The Distributed Liability of Distributed Ledgers: Legal Risks of Blockchain

49 Pages Posted: 15 Aug 2017 Last revised: 13 Jul 2018

Dirk A. Zetzsche

Universite du Luxembourg - Faculty of Law, Economics and Finance; Heinrich Heine University Dusseldorf - Center for Business & Corporate Law (CBC)

Ross P. Buckley

University of New South Wales (UNSW) - Faculty of Law

Douglas W. Arner

The University of Hong Kong - Faculty of Law

Date Written: August 13, 2017

Abstract

The transformative potential of distributed ledger technology, especially in the financial sector, is attracting enormous interest. Many financial institutions are investing heavily in proof of concept demonstrations and the rollout of pilot applications of DLT technology. Part of the attraction of distributed ledger systems, such as Blockchain, lies in transcending law and regulation. From a technological perspective, DLT is generally seen as offering unbreakable security, immutability and unparalleled transparency, so law and regulation are seen as unnecessary. Yet while the law may be dull and the technology exciting, the impact of the law cannot be simply wished away. With data distributed among many ledgers, legal risk will remain. DLT projects may well be found, by courts, to constitute joint ventures with liability spread across all owners and operators of systems serving as distributed ledgers. Regulators seeking to support appropriate approaches to twenty-first century financial infrastructure must focus on these legal consequences.

Keywords: Bitcoin, Blockchain, Distributed Ledger Technology, Financial Infrastructure, FinTech, RegTech

Suggested Citation

Zetzsche, Dirk Andreas and Buckley, Ross P. and Arner, Douglas W., The Distributed Liability of Distributed Ledgers: Legal Risks of Blockchain (August 13, 2017). University of Illinois Law Review, 2017-2018, Forthcoming; University of Luxembourg Law Working Paper No. 007/2017; Center for Business & Corporate Law (CBC) Working Paper 002/2017; University of Hong Kong Faculty of Law Research Paper No. 2017/020; UNSW Law Research Paper No. 17-52; European Banking Institute Working Paper Series 14. Available at SSRN: https://ssrn.com/abstract=3018214 or http://dx.doi.org/10.2139/ssrn.3018214

Dirk Andreas Zetzsche

Universite du Luxembourg - Faculty of Law, Economics and Finance ( email )

Luxembourg, L-1511
Luxembourg

HOME PAGE: http://wwwen.uni.lu/recherche/fdef/research_unit_in_law/equipe/dirk_andreas_zetzsche

Heinrich Heine University Dusseldorf - Center for Business & Corporate Law (CBC) ( email )

Universitaetsstr. 1
D-40225 Düsseldorf
Germany
+49 211 81 15084 (Phone)
+49 211 81 11427 (Fax)

Ross P. Buckley

University of New South Wales (UNSW) - Faculty of Law ( email )

Sydney, New South Wales 2052
Australia

Douglas W. Arner (Contact Author)

The University of Hong Kong - Faculty of Law ( email )

Pokfulam Road
Hong Kong, Hong Kong
China

HOME PAGE: http://hub.hku.hk/rp/rp01237

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