The increased number of business applications of blockchain-based smart contracts have provoked the British legislation analysis body, the Law Commission, to start a research project on the existing UK legal framework, the Commission revealed on Thursday in its Annual report. The aim of the review is to understand if smart contracts can be fitted to current laws or there will be a need for legal reform.
The Law Commission has already begun its initial research with the full review project to start later this summer. The legal analysis of smart contracts is among the fourteen-areas plan set for reform by the Commission in December.
“It is important to ensure that English courts and law remain a competitive choice for business […] The purpose of this project would be to ensure that the law is sufficiently certain and flexible to apply in a global, digital context and to highlight any topics which lack clarity or certainty,”
the body said on Thursday.
Unlike the more conservative language of the British financial regulator FCA, which on Friday called for a proper approach towards the FinTech sector in its Annual report, “to avoid causing harm”, the Law Commission praised blockchain technology.
“The use of smart contracts to execute legal contracts is expected to increase efficiency in business transactions and it is suggested that the use of blockchain technology will increase trust and certainty,”
the legislation analyzing body said.
The Law Commission is an independent agency set up by Parliament in 1965 and conducts analyses with the aim of making laws fair, modern simple and cost-effective. The Commission has authority over English law, the common legal framework of England and Wales, and does not cover Scotland or Northern Ireland, which have their own legislative bodies within the UK. As an independent body, the Law Commission’s proposals are highly respected but not obligatory.
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