How is the UK handling Cryptocurrency and the Law? Part 2: Smart Contracts

Kirsty Goodary
July 2020

Welcome to Part Two of our series at Extropy.io.

We hope you enjoyed Part One, where we discussed the legal status of cryptoassets from the UK Jurisdiction Taskforce’s (UKJT) paper, “Legal Statement on Cryptoassets and Smart Contracts”. There’s also a link to the full paper at the end of this article.

This time, we’ll be discussing the UKJT’s findings for Smart Contracts, as well as what this means, in principle, for those who are part of smart contract agreements.

What is a smart contract?

A smart contract is a self-executing contract where the agreement terms are written in code.

It’s designed to reduce the need for human intervention. Instead, the smart contract can define the rules and it automatically enforces the terms of the contract.

Smart contracts are becoming increasingly popular due to their benefits. Some of these include preventing someone from avoiding their obligations, transparent terms, security and efficiency.

They have been adopted across multiple sectors so far, such for as insurance policy agreements, managing loan agreements and legal contracts.