UK Jurisdiction Taskforce: new guidelines on crypto assets

The UK Jurisdiction Taskforce today published the results of its survey on the legal nature of crypto assets and smart contracts. This is the verdict: crypto assets must be treated according to the principle of ownership and smart contracts will be treated as legal contracts. 

According to reports, the UK Jurisdiction Taskforce seems to have given its verdict on crypto assets and smart contracts, despite the fact that they raise several issues. 

The first result describes the association of ownership with more informative assets such as cryptocurrencies. 

In this regard, the issue arises with the coexistence of public perception in dealing with crypto, for example, for trading, suggesting the existence of ownership relationships, while the legal interpretation is not clear on the subject, as it is uncertain whether the information in terms of computer code can be interpreted as property.

Another salient point of the report is the relationship between smart contracts and legal contracts.  

According to UK law, it appears that the legal approach to smart contracts is effective if the traditional elements of a contract are present, such as intention and consideration. In this case, each contract can take place via a smart contract. 

Whereas the third verdict recognises the private key as a signature. 

In essence, given the weaknesses of the traditional signature in terms of fraudulent copying, a private key seems to be better in terms of proof of an actual agreement, as the control of the same is under the sole control of the individual who owns it.

The British jurisdiction has taken a legal initiative to define these modern tools of business relations that use the advantages of the blockchain. Something that other legislatures continue to pursue but are not yet ready with the definitions. 

Another situation similar to the legality of smart contracts for the United Kingdom is that of smart legal contracts, recently introduced in the European Union as attested by the Observatory and Forum of the European Union for the Blockchain.

Crypto assets in Italy

On the very same subject, the Italian accountant Stefano Capaccioli, an expert in the field of crypto regulation, who was also selected as one of the 30 MiSE blockchain experts, expressed his opinion some time ago. 

Capaccioli, in an interview with The Cryptonomist, mentioned the need for the country to understand both the current and future dimensions of crypto assets, before being able to regulate them. Something that will depend on Italy as a result of its action to intercept trends. 

In particular, Capaccioli had stated:

“The future of crypto will depend on the ability of this country to intercept trends, rejecting reactionary tendencies which only raise doubts and uncertainties, without ever taking the time to analyse the potential”.

More recently, also interviewed by The Cryptonomist, Alessandro Negri della Torre, a lawyer specializing in blockchain, said:

“With the Simplification Decree (D.L. 135/2018), Italy has adopted a definition of technologies based on distributed ledgers and smart contracts. With particular reference to the latter, the national legislator has also delegated to the Agency for Digital Italy the adoption of guidelines, the compliance with which will allow “computer programs” (i.e. “smart contracts” as defined pursuant to art. 8-ter of the Simplification Decree) to meet the requirement of written form. While waiting for the guidelines, however, the interpreters are wondering about the correct understanding of the rule and the relationship between the traditional contracts and smart contracts. One of the most important questions is certainly that relating to the nature of smart contracts, i.e. whether they are autonomous contracts (binding, complete and autonomous agreements, even if written in full or in part in code) or executive acts of a contractual will between the parties that exist independently and separately from the smart contract”.

Legislation in Switzerland

Lars Schlichting, a Swiss lawyer in the Kellerhals Carrard group, takes a different view:

“I am pleased to note that the UK, like Switzerland, is recognising the possibility of owning tokens. It seems a small thing, but in reality today the laws do not allow to recognise the ownership of a token since it is not a material good and there is no register held by an authority that determines the ownership.