Regulating the distributed ledger: the EU’s attempt

In this article ([2021] 10 JIBFL 648), Richard Nowinski considers some of the shortcomings of the EU’s attempt to regulate distributed ledgers.

KEY POINTS:

• It is clear from the text of the EU proposal that only permissioned networks will be permitted within the remit of the regulation.
  
• Under the proposal, both legal and computer codes will need to be considered by both the member state regulator and ESMA in the approval process – but do they have the skill and capacity to assess computer code?
• The regulator may require an assessment of reliability of the IT and cyber arrangements by an independent auditor but there are no criteria against which these arrangements are to be assessed.

Richard Nowinski
rnowinski@threestone.law