Securities on Blockchain and the Uniform Commercial Code
Reade Ryan and Mayme Donohue; 73(1): 85-108 (Winter 2017/2018)
This article initially provides a high-level description of blockchain technology intended to be accessible to those without a technical background, and illustratively describes an existing blockchain system that already evidences securities issued and being traded. The article then sets forth and analyzes how Article 8 of the Uniform Commercial Code covers blockchain securities as “uncertificated securities.” Finally, the article provides guidance to corporate lawyers faced with giving a legal opinion relating to the issuance and sale of securities on a blockchain.
Crypto Transaction Dispute Resolution
Wulf A. Kaal and Craig Calcaterra; 73(1): 109-152 (Winter 2017/2018)
The rapid evolution of anonymous, autonomous, and distributed blockchain-based smart contracting creates friction and enforceability issues with existing legal and jurisdictional principles, calling the future governance of blockchain technology into question. The effective governance of blockchain technology and smart contracting is essential to ensuring its continuing evolution. Based on the mathematical principles underlying the disposition of blockchains, we propose and evaluate an alternative approach to the existing legal exercise of jurisdiction that is inherent in blockchain technology itself. We call this “distributed jurisdiction.”
This contribution is not merely theoretical. Several Ethereum smart contracting crypto start-ups have demonstrated that anonymity can be perpetuated in blockchain technology, despite blockchains’ eternal storage of information and their growing size working against anonymity. Start-up applications highlight that the technology itself offers means of internal controls that help ensure effective governance in the continuing evolution of the technology.
Based on the concept of distributed jurisdiction, we suggest an opensource platform ecosystem for smart contracting dispute resolution that allows users to opt in to a conflict resolution mechanism that enables more nuanced crypto solutions and produces greater certainty in the process. Anonymized arbiter expertise via rankings in combination with a representation option for crypto disputes provide a resolution mechanism for legacy businesses that desire to participate in the growth of crypto business opportunities and hope to avoid legacy system intermediation and the associated transaction costs but require legal legacy system assurances and crypto dispute resolution equivalence.
Distributed Stock Ledgers and Delaware Law
J. Travis Laster and Marcel T. Rosner, 73(2): 319-336 (Spring 2018)
Effective August 1, 2017, the Delaware General Corporation Law (the “DGCL”) now authorizes Delaware corporations to use blockchain technology to maintain stock ledgers and communicate with stockholders. Consistent with the DGCL’s status as an enabling act that facilitates private ordering, the blockchain amendments are permissive. In the near term, they create a foundation for a technology ecosystem by removing any uncertainty about the validity of shares that have been issued or are maintained using blockchain technology. Over a longer time horizon, the amendments foreshadow a more flexible, dynamic, and digital future in which distributed ledger technology and smart contracts play major roles.