Problems of legal regulation of smart contracts

Authors

DOI:

https://doi.org/10.35774/app2020.01.143

Keywords:

smart contract, cryptocurrency, token, initial coins offering, smart contract legal force, legal regulation

Abstract

Recently smart contracts become more and more popular in such areas as initial coins offering (ICO), financial sector, international trade and public services. At the same time there is almost no legal regulation of smart contracts. There are unsuccessfull tries to regulate smart contracts bu security legislation. There are continuing discussions over whether a smart contract can be considered a civil contract and whether violated rights of the parties of smart contract could be protected in trail. The purpose of this article is to assess the practice of legal regulation of smart contracts worldwide and in Ukraine and to develop proposals for improvement of legal regulation of smart contracts. An analysis of law regulation of smart contracts in different countries of the world shows the initial state of the law in this area, significant differences between national systems of law and almost complete absence of judicial precedents. Most countries are trying to regulate smart contracts by securities and financial instruments legislation, which neither takes into account the economic nor legal nature of the smart contract. The greatest progress in legal regulation has reached Belarus, which has recognized the smart contract as a type of civil contract and cryptocurrency as the official means of payment. In Ukraine, despite the active implementation of blockchain technology in state registers, there is no legal regulation of smart contracts and cryptocurrency. The Government Concept of the development of digital economy and society for 2018 – 2020 and conclusions of financial regulators on the legal status of cryptocurrencies determine the need to develop legal regulation of the digital economy. In my oppinion, Ukraine should recognize the most widespread cryptocurrencies as official means of payment and issue its own state cryptocurrency. The legal regulation of tokens used in initial coins offering should be similar to the legal regulation of of debt securities. It is necessary to amend the civil legislation in order to recognize a smart contract as a type of civil contract expressed in the form of programming code and automatically executed in a distributed network. To minimize risks of smart contracts it is necessary to state requirements of mandatory identification of parties and to implement mandatory electronic application containing the essential terms of the contract which will have legal force in case of a programming code error and to resolve litigation between the parties.

References

Deiaki pytannia posylennia bezpeky zberihannia ta zakhystu vidomostej Derzhavnoho reiestru rechovykh prav na nerukhome majno i systemy elektronnykh torhiv z realizatsii areshtovanoho majna [Some issues of strengthening the security of data storage and protection of the State register of real estate rights and the system of electronic bidding of arrested property]. (2017, May 24). Rozporiadzhennia KMU № 353-p. Kabinet Ministriv Ukrainy. Retrieved from https://www.kmu.gov.ua/ ua/npas/250015228 [in Ukrainian].

Deiaki pytannia realizatsii pilotnoho proektu iz zaprovadzhennia elektronnykh zemelnykh torhiv i zabezpechennia zberihannia ta zakhystu danykh pid chas yikh provedennia [Some issues of implementation of the pilot project of electronic land bidding and bidding data protection]. (2017, June 21). Postanova KMU №688. Kabinet Ministriv Ukrainy. Retrieved from https://zakon.rada.gov.ua/laws/show/688-2017-п [in Ukrainian].

Pro skhvalennia Kontseptsii rozvytku tsyfrovoi ekonomiky ta suspilstva Ukrainy na 2018 – 2020 roky ta zatverdzhennia planu zakhodiv shchodo yii realizatsii [About approval the Concept of development of digital economy and society of Ukraine for 2018 – 2020 and ratification the plan of Concept implementation]. (2018, January 17). Rozporiadzhennia KMU №67-р. Kabinet Ministriv Ukrainy. Retrieved from https://www.kmu.gov.ua [in Ukrainian].

Baranov O.V. (2017). Internet rechej: pravovi problemy zastosuvannia rozumnykh kontraktiv [Internrt of things: legal problems of using smart contracts]. Informatsiia i pravo – Information and law, 4(23), 26-40 [in Ukrainian].

Bojko, N. (2018). Smart-kontrakty – chy spravdi dohovory ta chy dijsno rozumni [Smart contracts – are they really contracts and really smart]. Natsionalna asotsiatsiia advokativ Ukrainy – National bar association of Ukraine. Retrieved from http://unba.org.ua/publications/3169-smart-kontrakti--chi-spravdi-dogovori-ta-chi-dijsno-rozumni.html [in Ukrainian].

Korzh, I. (2018). Smart-kontrakty iak innovatsijnyj pravovyj instrument [Smart contracts as a legal innovative tool]. Businesslaw.org. Retrieved from https://www. businesslaw.org.ua/smatr-contracts-as-a-legal-innovative-tool [in Ukrainian].

Marutian, R. (2018). Ukraina sered krain-lideriv z vprovadzhennia tekhnolohii blokchein [Ukraine is among the leading countries in the implementation of blockchain technology]. Matrix-info.com. Retrieved from https://matrix-info.com /2018/01/30/ukrayina-sered-krayin-lideriv-z-vprovadzhennya-tehnologiyi-blokchejn [in Ukrainian].

Mytko, V. (2018). De bitkoin ie natsionalnoiu valyutoiu [Where bitcoin is the national currency]. Howtobuycoin.com. Retrieved from https:// howtobuycoin.com /bitcoin/bitcoin-official-cryptocurrency [in Ukrainian].

Tarasiuk, A. (2017). Smart-kontrakty sered iurystiv [Smart contracts among lawyers]. Elektronnyj zhurnal Yuryst&Zakon – Electronic magazine Lawyer&Law, 21. Retrieved from http://uz.ligazakon.ua/ua/magazine-article/EA010426 [in Ukrainian].

Tolkachev, A. (2018). Pozicii regulyatorov mira kasatel'no ICO i kriptovalyut: analiticheskij obzor [Positions of the world’s financial regulating bodies regarding ICOs and cryptocurrencies: analytical review]. Deloitte. Retrieved from https://www2.deloitte.com/ru/ru/pages/tax/articles/2017/ico-alert.html [in Russian].

Kriptovalyuty, blokchejn i makroekonomicheskaya ustojchivost' [Cryptocurrencies, blockchain and macroeconomic stability] (2018). Evrazijskaya ekonomicheskaya komissiya – Eurasian Economic Commission. Retrieved from: http://www.eurasiancommission.org/ru/act/dmi/workgroup/Documents [in Russian].

Samye uspeshnye ICO za vsyu istoriyu ih provedeniya [The most successful ICOs in the history] (2017). Habr.com. Retrieved from https://habr.com/ru/post/339822 [in Russian].

Smart-kontrakty: analiticheskij obzor [Smart contracts: analytical review] (2018). Central'nyj bank Rossijskoj Federacii – Central Bank of the Russian Federation. Retrieved from https://www.cbr.ru/Content/Document/File/47862/ SmartKontrakt_18-10.pdf [in Russian].

Ukrainski kompanii na ICO [Ukrainian companies on ICO] (2018). Minfin.com.ua. Retrieved from https://minfin.com.ua/ua/2018/03/10/32649004 [in Ukrainian].

Nick Szabo. (1996). Smart Contracts: Building Blocks for Digital Markets. Semanticscholar.org. Retrieved from: https://www.semanticscholar.org/paper /Smart-Contracts-%3A-Building-Blocks-for-Digital-Szabo/9b6cd3fe0bf5455dd44ea31422d 015b003b55688f [in English].

Impact of digital innovations on the processing of electronic payments and contracting: an overview of legal risks (2017). European Central Bank. Retrieved from https://www.ecb.europa.eu/pub/pdf/scplps/ecb.lwp16.en.pdf?344b9327 fec917 bd7a8fd70864a94f6e [in English].

Published

2020-04-26

Issue

Section

CIVIL LAW AND CIVIL PROCESS. FAMILY LAW. INTERNATIONAL PRIVATE LAW. COMMERCIAL LAW. COMMERCIAL-PROCEDURAL LAW.

How to Cite

Varavka, Vasyl. “Problems of Legal Regulation of Smart Contracts”. Actual Problems of Law, vol. 1, no. 1, Apr. 2020, pp. 143-51, https://doi.org/10.35774/app2020.01.143.

Similar Articles

1-10 of 622

You may also start an advanced similarity search for this article.