The UK Law Commission, which is responsible for reviewing and recommending modifications to the country’s laws, has said that smart legal contracts in the digital asset area do not require statutory law reform in England and Wales.
“The Law Commission’s analysis demonstrates the flexibility of the common law to accommodate technological developments, particularly in the context of smart legal contracts,” said the announcement.
The United Kingdom Law Commission, which is responsible for reviewing and recommending modifications to the country’s laws, has said that smart legal contracts in the digital asset area do not require statutory law reform in England and Wales.
The commission stated smart contracts made with distributed ledger technology are lawful in England and Wales, according to a statement released on Thursday. The Law Commission only advocated “incremental growth of the common law” for current frameworks, but it also encouraged smart contract parties to describe risks related to “code performance” and any other essential conditions.
The commission’s findings were based on the findings of the UK Jurisdiction Taskforce, which recognized smart contracts as enforceable agreements under local laws in 2019 and classified crypto assets as tradeable property. However, the organization stated that it planned to collaborate with the UK government on a project in 2022 to examine any potential legal difficulties relating to future technologies.
“The Law Commission’s analysis demonstrates the flexibility of the common law to accommodate technological developments, particularly in the context of smart legal contracts,” said the announcement. “It confirms that the jurisdiction of England and Wales provides an ideal platform for business and innovation.”
“As smart legal contracts become increasingly prevalent, the Commission anticipates that the market will develop established practices and model clauses that parties can use to simplify the process of negotiating and drafting their smart legal contracts.”
Despite the apparent need for a framework in cross-border transactions and other acts impacting more than one nation, determining whether regulations and laws apply to new industries, including cryptocurrencies and blockchain, has mainly been left to individual countries.
Some in the public and private sectors have suggested that regulatory scrutiny and crackdowns will help the crypto space in the long run, while others argue that authorities should adapt current frameworks to digital assets rather than the other way around.
