that it cannot be modified.

Other experts such as Massimiliano Nicotra are less critical of the Italian legislation. Quite the contrary, according to Nicotra the legislation should be welcomed: the experience gained over the years with electronic signatures, for example, suggests that it is necessary to have a legal framework, even if it’s extensive, in order to give legal certainty to their use.

From a technical point of view, the Italian legislation on smart contracts could be improved and AgID could then better define the technical characteristics for its concrete application.

The legislation is in fact included in the Simplifications Decree which should be definitively approved on February 12th, which means that there is not much time to discuss it in detail.

In addition, the group of blockchain experts recently selected by the Ministry for Economic Development, in the coming months will be able to discuss and propose to Parliament a modification or a correction of the legislation.

italian legislation smart contract

Fulvio Sarzana, a member of the MiSE blockchain group, gave an interview to Cryptonomist in which on the one hand, he admits that perhaps these definitions are a bit ‘rigid, on the other, he reiterates that AgID must be responsible for defining the technical specifications for the application of the standard, based on UNI standards and best practices in the industry.

Moreover, he points out that there are also European standards in this regard and this could help to better frame the definitions of the Italian legislation.

Time is running out, and starting to introduce these concepts into the State’s legal texts could at least finally lead the country to embark on a concrete path in the adoption of these technologies.

In other words, it is probably not the best possible legislation, but at least it is a clear start to a legislative framework that could take some time anyway. The hope is that Italy will be able to provide itself with a regulatory framework favourable to tokenisation.

Marco Cavicchioli
Marco Cavicchioli

Class 1975, Marco teaches web-technologies and is an online writer specializing in cryptocurrencies. He founded ilBitcoin.news, and his YouTube channel has more than 25 thousand subscribers.

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