If one factor could be held up as a summary of this year in the Blockchain industry, it might be that regulating the space is truly difficult. At this point, globally, the legal statuses of Blockchain technology and cryptocurrencies are fragmented to say the least.
Even so, as of this week, one major clarification has been made.
According the Commodity Futures Trading Commission, contrary to the sentiment that most Blockchain news sites have been giving us all year, smart contracts are already being regulated. In a primer released yesterday which is essentially a Powerpoint presentation, CFTC representatives have attempted to make clear exactly what this means.
One of the first stipulations was that a smart contract is not a legally binding contract if it violates existing laws in some way. Perhaps even more importantly, the CFTC goes on to clarify the specific legal designation of a smart contract under current financial laws.
In doing so, they suggest that it is essentially impossible to call a smart contract one thing like a commodity. Because of what they are on a technical level, it is suggested as more logical that smart contracts are defined under five or more designations. If we consider what criteria the CFTC used in making this conclusion, then their reasoning may be easier to grasp.
Overall, they list the structure and inner workings of smart contracts as being the key indicators for how they may be classified. From this, we can conclude that in most cases, it seems like the digital items that smart contracts deal with will tell us how they may be legally defined.
For example, the primer suggests that a smart contract that facilitates the trading of futures should be legally treated in the same way as a traditional futures contract.
One case that is somewhat related to this is that of prediction markets.
In an article today, Coindesk reminded us that the CFTC has already floated the possibility that smart contracts which are involved in prediction markets like Augur could be considered illegal.
In the end, however, this has not yet been specified further.
Also, because this latest release from the CFTC was basically an introduction to their thoughts on smart contracts, one can reasonably expect that more details will be released over time as their opinion evolves.
Still in reading and understanding this presentation, it seems clear that United States regulators are definitively taking significant steps towards treating the Blockchain industry as one that is truly legitimate.
By: BGN Editorial Staff