The Dubai International Financial Centre (DIFC) Courts have partnered with Smart Dubai to create what they say is the world’s first “Court of the Blockchain”. According to an announcement on 30 July, they will initially explore how to aid verification of court judgments for cross-border enforcement. They say they plan to create a blockchain-based court designed to streamline the judicial process, remove document duplications, and drive efficiencies. Future research announced will investigate handling disputes arising out of private and public blockchains and out of regulation and contractual terms encoded within smart contracts.
Australian companies Decentralised Capital and Custodian Vaults have recently announced a partnership to launch Australia’s first insured crypto-currency custody vault. This follows the earlier commencement of Coinbase’s crypto-custody service in the USA and Europe. These offerings are in response to growing investor demand for reliable and secure crypto-currency storage.
Published on 19 July, the UK Law Commission’s 2017-2018 Annual Report includes a section dedicated to a research project into smart contracts. The Commission is a statutory independent body. Its aims include the conduct of research and consultations in order to make systematic recommendations for consideration by the UK Parliament. The Commission defines “smart contracts” as the technology which runs on blockchain and by which legal contracts may be executed automatically, at least in part. The body says there is a compelling case for a Law Commission scoping study to review the current English legal framework as it applies to smart contracts. The project’s purpose would be to ensure that English 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 has started its initial research and its main work will begin in summer 2018.
On June 14, Cardozo Law School in New York City held a conference entitled “Blockchain and the Law: Towards a Responsible Blockchain Sector.” The conference was led by a panel consisting of current and former commissioners and staff members of the SEC and the CFTC including Rob Cohen, director of the SEC’s enforcement division.
Among topics discussed was SEC Director William Hinman’s recent speech in which he stated that Ethereum is not a security. Panelists suggested this may indicate that the SEC would regard a token as being able to change its character over time, such that a token that was once a security can morph into one that is not a security. This would have important implications for market practices, potentially including the utility of SAFTs.
Amazon Web Services (AWS) plans to be one of a handful of tech companies providing blockchain-as-a-service (BaaS) for customers wanting to test the new technology without the costs or risks of developing it in house. Other providers of BaaS include Microsoft, IBM, HP, Oracle and SAP.
AWS has partnered with Kaleido, a new blockchain business cloud service for enterprises. Kaleido will offer its cloud services to host an Enterprise Ethereum-based, open-source blockchain platform, making Kaleido the first managed blockchain SaaS available on AWS. The platform has been designed to be easy to use, as the uncertainty surrounding the new technology has prevented its widespread adoption.
March was a busy month in the blockchain and cryptocurrency space for the Wyoming state government. The legislature passed, and the governor signed, five bills that many in the industry view as favorable to blockchain and cryptocurrency businesses. While the bills provide some beneficial clarity in this space and may attract businesses to the state, the scope and effect of some of the bills is limited. Accordingly, it is important that industry participants fully understand what the new Wyoming laws address, and, perhaps more importantly, what they do not.
Please see our latest thinking here for a full discussion of Wyoming’s new blockchain and cryptocurrency legislation.
By Jim Bulling and Felix Charlesworth
On 16 April 2018, representatives from the Australian Securities and Investments Commission (ASIC), Australian Transaction Reports and Analysis Centre (AUSTRAC) and the Australian Tax Office (ATO) convened in Melbourne and delivered presentations outlining their regulatory views on Initial Coin Offerings (ICOs) and blockchain technology in general.
The Bank of England, the UK’s central bank, is undertaking a Proof of Concept (PoC) to understand how a renewed Real Time Gross Settlement (RTGS) service could be capable of supporting settlement in systems operating on innovative payment technologies, such as those built on Distributed Ledger Technology (DLT). It is hoped that the service will deliver a stronger, more resilient, flexible and innovative sterling settlement system for the United Kingdom to respond to the changing payments landscape. The RTGS blueprint, published in May 2017, stated that the renewed service will offer a diverse and flexible range of settlement models, to enable existing and emerging payment infrastructures to access central bank money.
By Cameron Abbott and Sarah Goegan
Technology company IOT Group announced this week that it has signed an Australian first energy and blockchain deal. In the agreement with Hunter Energy, IOT Blockchain will build a blockchain centre at the Redbank coal-fired power station in the Hunter Valley, two hours north of Sydney.
The Australian Government has recently decided to regulate Digital Currency Exchange (DCE) providers, as they have inherent money-laundering and terrorism financing risks stemming from their high degree of anonymity and ease of cross-border transactions. As part of this regulation, DCE providers must provide regular reports to the Australian Transaction Reports and Analysis Centre (AUSTRAC). These reports must include, if known, the social media identifiers, unique device identifiers and digital wallet addresses of the relevant customer.
Many digital currencies operate on public blockchains that contain records of all transactions ever made, which is essential to their transaction validation and anti-tampering features. This public nature enables every client on the blockchain network to verify that any currency used in relation to a transaction actually exists, by looking through the transaction history of a particular digital wallet address. As such, being able to link digital wallet addresses to particular individuals will, over time, give AUSTRAC the power to trace suspicious transactions up the chain back to an individual. It may also be possible for the Australian Taxation Office to use this information in the future to ensure that individuals correctly report any capital gains resulting from the trading of digital currency for taxation purposes.