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It’s official: cryptocurrency is property and smart contracts are binding

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Legal statement aims to position UK as fintech and lawtech leader

A host of top London legal names have penned an official statement confirming that cryptocurrency is property and smart contracts are, well, contracts — in a move designed to position England & Wales as a global fintech and lawtech leader.

Top barristers Lawrence Akka QC, Sam Goodman (both Twenty Essex), David Quest QC (3 Verulam Buildings) and Matthew Lavy (4 Pump Court) drafted the statement under the authority of the UK Jurisdiction Taskforce of the Lawtech Delivery Panel.

The quartet wrote that cryptocurrencies — whose number and value have soared since Bitcoin first arrived on the scene in 2009 — “have all of the indicia of property” and “are therefore to be treated in principle as property”, before adding a few lawyerly disclaimers.

Meanwhile, they stated that a smart contract satisfies the key legal requirements for contacts, and is therefore imbued with “contractual force”, with the parties’ contractual obligations capable of being “defined by computer code” or in circumstances where “the code may merely implement an agreement whose meaning is to be found elsewhere”.

This move to provide greater clarity comes after the UK Jurisdiction Taskforce issued a Consultation Paper earlier this year on the status of cryptoassets and smart contracts in English law, which flagged “perceived legal uncertainty” as the reason for some lack of confidence among market participants and investors.

In a note appended to their statement today, Akka, Goodman, Quest and Lavy observed that English law, with its famed “flexibility”, is well positioned to steal a march on rival legal systems in adapting to the world of crypto. It states:

“Rather than depending on the often cumbersome, time-consuming and inflexible process of legislative intervention, judges are able to apply and adapt by analogy existing principles to new situations as they arise. In commerce, the law is there to support and fulfil reasonable expectations. It is ‘endlessly creative … a living law, built on what has gone before, but open to constant renewal’. Time and again over the years the common law has accommodated technological and business innovations, including many which, although now commonplace, were at the time no less novel and disruptive than those with which we are now concerned. In no circumstances therefore are there simply no legal rules which apply.”

Cryptocurrencies and smart contracts, and the wider fields of fintech and lawtech, are exciting areas full of potential for future corporate lawyers. Next week Legal Cheek is holding two student events exploring the possibilities:

TUESDAY 26 NOV: Secrets to Success: lawtech special edition — with Ashurst, BT, Hogan Lovells, Pinsent Masons, Radcliffe Chambers and ULaw [Apply to attend]

FRIDAY 29 NOV: The future of fintech — with Linklaters [Apply to attend]

13 Comments

Training contracts aren't everything

I couldn’t get a training contract during the financial crisis. Saved some money temping for a year. Bought £150 of bitcoin in 2011 on a whim then went travelling. Came back, paralegalled for a bit. Still couldn’t get a TC. F*cking Watson Glaser. Remembered the bitcoin. Sold it in 2017 for around £4 million. Bought house in Zone 1. Rented out. I write this overlooking the sea in South East Asia, where I follow the posts on here by Kirkland Lambo guy with amusement. Training contracts aren’t everything.

(34)(7)

Kirkland Equity Partner

£4m. Cute.

(14)(7)

Andrew de Bernier

You’re obvs not a Kirkland partner so why do you live such a sad fake life online? I feel sorry for you.

(8)(0)

Anonsense

Back to Company Law textbooks boi

(1)(0)

Anonymous

Must have been a small house or in a crap part of town for just £4m. Must be wrroying to only have that little capital, have it all locked up in one asset and have no career.

(7)(3)

Training contracts aren't everything

House cost £2.5m. It’s in Shoreditch. Rest is invested. I’m feeling quite relaxed.

(10)(5)

Anonymous

First, we all know you are making this up. Second, £2.5m does not get you much. Third, living off just £1.5m with no career sounds quite miserable. Even at 5% returns that is only 75k a year even if you do not provide for inflation gnawing away at capital values. But I suppose for someone not good enough to make it into the profession, it is better than most.

(11)(5)

Training contracts aren't everything

1. If you are so sure I’m making this up, why reply?

2. Depends what you’re used to I suppose. Personally very happy with what my £2.5m has bought.

3. £75k a year is more than enough. Without a mortgage it is far, far more than enough.

4. As for not being good enough to make it as a lawyer, I’m slowly coming to terms with this.

Anonymous

That’s your creative writing for the day done, back to revision now fresher.

Trainee

Shoreditch isn’t central london.. also everything about your little tale to strangers on the internet isn’t true.
Post your name son, don’t hide behind anonymity.

(1)(1)

Anoon

It’s zone one, and frankly who would actually want to live in ‘central London’ unless you are a bloody tourist?

(1)(1)

Anonymous Person

Frankly, it is ludicrous that there was ever a question about the binding nature of smart contracts (or indeed e-signing). Mostly the result of traditionalist conservative law firms being afraid of anything new and peddling a load of guff about originals being required for everything.

(5)(0)

Anon

It is not “official”. It is just an opinion and means nothing. Statute or case law, please.

(22)(1)

Comments are closed.