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Blockchain has the ability to cross jurisdictional boundaries as the nodes on a blockchain can be located anywhere in the world. This can pose a number of complex jurisdictional issues which require careful consideration in relation to the relevant contractual relationships.
The principles of contract and title differ across jurisdictions and therefore identifying the appropriate governing law is essential. In a conventional banking transaction, for example, if the bank is at fault then irrespective of the transacting mechanism or location, the bank can be sued and the applicable jurisdiction will most likely be contractually governed. However, in a decentralised environment, it may be difficult to identify the appropriate set of rules to apply.
At its simplest level, every transaction could potentially fall under the jurisdiction(s) of the location of each and every node in the network. Clearly, this could result in the blockchain needing to be compliant with an unwieldy number of legal and regulatory regimes. In the event a fraudulent or erroneous transaction is made, pinpointing its location within the blockchain could be challenging.
The inclusion of an exclusive governing law and jurisdiction clause is therefore essential and should ensure that a customer has legal certainty as to the law to be applied to determine the rights and obligations of the parties to the agreement and which courts will handle any disputes.
So we could say that probably we will encounter resistance from governments and banks institutions, let's see as the technology evolve.
The most important thing about Blockchain is ensuring that key stakeholders, project owners and Clients are aware of the implications of implementing a Blockchain architecture before they start as a decentralised system for the information technology infrastructure does not always suit every client and they may caught up in the thinking that newer is better. The hosting of encrypted data in a different jurisdiction to where your customers are located throws up a lot of legal, technical and ethical issues and these hurdles must be addressed even before any talk to blockchain is discussed. As is the case with many projects small is beautiful but these type of projects do not always scale up well and can greatly affect your return on investment or realising your project objectives.
The article shows the potential to use the technology across a breadth of industries. As a nation-agnostic tool, resolving its legislative challenges may take us closer to a global infrastructure.
In the past year, some of the world’s largest public and private organizations have launched massive blockchain projects. These initiatives underscore the need for deep pockets and absolute supply chain control to successfully scale the technology.
The Commonwealth Bank of Australia (CBA) partnered with the World Bank on a two-year, AU$110 million project to issue bonds exclusively through a private blockchain platform. The goal is to streamline processes for raising capital and trading securities while making it easier for regulators to track and monitor these transactions. Developed by CBA’s blockchain innovation hub, the project delivers the first global bond to be created and managed via blockchain.
Deloitte, EY, PwC and KPMG partnered with 20 Taiwanese banks to launch a blockchain-based pilot project for financial audits. The goal is to automate and streamline the external confirmation process while accelerating audit tasks and reducing overhead. In the previous system, financial audits required someone to manually obtain and verify every piece of transaction data, which took roughly two weeks. Blockchain will allow auditors to complete the same task in less than a day. The sponsors hope to expand the project to 1,400 publicly listed companies in China later this year.
De Beers launched a diamond-tracking pilot project in January 2018 and within the first five months was able to trace 100 high-value diamonds through its supply chain. The system is designed to create a permanent digital record for every diamond registered on the platform so the company can prove the origin of each diamond and show that it was ethically mined.
IBM and Maersk last year completed a joint venture to create a blockchain-based system that establishes a more secure and efficient process for global trade transactions. It creates a single-shared and real-time view of transactions for shippers, shipping lines, freight forwarders, port and terminal operators, customs authorities and inland transportation. Within the first year, the platform traced 154 million shipping events in ports around the world. To date, nearly 100 organizations have agreed to use the platform.
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