The Commodity Futures Trading Commission (“CFTC”) recently published a detailed primer on smart contracts. The Primer discusses their functionality, use cases, regulatory environment and potential risks. It describes a “smart contract” as a set of coded computer functions that (1) may incorporate the elements of a binding contract (e.g., offer, acceptance, and consideration), or (2) may execute certain terms of a legal contract, or (3) allows self-executing computer code to take actions at specified times or based on reference to the occurrence or non-occurrence of an action or event (e.g., delivery of an asset, weather conditions, or change in a reference rate). The Primer also observes that a smart contract may not be a legally binding contract, which is a critical distinction for developers and entrepreneurs (and their counsel) in the digital economy.
On October 11, 2018, the Senate Banking Committee held a wide-ranging hearing entitled “Exploring the Cryptocurrency and Blockchain Ecosystem.” The hearing featured testimony from Dr. Nouriel Roubini, an NYU professor who famously predicted the 2007-2008 financial crisis, as well as a counterpoint from Mr. Peter Van Valkenburgh, the Director of Research from Coin Center. Continue Reading Senate Banking Committee Explores Blockchain
For many public companies, the annual meeting voting process is littered with intermediaries and inefficiencies that can result in a lack of shareholder engagement. Proposals are often voted on by proxies instead of by shareholders, oftentimes weeks in advance of the meeting. Few shareholders attend annual meetings in person. Large institutional shareholders may be granted engagement opportunities with management of the company that are not afforded to individual shareholders. These factors can result in a lack of transparency in the voting process and asymmetrical voting power amongst shareholders. Blockchain technology has several potential applications that can remedy these inefficiencies and restore shareholder trust and engagement. Continue Reading The Promise of Blockchain Technology in Annual Meetings and Corporate Governance
Recently, several states have passed legislation allowing the use of smart contracts and blockchain technology in various commercial contexts. A “smart contract” is commonly defined in such legislation as an event-driven program or computerized transaction protocol that runs on a distributed, decentralized, shared and replicated ledger that executes a contract or any provision(s) of a contract by taking custody over and instructing transfer of assets on the ledger. Continue Reading The State of Smart Contract Legislation
Enterprises around the world are actively implementing a wide variety of blockchain solutions to improve efficiencies, enhance user experiences and lower transaction costs. But the private sector’s development of distributed ledger technology is often outpacing the legal and regulatory regimes that impact it. In the United States, numerous regulators have asserted jurisdiction over blockchain applications, frequently in redundant or even contradictory ways. With the Blockchain Legal Resource blog, we at Hunton Andrews Kurth plan to keep track of the most notable legal and regulatory developments in the blockchain space, providing our commentary and legal insight along the way.