Regulation by blockchain: the emerging battle for supremacy between the code of law and code as law

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Regulation by blockchain : the emerging battle for supremacy between the code of law and code as law. / Lockett-Yeung, Karen.

In: Modern Law Review, Vol. 82, No. 2, 03.2019, p. 207-239.

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@article{685f86759f1f448aa1b0490e1669a7f4,
title = "Regulation by blockchain: the emerging battle for supremacy between the code of law and code as law",
abstract = "Many advocates of distributed ledger technologies (including blockchain) claim that these technologies provide the foundations for an organisational form that will enable individuals to transact with each other free from the travails of conventional law, thus offering the promise of grassroots democratic governance without the need for third party intermediaries. But does the assumption that blockchain systems will operate beyond the reach of conventional law withstand critical scrutiny? This is the question which this paper investigates, by examining the intersection and interactions between conventional law promulgated and enforced by national legal systems (ie the {\textquoteleft}code of law{\textquoteright}) and the internal rules of blockchain systems which take the form of executable software code and cryptographic algorithms via a distributed computing network ({\textquoteleft}code as law{\textquoteright}). It identifies three ways in which the code of law may interact with code as law, based primarily on the intended motives and purposes of those engaged in activities in developing, maintaining or undertaking transactions upon the network, referring to the use of blockchain: (a) with the express intention of evading the substantive limits of the law ({\textquoteleft}hostile evasion{\textquoteright}); (b) to complement and/or supplement conventional law with the aim of streamlining or enhancing compliance with agreed standards ({\textquoteleft}efficient alignment{\textquoteright}); and (c) to co-ordinate the actions of multiple participants via blockchain to avoid the procedural inefficiencies and complexities associated with the legal process, including the transaction, monitoring and agency costs associated with conventional law ({\textquoteleft}alleviating transactional friction{\textquoteright}). These different classes of case are likely to generate different dynamic interactions between the blockchain code and conventional legal systems, which I describe respectively as {\textquoteleft}cat and mouse{\textquoteright}, the {\textquoteleft}joys of (patriarchial) marriage{\textquoteright} and {\textquoteleft}uneasy coexistence and mutual suspicion{\textquoteright} respectively. ",
keywords = "blockchain, governance, forms of social ordering, regulating, rule of law, transactional security, public-private divide",
author = "Karen Lockett-Yeung",
year = "2019",
month = mar,
doi = "10.1111/1468-2230.12399",
language = "English",
volume = "82",
pages = "207--239",
journal = "Modern Law Review",
issn = "0026-7961",
publisher = "Blackwell-Wiley",
number = "2",

}

RIS

TY - JOUR

T1 - Regulation by blockchain

T2 - the emerging battle for supremacy between the code of law and code as law

AU - Lockett-Yeung, Karen

PY - 2019/3

Y1 - 2019/3

N2 - Many advocates of distributed ledger technologies (including blockchain) claim that these technologies provide the foundations for an organisational form that will enable individuals to transact with each other free from the travails of conventional law, thus offering the promise of grassroots democratic governance without the need for third party intermediaries. But does the assumption that blockchain systems will operate beyond the reach of conventional law withstand critical scrutiny? This is the question which this paper investigates, by examining the intersection and interactions between conventional law promulgated and enforced by national legal systems (ie the ‘code of law’) and the internal rules of blockchain systems which take the form of executable software code and cryptographic algorithms via a distributed computing network (‘code as law’). It identifies three ways in which the code of law may interact with code as law, based primarily on the intended motives and purposes of those engaged in activities in developing, maintaining or undertaking transactions upon the network, referring to the use of blockchain: (a) with the express intention of evading the substantive limits of the law (‘hostile evasion’); (b) to complement and/or supplement conventional law with the aim of streamlining or enhancing compliance with agreed standards (‘efficient alignment’); and (c) to co-ordinate the actions of multiple participants via blockchain to avoid the procedural inefficiencies and complexities associated with the legal process, including the transaction, monitoring and agency costs associated with conventional law (‘alleviating transactional friction’). These different classes of case are likely to generate different dynamic interactions between the blockchain code and conventional legal systems, which I describe respectively as ‘cat and mouse’, the ‘joys of (patriarchial) marriage’ and ‘uneasy coexistence and mutual suspicion’ respectively.

AB - Many advocates of distributed ledger technologies (including blockchain) claim that these technologies provide the foundations for an organisational form that will enable individuals to transact with each other free from the travails of conventional law, thus offering the promise of grassroots democratic governance without the need for third party intermediaries. But does the assumption that blockchain systems will operate beyond the reach of conventional law withstand critical scrutiny? This is the question which this paper investigates, by examining the intersection and interactions between conventional law promulgated and enforced by national legal systems (ie the ‘code of law’) and the internal rules of blockchain systems which take the form of executable software code and cryptographic algorithms via a distributed computing network (‘code as law’). It identifies three ways in which the code of law may interact with code as law, based primarily on the intended motives and purposes of those engaged in activities in developing, maintaining or undertaking transactions upon the network, referring to the use of blockchain: (a) with the express intention of evading the substantive limits of the law (‘hostile evasion’); (b) to complement and/or supplement conventional law with the aim of streamlining or enhancing compliance with agreed standards (‘efficient alignment’); and (c) to co-ordinate the actions of multiple participants via blockchain to avoid the procedural inefficiencies and complexities associated with the legal process, including the transaction, monitoring and agency costs associated with conventional law (‘alleviating transactional friction’). These different classes of case are likely to generate different dynamic interactions between the blockchain code and conventional legal systems, which I describe respectively as ‘cat and mouse’, the ‘joys of (patriarchial) marriage’ and ‘uneasy coexistence and mutual suspicion’ respectively.

KW - blockchain

KW - governance

KW - forms of social ordering

KW - regulating

KW - rule of law

KW - transactional security

KW - public-private divide

U2 - 10.1111/1468-2230.12399

DO - 10.1111/1468-2230.12399

M3 - Article

VL - 82

SP - 207

EP - 239

JO - Modern Law Review

JF - Modern Law Review

SN - 0026-7961

IS - 2

ER -