Yesterday the Law Society published the second edition of its blockchain report providing clarity on some of the pressing legal issues and regulatory concerns surrounding Distributed Ledger Technology (DLT) such as blockchain.

This follows the first edition published in September 2020. Both reports are published in connection with the Tech London Advocates (TLA) with the objective of providing legal practitioners with information on how to advise clients on matters relating to DLT and to identify areas where further guidance might be required.

DLT is a term used for technology which allows the storage of information through digital records across multiple sites and countries. This contrasts to the centralised databases used by banks and governments across the globe today. The report acknowledges that the pandemic has accelerated the use of DLT with growth set to continue.

The report covers guidance on a range of key legal issues relating to DLT such as:

• The regulation and legal status of Cryptoassets;
• The risk and regulatory concerns of DeFi (Decentralised Finance);
• Ownership, storage and regulation of NFTs (Non-fungible tokens);
• The impact of DAOs (Decentralised Autonomous Organisations);
• Data governance and smart contracts;
• Data protection and intellectual property rights on the blockchain.

The report is welcomed by those in the legal profession and seeks to clarify some of the ‘grey’ areas of DLT for practitioners and their clients. It also confirms that English law is capable of resolving disputes that involve DLT irrespective of the evolution of technology. In fact, the report suggests that the need for lawyers will most likely increase as DLT becomes more mainstream. It also addresses the potential impact technology has on the use of legal contracts and their format. We may therefore see an increased use of programmers to resolve legal disputes and check code.

There are however further challenges for the judiciary to overcome when managing cases where a DLT platform is central to the dispute. For example, there may be procedural developments relating to serving outside of the jurisdiction where the other side’s domicile is unknown if the DLT platform has no centralised location. Guidance may also need to be issued on the disclosure process if a ‘document’ includes elements of code.

We will be publishing a mini-series on the report and the topics covered over the next few weeks. Please get in touch should you need any advice on blockchain and the law.