The Italian Senate has proposed a first draft of law recognising the legal value of the information stored in DLTs and smart contracts.
Last week Italian legislator reattempts the introduction of a regulation enabling distributed ledger technology (hereinafter DLTS) such as blockchain to carry out transactions legally binding, as the Ist and VIIIth Senate Permanent Commissions proposed a draft law-decree on legal certainty of blockchain and smart contract.
The capacity of DLTs to accelerate, decentralise, automate and standardise data-driven processes at a lower price, not only in the area of virtual currencies (for instance, digital identity, public notary services, investment banking services) has drawn also the attention of Italian Government.
Hence, after a first attempt in November of the Government to came up with a first legislative act ensuring the validity and legal certainty of the information and data provided with DLTs, Italian Senate has raised again the proposal.
The draft focuses on:
- definition of DLTs “technologies and telematic protocols using a shared, distributed, replicable and simultaneously accessible ledger, based on a decentralised system of cryptographic keys, enabling the registration, validation, update and storage of data, protected or not by further cryptographic keys, which are not perishable or modifiable"
- definition of smart contracts: “computer program running on top of a distributed ledger technology which execution is automatically binding on two or more parties under the rules pre-defined by them. Smart contracts shall satisfy the written form requirement upon electronic identification of the concerned parties, by means of a procedure complying with the requirements laid down by the Agency for Digital Italy guidelines that will be enacted within 90 days form the day on which the Law converting the Law-Decree entered into force, and
- the storing of information with DLTs which produces the legal effect of electronic time stamps in accordance with Regulation (EU) No 910/2014 on electronic identification and trust services for electronic transactions in the internal market, upon the adoption of technical standards by Agency for Digital Italy laying down requirements DLTs shall comply with.
In more practical terms, legal certainty of DLTs would enable stored information to be admitted as evidence in legal proceedings, as well as the enforcement of smart contracts, in accordance with article 41 of Regulation (EU) No 910/2014.
It remains unclear how Agency for Digital Italy would set guidelines regarding the requirements of smart contracts and technical standards on DLTs. Moreover, the draft omits any application of consumer protection, anti-money laundering or privacy framework to DLTS and smart contracts.
The approval procedure of the law-decree is being monitored with attention to practical arrangements Agency for Digital Italy is required to adopt, and further details will be provided as soon as the law-decree will enter into force.
This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.