The Law Society’s Blockchain Guidance: what do you need to know?

In his foreword to the Guidance, Master of the Rolls Sir Geoffrey Vos predicts that in the future every lawyer will need to be familiar with blockchain and its key applications in cryptoassets and smart contracts. We agree.

The Law Society has been working alongside Tech London Advocates to produce a second edition of its Blockchain Legal and Regulatory Guidance. Published in January 2022, the updated Guidance weighs in at well over 200 pages, made up of 14 sections that are split into detailed topics. It has been written by a host of experts from legal, academic and tech backgrounds.

The Guidance begins by introducing Distributed Ledger Technology (DLT), defining it as “a broad umbrella of technologies that seek to store, synchronise and maintain digital records across a network of computing centres.” This includes blockchain, which is probably the best-known type of DLT.

The Guidance identifies three key growth areas for 2022:

• The implementation of central bank digital currencies (CBDCs), which make use of DLT and smart contracts.
• An increased acceptance and use of non-fungible tokens (NFTs).
• A growing interest in environmentally sustainable DLT.

Why is the Guidance relevant to you?

The update to the Guidance is timely, as blockchain and its diverse applications continue their march from the furthest fringes of the internet into the mainstream. Yet, for many lawyers, as for the general public, there is limited knowledge and understanding of the technology that underpins blockchains and the legal risks arising from their application in areas ranging from cryptocurrency to digital artwork.

At TLT, we work with leading clients in a range of key sectors. We can already see use cases for DLT in all of them (see below). The applications of DLT raise legal and regulatory issues that we collaborate on across our service lines, including Technology, Commercial, Data Privacy, IP and Financial Services.

This is the context in which clients will expect their lawyers to have an understanding of blockchain, cryptoassets, smart contracts and myriad other DLT solutions.

Our Blockchain series

We recognise the challenge this presents busy lawyers (and clients!) who are looking to develop their understanding in this area. Given how important we think this developing technology is, we have decided to use the Law Society’s Guidance as a springboard for a series of articles on the most interesting blockchain-related topics.

A brief look at some of these topics reveals the breadth of the sectors that will be affected by developments in this space.

• The growth of NFTs across Retail, Leisure and sport industries as well as novel ESG applications in conservation and sustainability projects.
• Blockchain solutions in the Public Sector, including the potential issue of CBDCs by central banks and the Land Registry’s (long heralded) digital conveyancing solutions in the Real Estate Sector.
• The development and exchange of cryptocurrencies and other tradeable cryptoassets (including NFTs), which has become a key area of focus for Financial Services regulators.
• The use of smart contracts on blockchains to facilitate various Financial Services transactions.
• The increasing scrutiny that blockchain platforms face from a Clean Energy and ESG perspective in relation to power consumption and the development of carbon neutral blockchains.
• Of course, all of these applications are underpinned by Digital technology involving platforms and exchanges, communications and cryptography.

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If, like us, you want to know your stablecoins from your social tokens, understand the excitement around NFTs or find out whether your blockchain really does use the power supply of a small country (spoiler: it depends on which blockchain), then keep an eye on our website and LinkedIn page for our articles.

Contributor: Elizabeth Smillie (Trainee Solicitor, Financial Services Disputes & Investigations)

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at February 2022. Specific advice should be sought for specific cases. For more information see our terms & conditions