Gary Cywie, Partner, and Karl Pardaens, Partner, at Elvinger Hoss Prussen, tell us more about their collaboration with Infrachain, and also discuss the main advantages of the Blockchain technology.
When and why did you join the Infrachain initiative?
Elvinger Hoss Prussen joined Infrachain in March 2018.
Being active in the Fintech and other digital ledger technology realm, we wanted to be able to share our experience and also learn from our interactions with the members of the community. The first area in which we contributed was in relation to the then upcoming entry in application of the GDPR. We were involved in the drafting of Infarchain’s position paper about how the GDPR applies to the non-profit organization in general.
What are the challenges you are currently facing when it comes to the development of concrete Blockchain applications?
One of the main legal challenges sits with the fact that there is no specific legislation or regulation about blockchain-based applications. That being said, the lack of specific legislation does not necessarily mean that blockchain uses cases are illegal or that no legislation applies. Although the blockchain technology is different from others in certain ways as it embeds many features able to boost the applications that it supports, it is still a technology and one must assess each business model and application against the applicable laws and regulations in general. Certain activities, especially but not only Fintech, may fall within the scope of regulated activities and therefore deserve special attention from a legal standpoint.
Intellectual property aspects of blockchain-based application also deserves some attention.
What about their main advantages and opportunities?
The advantage of being a law firm is that we see the projects from various angles, from inception to launch. Aspects that need to be considered range from the intellectual property clauses to be inserted in the employment contracts entered into with developers to ensure ownership of the code to in depth regulatory analysis for projects in certain areas such as the financial sector or the health sector. We also incorporate the companies, assist them navigate complex tax matters, help them when they get financed by business angels, banks or institutional investors, draft and negotiate agreements relating to joint ventures or commercial cooperation, etc. More particularly, we provide legal advice and assistance to ensure there are no road blocks that would legally impair the model envisaged by the business. And we identify such road blocks, we assist in finding the best solutions.
According to you, where will Blockchain be the most efficient? How and why?
We would need a crystal ball to answer that question but can say that the sector in which we see the more advanced applications currently relate to finance, and in particular structured finance where securitization companies, which operate usually in a less regulated environment, are testing the blockchain as a way to give more transparency and certainty to the holders of securities in relation to their portfolio. The funds industry should logically follow but due to the regulatory environment there are more legal issues to be dealt with.
What is needed to really kickoff the adoption of Blockchain?
Some more time. The world wasn’t built in a day. It took 10 years for the internet to become a publicly used. It’s wider use only came after 5 more years. The existence of the first blockchain was released in 2008 with the launch of bitcoins by Satoshi Nakamoto, whomever is or are beyond this pseudonym. Why should the adoption of a technology which is supposed to be the biggest contemporary technical evolution as some say take less time to be adopted than the internet itself? Legal challenges also existed at the time when the internet became more widely used. The law follows the evolution of society and always lags behind technical development. When they are sufficiently neutral from a technology standpoint, many laws can apply without there being a need to change them to embrace technical evolution. When legal changes are necessary, they need some time to be implemented. Who speaks today about the internet protocol (IP) when creating or browsing a website? Like others, we think that no one will speak about blockchain anymore in a few years’ time, whilst the technology will be largely spread. It will just happen. First movers are of course the ones shaping the future. As always.
Some time and a bit of international harmonization or at least normalization, be it solely from a terminological standpoint. Some regulators such as IOSCO, the EU Commission, the EBA and others are working on it.
Published on March 10th, 2020 on https://www.itone.lu/actualites/first-movers-are-course-ones-shaping-future