Topic: Distributed ledger technologies blockchain and smart contracts

On Thursday 20 June we hosted the Future of Finance Conference with the Global Blockchain Business Council at our offices in London.

A number of recent cases involving blockchain platforms illustrate the difficulties that sometimes emerge in understanding what roles software coders do and don’t play when it comes to such systems, and thus whether they may potentially be faced with liability.

On 11 October 2023, the European Securities and Markets Authority (ESMA) published two articles on decentralised finance (DeFi), one on developments and risks in the EU market and another on a methodology for the categorisation of smart contracts. In these articles, ESMA highlighted risks to consumers, new forms of market abuse, and possible vulnerabilities to financial stability.

On 2 June 2023, the European Securities and Markets Authority (ESMA) updated its Q&As on the implementation of Regulation (EU) 2022/858 on a pilot regime for market infrastructures based on distributed ledger technology. In particular, ESMA has added new Q&As on DLT market infrastructures, cash settlement and exemptions from the Central Securities Depositories Regulation.

On 3 February 2023, the European Securities and Markets Authority (ESMA) updated its Questions and Answers (Q&As) on the implementation of Regulation (EU) 2022/858 on a pilot regime for market infrastructures based on distributed ledger technology (DLT).

Two seemingly unrelated recent developments in the world of blockchain are now posing the same odd question: Can there be law without people?

On 15 December 2022, the European Securities and Markets Authority published a final report containing guidelines on standard forms, formats and templates to apply for permission to operate a Distributed Ledger Technology market infrastructure (DLT MI).

Ethereum’s effectuation of the “Merge” was a technological tour-de-force with significant environmental upsides in reducing energy consumption and perhaps facilitating continued future innovation in the blockchain space. But unsettled fundamental legal questions remain.

Critical to obtaining effective relief against a wrongdoing defendant is being able to serve process on that defendant in a manner that the forum hearing the dispute will deem sufficient, and that meets constitutional due process requirements for giving a defendant notice. Sometimes, though, this is easier said than done. This is especially so when litigating matters involving cryptocurrencies and other blockchain tokens. In such cases, the defendants being sued not infrequently operate only anonymously or pseudonymously, without ever disclosing their true names, physical addresses or even their general location—and that location might be anywhere in the world.

The explosion of activity and interest in “the metaverse” is now giving rise to disputes about that realm. Yet paradoxically these disputes have begun to take shape in the courts of our physical world.