I regularly take heat from the public, permission-less blockchain (cryptocurrency) folks who are adamant about the use of public networks having superiority over private, permissioned blockchain networks.
I’m not an attorney (although I tend to debate with them a lot about the intersect of tech and law) and since crypto enthusiasts and technical people are generally pretty bad at armchair law, I try to actually go read legal code and consider the contextual implications and intersects with other laws.
Based on other language in various legislation relating to blockchain, determining the genuineness of the author of a record may prove challenging since in public, permission-less blockchains do not provide an explicit and stable link between a transacting address and a legal or real-world entity.
There are ways to trace transactions back to their “most likely” author, such as those used by law enforcement agencies investigating crimes, but they require a good deal of sleuthing and are not guaranteed to produce results, especially since developers of public, permission-less blockchains are very concerned about protecting the privacy of transacting parties and are constantly developing new ways to anonymize transactions and protect identity.
This was most recently demonstrated with the international incident between Virgil Griffith and his Ethereum North Korea shenanigans.
In private, permissioned blockchains, it is as easy to identify the author of a given record as it is with any other digital record-keeping system. Such systems like XDEX routinely employ identification and authentication as part of their design.
State of Vermont (H.868) (Act 157, Sec. I.1. 12 V.S.A. § 1913)
an act relating to miscellaneous economic development provisions, provides that:
(1) A digital record electronically registered in a blockchain shall be self-authenticating pursuant to Vermont Rule of Evidence 902, if it is accompanied by a written declaration of a qualified person, made under oath, stating the qualification of the person to make the certification and:
(A) the date and time the record entered the blockchain; (B) the date and time the record was received from the blockchain;
(C) that the record was maintained in the blockchain as a regular conducted activity; and (D) that the record was made by the regularly conducted activity as a regular practice.
(2) A digital record electronically registered in a blockchain, if accompanied by a declaration that meets the requirements of subdivision (1) of this subsection, shall be considered a record of regularly conducted business activity pursuant to Vermont Rule of Evidence 803(6) unless the source of information or the method or circumstance of preparation indicate lack of trustworthiness. For purposes of this subdivision (2), a record includes information or data.
(3) The following presumptions apply:
(A) A fact or record verified through a valid application of blockchain technology is authentic. (B) The date and time of the recordation of the fact or record established through such a blockchain is the date and time that the fact or record was added to the blockchain.
(C) The person established through such a blockchain as the person who made such recordation is the person who made the recordation.
(D) If the parties before a court or other tribunal have agreed to a particular format or means of verification of a blockchain record, a certified presentation of a blockchain record consistent with this section to the court or other tribunal in the particular format or means agreed to by the parties demonstrates the contents of the record.
Still Raises Questions
Although this law’s intent is to grant legitimacy to blockchain records, thereby providing greater certainty to organizations and agencies who may wish to use this technology for record-keeping, questions still persist about how such provisions would be implemented in practice.
These include who would be considered a “qualified person” pursuant to sub-section (1) or “the person who made such recordation” pursuant to sub-section (3)(C) in a system that may be operating pseudonymously and autonomously, as well as how to achieve the requirement for there to be a date and time of recordation (e.g., reliance on system time or use of an external source of date and time verification).
If a blockchain record is written by a Delaware-based entity, does that pass legal status to a client user of said company’s software to record the record via a services offering—even if the client and higher order transaction isn’t within the State of Delaware jurisdiction?
Ohio Does E-Signatures
Ohio simplified it even further in the Ohio Revised Code 1306.01 Definitions by changing the definition of “Electronic signature” to read
(H) “Electronic signature” means an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record . A signature that is secured through blockchain technology is considered to be in an electronic form and to be an electronic signature.
Again, this invokes questions around the ambiguity of “Who is signing what?”
Is the owner of a block producing node signing an affidavit the data about the transaction recorded on the blockchain is true and valid? aka notary?
Or are they signing an online form version of an agreement? aka Docusign?
Fairly nebulous, which is where I think a lot of attorneys like it to remain (so they can argue the semantics in a case trial).
When the blockchain node writes a new block with transactions and data to the chain, it is effectively providing the time and date stamp with affidavit of witness to the parties and act of execution of a validated document. How does this impact the owner of the node?
Can I simply provide the core technology platform to the regulated entity providing the attestations of the record on a legal basis without actually having to also be that status of an entity as well?
For example, these Ethereum blockchain companies becoming an exchange or transfer agent to conduct business? Is that even necessary if you’re just providing the enterprise software and data infrastructure to say… a bank?
The answer is a resounding “NO!”
It is ludicrous to even remotely suggest that I must be a broker dealer in order to provide broker dealers with software and data solutions as a vendor.
XDEX is a shared global financial record network that connects all of your financial information, documents, metadata, payments, trading, order, communication, market and reference information into a highly-secured, API-connected, blockchain-based platform to connect, simplify, log, and secure every activity and interaction — lowering risks and reducing costs.
XDEX helps people become better-organized and prepared for the most transformative evolutions coming to global marketplaces, banking and even money itself.
Your financial records are more trustworthy, more secure, and fully-automated between people, organizations, and jurisdictions.