The United Kingdom Law Commission came to the conclusion that smart contracts come under the English and Welsh laws. The firm, tasked with monitoring the laws and introducing reforms when and if needed, confirmed that no new reforms need to be introduced regarding these digital contracts.
Incremental development of common law
In their report, the UK Law Commission noted that there is no need to create additional laws pertaining to cryptocurrencies. However, the authority emphasizes the “incremental development of the common law.”
The Law Commission’s analysis demonstrates the flexibility of the common law to accommodate technological developments, particularly in the context of digital legal contracts, said the report.
According to the Law Commission, the current legal framework is flexible enough to impose legal authority over technological innovations like smart contracts. However, there are certain risks that might develop in the future because the technology hasn’t been fully discovered yet.
Therefore, the authorities will sit down with the Law Commission to figure out the possibilities of conflict with current legal infrastructure in the near future where smart contracts will be easier to draft, and the process of negotiation will be simpler.
Smart contracts are blockchain-based digital contracts that only execute when a certain condition is met. Popular platforms using this technology include Solana and Cardano. Currently, these contracts are not legally binding in many countries. In 2017, Belarus became the first nation to legalize them.
There are a number of nations that currently hold a speculative stance on blockchain-based assets as well as smart contracts. However, these digital contracts have the capability to reduce paperwork, and the workforce needs to process the paperwork. The rising popularity of platforms like Solana and Cardano hint at the rising usage of these contracts.
The report from UK Law Commission is another optimistic approach to the legalization of blockchain technology and cryptocurrencies as well.