Sir Geoffrey Vos’ Lawtech UK publishes dispute resolution rules for cryptoassets
English law provides an established and familiar framework by reference to which rights in respect of digital technologies can be effectively established and enforced, and has an impressive track record of dealing with and adapting to technological developments.
The UK Jurisdiction Taskforce of LawtechUK, chaired by Sir Geoffrey Vos, has published its Digital Dispute Resolution Rules.
Designed to enable faster and more cost-effective resolutions to legal disputes relating to crypto-assets, smart contracts, and blockchain applications, the document aims to foster confidence amongst businesses in the adoption of these technologies.
The new rules, drafted in extensive public and private consultation with lawyers, technical experts and financial services and commercial parties, address the little consistency in how legal disputes relating to distributed ledger technologies should be resolved.
The rules allow parties to resolve their disputes by an arbitrator with technical expertise rather than by a judge in court and provide maximum flexibility to adapt to as yet undeveloped technologies, thus enabling on-chain implementation of decisions.
In November 2019, the UKJT published its well-received legal statement on the status of cryptoassets and smart contracts under English and Welsh law.
English law provides an established and familiar framework by reference to which rights in respect of digital technologies can be effectively established and enforced, and has an impressive track record of dealing with and adapting to technological developments.
Sir Geoffrey Vos, chair of the UK Jurisdiction Taskforce and LawtechUK Panel member, commented: “I am delighted to welcome the publication by the UK Jurisdiction Taskforce of the ground-breaking Digital Dispute Resolution Rules.
“International business is rapidly adopting the use of digital documentation and on-chain smart contracts. The Rules aim to provide a process for speedy and cost-effective resolution of disputes originating digitally. They will hopefully give global businesses greater confidence to adopt and utilize new digital technologies.”
Jenifer Swallow, LawtechUK Director at Tech Nation, said: “Analogue ways of doing business will be widely restructured and digitized in the coming years, increasing efficiency and transparency. The smart contracts market alone is set to reach $345.4 million by 2026. Methods of dispute resolution must keep pace.
“The Digital Dispute Resolution Rules are a step-change in that evolution and in enabling wider confidence and adoption of these technologies – underpinning those readily-available today and capable of adapting to those yet to be developed. This is an exciting next step in the UK’s leadership at the forefront of business, law, and technology, and also demonstrates how simple legal processes can be.”
In 2020, the UK Financial Conduct Authority announced new rules for cryptoasset businesses. The FCA has been the anti-money laundering and counter terrorist financing (AML/CTF) supervisor of UK cryptoasset businesses under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs).
In October 2019, the FCA consulted on the fees structure it proposed to introduce to recover the costs of setting up and undertaking the new regime. Back then, the FCA proposed a flat-rate application charge for registration of £5,000 to recover estimated gateway costs of £400,000 from approximately 80 potential applicants known to the regulator.
In response to the feedback it received, the FCA has amended its proposals and the Board has set the following application charges:
£2,000 – businesses with income from UK cryptoasset activity up to £250,000; and
£10,000 – businesses with income from UK cryptoasset activity above £250,000.
