Legal Challenges - Blockchain An Introduction

What are the Legal Challenges?

So far, so positive. But what should you keep in mind from a legal perspective?

1. Jurisdiction

As this is a decentralised ledger, the nodes or computer servers can be located in multiple countries.

2. Cyber Security

Blockchain is applauded for being highly secure, but it is not incapable of attack by cyber criminals.

3. Intellectual Property

Whether it is this article, to NFTs, to recording ownership of the Mona Lisa, a ledger also is a way to record ownership and licensing activities.

4. Decentralised Autonomous Organisations "DAOs"

DAOs are member-owned communities without centralized leadership

5. Data Privacy

Should personal data or metadata (capable of identifying a person) be stored in a block (even if pseudo-anonymised), the blockchain will need to comply with the EU General Data Protection Regulation..

6. Smart Contracts

There is a growing awareness about the vast potential for smart contracts, and this extends beyond the by now well-known Decentralised Finance ("DeFi") and the more recent Non-Fungible Tokens ("NFT") industries.

7. Regulating Digital Assets

In addition to the general law and jurisdictional issues, there is an ongoing question of whether or not a digital asset is also an asset to be regulated.

The Next Steps

The EU’s blockchain strategy is to be the leader in this technology and is becoming a home to significant platforms, applications and companies1. This is complemented by Ireland’s National Digital Strategy (2022). Blockchain represents the technology, cryptocurrencies and NFTs are registered on it. The Metaverse is lining-up to use it and being the front-end of the decentralised Web3 (the next iteration of the World Wide Web). As with all technology, trust is key. Trust comes with greater global awareness (without the hype and horror stories), actively delivering on the promise of a greener future, and solving the legal challenges head-on.

Matheson's lawyers are keeping abreast of developments and we would be delighted to discuss any questions that have arisen as a result of this article. Please contact us for more information.

Sources

1European Commission, "Blockchain Strategy"

2 Government of Ireland, "The Digital Ireland Framework"

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