Even when blockchain-based fintech deals becomes mainstream, lawyers will remain central to the process, a Clifford Chance professional believes.
Speaking to a specialist sector website, Legal Futures, Clifford Chance’s co-head of fintech, senior associate Peter Chapman, who recently advised on an early example of such a deal, said that, “Ultimately the institutions that want to make use of this construct want to confirm this is an effective way of transferring their entitlements to security, because at the end of the day whether something is transferred is a legal question.
“You can do this all with technology, you can update records and so on and so forth – but without the contractual layer it just doesn’t operate, so the legal bit is pretty vital.”
Chapman had been part of the oversight team for a blockchain deal in which financial securities were moved between Credit Suisse and ING by reassignment of the ownership of the account in which they were contained as opposed to the normal transfer of securities via the R3 Corda platform.
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The €25m transaction, which the site says Chapman worked on with colleagues and another from called Baer Karrer, is believed to be the first example of this kind of deal.
Chapman says the transfer means that blockchain record identifies who becomes the owner, but that expertise like his would still be needed: “There needs to be a law firm that can understand that technology and apply legal principles.
“As more and more [fintech blockchain] platforms are built, there needs to be a proper legal footing for those platforms.”