Keller was one of several panelists that spoke at the Ontario Bar Association Institute event “Operationalizing Blockchain: Legal Issues and Challenges to Consider” held on Feb. 5.
“A will is basically a smart contract,” Keller said, pointing to the fact that there is a predictable series of “if this, then that” events that take place when a will is executed. “For a will that’s uncontested, I think it will change the role of executors.”
Alan Wunsche, CEO of TokenFunder, Inc., said that while blockchain is commonly associated with crypto-currencies such as Bitcoin, it can also be viewed as an underlying technology akin to a smart contract. For instance, Wunsche said at the conference, a technology called Hyperledger from IBM and The Linux Foundation allows companies to allow private, permissioned access to a ledger.
“You get the security of the data, the auditability [and] the transparency, but you can tie it down to a small group of people,” said Wunsche. These types of “ledgers” can be used to automatically keep track of transactions or even supply chains, he said.
In real estate, for example, blockchain could be used fo subdividing a piece of real estate into micro-ownership through a token.
“If you can take real-world assets and tokenize them, that is where it gets really interesting and exciting,” he said.
However, these new applications of blockchain are still governed by old laws, which could limit applications in Canada, Keller said. In the case of real estate, one might need to be a registered broker to tokenize property, she said.
In some jurisdictions, there is a “right to be forgotten” or have one’s past erased from Google search, which might come into conflict with blockchain’s application as an immutable ledger, said Usman Sheikh, a partner in Gowling WLG's Toronto office, at the event.
“There is well-established privacy law in these areas, and just because you put it on blockchain doesn’t mean you get to pretend these laws don’t exist,” Keller said.
Wunsche also said that “governments are struggling to figure out where the path is” in terms of regulation.
“We are at the crosshairs of three different regulatory regimes: securities, foreign sanctions and anti-money laundering,” said Bram Abramson, general counsel at Decentral Inc. “Those can be hard to triangulate.”
Blockchain company QuadrigaCX has made headlines in recent weeks as creditors try to deal with its crypto-currency assets.
“We’ve all seen in the news or somewhere about a crypto exchange getting hacked. As much as we’d like to say the technology is absolutely perfect, there is no such thing as perfect technology. It would be incumbent on you to advise your client that there is risk,” said Keller.
It can be difficult to explain to clients who want to work with blockchain why they might not want to be the first to test the regulatory waters in a given area of the law, said Abramson.
“I joke that I haven’t slept in two years,” says Sheikh. “Our phones started going off the hook. Companies that were doing token sales were calling and saying ‘I didn’t really know this applied.’ . . . This area, because of all the hype, was also rife with fraud. At our firm, we have more of an extensive vetting process for these clients.”
Because there tend to be so many “firsts” in the area of blockchain law, there is a lot of congeniality between lawyers at different firms who are all trying to help clients navigate areas with little precedent, said Sheikh.
“There is no such thing as blockchain law. We are practitioners in what we did before now applying it to blockchain,” said Sheikh.
Despite the opportunities to use blockchain to automate legal processes, the panelists were not convinced that lawyers should all learn to code. Keller suggested that, like spoken languages have certified legal translators, coding languages might soon need something similar.
“Because the contracts will always get more complicated, we will never be better than the people doing the coding,” she said.