Beyond Bitcoin: Understanding Legal Boundaries of Blockchain Technology

Abstract

The current legal uncertainty surrounding blockchain technology can discourage innovators from implementing new blockchain applications. Consequently, it can limit the development of the technology and, ultimately, hinder the growth of this new market. Therefore, this article aims to highlight and address, from a practical standpoint, the prominent legal challenges faced by innovators. The main technical components and applications of blockchain technology – such as crypto-assets, distributed ledgers, and smart contracts – are used as reference points for the analysis. First, the article classifies crypto-assets and specifies (1) when they fall within the scope of banking and finance regulation; and (2) when they fall within the scope of the MiCa Regulation proposal (also describing its principles and functioning). Secondly, it investigates the evidential value of distributed ledgers, assesses how they could be exploited in private law matters, and examines the recent proposal of amendment to the eIDAS Regulation. Lastly, it clarifies under which conditions a smart contract can be legally binding and the practical consequences.