The British Government’s Ministry of Justice has backed a project to be carried out by the Law Commission for England and Wales that seeks to understand how legal issues related to cryptocurrencies and their associated technologies are handled in other countries.

This latest project of the Legal Commission is nicknamed Digital Assets: Which Law, Which Court? It will focus specifically on international private law, including those that have addressed technical issues related to smart contracts, non-fungible tokens (NFTs), and electronic business documents, among others.

The launch of the project is seen as much needed as the growth of these blockchain innovations has brought entirely new legal challenges to most countries including the UK. With plans to gather input on the handling of these cases around the world, the Law Commission may then propose a set of legal reforms for public consultation in mid-2023.

“With digital assets and other emerging technologies developing rapidly in recent years, the laws that support and govern them have struggled to keep up. This has led to inconsistencies between jurisdictions, with uncertainty over which laws should apply and which courts should rule on them,” said Professor Sarah Green, Legal Commissioner for Commercial and Common Law.

While the UK is poised to become a global hub for digital currencies, all aspects of the regulation of emerging fintech must be foolproof. The emergence of appropriate laws will avoid precedents such as the one presented in the case of Nathaniel Chastain, former product manager in the NFT market, OpenSea, who was loaded with crimes of insider trading.

In a bold move, Chastain’s lawyers asked the court to dismiss the case, noting that NFTs are neither classified as commodities nor without merit. While the case has yet to be ruled on, strong legal reform can help prevent gray areas like the ones Chastain’s lawyers are exploiting.

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