Generally speaking, a Blockchain is a peer-to-peer operated
distributed digital ledger that records all transactions executed
for a particular asset. The ledger is "distributed"
because each user of the network has its own copy of the
blockchain, and each user's copy is updated with new
information simultaneously. The greatest benefit of
distributed ledger applications, in comparison to conventional
financial networks, is that exchanges of a particular asset can be
verified, monitored and enforced without the presence of a trusted
third party or a central institution.
Currently, Blockchain-based technologies almost entirely cover
so-called virtual currencies, with Bitcoin being the most prominent
example. However, the technology could have applications well
beyond cryptocurrencies and is evolving to be applied to a broader
range of assets. The asset being transferred could be a nominal
amount of currency, like the Euro, or it could be a unit in a
securities issue, or something unrelated to the finance sector like
intellectual property rights or plots of land.
A (growing) number of legal questions need to be
answered, if Blockchain applications are to be put into
practical mainstream use. The nature of these questions has,
however, yet to be fully grasped. A small number is briefly
The Applicable Legal Rules
There is no European Union law that specifically addresses
the use of distributed ledger technologies. However, what is
evident is that the applicable legal framework will – to a
large extent – depend on the particular asset that is being
transferred using blockchain technologies. Depending on the asset,
different rules are involved.
Legal Effects of an Entry in the Blockchain Ledger
A Blockchain is a distributed network of Information; a digital
record of all transactions executed for a particular asset.
However, the legal effects of an entry in the Blockchain ledger
that describes a transfer of a particular asset from one address to
another are, so far, unclear. A question that has been pointed out
by authors is, for example, whether the acquirer of an asset that
has been transferred through Blockchain has obtained property.
In Germany, various registers provide us with information on the
ownership of assets (e.g. land titles) or on the entitlement to
rights. While, for example, the patent or trademark register
do not have constitutive effect because the entry itself does not
confer the right to exclude others from making or using the patent
or trademark, the entries still have presumptive legal effect.
Pursuant to section 28 para 1 of the German Trademark Act, for
example, "[i]t shall be presumed that the party recorded in
the register as the proprietor is entitled to the right arising
from the registration of a trade mark."
In the absence of a specific legal framework, a presumption of
ownership or of entitlement to rights cannot be derived from
distributed ledgers; and, more importantly, an entry in the ledger
cannot have constitutive effect on the transfer of rights or
ownership. Pursuant to section 873 para. 1 of the German Civil
Code, for example, the transfer of ownership of a plot of land
requires the registration of the change of ownership in the land
register. Thus, an entry in the Blockchain ledger would, by itself,
not be sufficient to obtain property in a plot of land.
However, it is conceivable that an entry in the ledger could
trigger a contractual obligation, if the formal requirements of the
law which governs the contract were satisfied which, by way of
example, might require notarization in cases where the contractual
obligation to transfer ownership concerns a plot of land.
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entities in Asia; and Tauil & Chequer Advogados, a Brazilian
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This Mayer Brown article provides information and comments
on legal issues and developments of interest. The foregoing is not
a comprehensive treatment of the subject matter covered and is not
intended to provide legal advice. Readers should seek specific
legal advice before taking any action with respect to the matters
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The implementation of the mandatory exchange of initial and
variation margin for non-cleared OTC derivative trades in the EU
commenced on 4 February for financial counterparties with the
largest derivatives portfolios.
Nevertheless, a RAIF's investment policy is subject to certain risk diversification requirements laid down by the CSSF.
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