National blockchain laws as a threat to capital markets integration

Various states have started providing private law frameworks for blockchain transfersand crypto assets. The first acts have been adopted by France and Liechtenstein,while a commission of the British government sees no difficulties in extending propertyprotection under the Common law to crypto assets. In the US, an amendment to theUniform Commercial Code has been suggested, which has not stopped some Statesgoing their own, different way. The aim in all cases is to promote the use of moderndistributed ledger technology and enhance investor protection.While these initiatives will increase legal certainty, they differ significantly. Thishas an important downside: there is a strong risk that the blockchain will be madesubject to diverging legal rules. Similar to the world of intermediated securities, variousnational laws will need to be consulted to determine the rights and privileges ofinvestors. This may increase transaction costs, thwart interoperability and producethorny conflict-of-laws problems. Markets risk being fragmented into nationalsegments, with an inevitable diminution of their depth and liquidity.As a remedy, this article suggests developing uniform rules for the blockchain.Before national legislators and judges once again divide the world throughidiosyncratic rules, the private law of crypto assets should be harmonised to thehighest degree possible. Uniform rules should ideally be forged at the global level, byfora like the International Institute for the Unification of Private Law (UNIDROIT), theUnited Nations Commission on International Trade Law (UNCITRAL), and the HagueConference on Private International Law. In the absence of world-wide rules,uniformisation of private law should take place at the regional level, for instance by theEuropean Union. The article makes specific suggestions as to how this can beachieved and what the content of those rules should be