Law

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13 September 2017

Academics and regulators gathered together to discuss blockchain-based-platforms at a morning seminar hosted by the Commercial and Personal Property Law Centre (CPLRC).

Blockchain-based-platforms are becoming more developed and popular, with many of these platforms aiming to facilitate payments without the intermediation of either a bank or a credit card company. 

Other platforms alternatively aim to facilitate the transfer of securities without the intermediation of brokers, banks or central securities depositaries. Others again combine both services by facilitating the selling and buying of securities, on the one hand, and payments which the buyers of these securities have to fulfill to the sellers, on the other hand.

Certainly, this technology will simplify the setting. However, this technology could give rise to new issues whenever an entity which has either made a payment or bought a security through a blockchain-based-platform, becomes insolvent and insolvency proceedings are opened.

This is because, if this is the case, the interest held by that entity might clash with the interests of his/her/its creditors.

Professor Renato Mangano, Associate Professor, University of Palermo, was the guest speaker at the seminar, and touched on key points from his research paper.

His paper aims to demonstrate that current insolvency laws around the globe are inadequate for solving these issues, and that this loophole could transform blockchain-based-platforms into instruments for insolvent debtors to fraudulently evade their creditors.

However, this statement does not imply a critical or pessimistic approach to blockchain-based-platforms, which – by contrast – he considered as valuable innovations requiring both an in-depth study of some methodological issues concerning them and a regulatory intervention which will be consistent with the results of this study.

“Arguably, the principle of ‘technology neutrality’ does not affect the ascriptive level of law. This level refers to the following questions: ‘who is responsible for what?’ and ‘who has reputational incentives for what?’” Professor Mangano said.

He proposed that a suitable regulatory strategy could consist not only of applicable law but also nudge regulation, as well as reputational incentives through digital feedback.

Professor Rosalind Mason, leader of the CPLRC's debt, insolvency and restructuring research theme, said that "Professor Mangano's seminar highlighted the need for flexible regulatory frameworks that are responsive to new technologies and developments."

The CPLRC hosts several public events each year featuring a variety of distinguished national and international scholars to help improve the understanding of the role technological, commercial and property law concepts and principles can play in solving global challenges.

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CPLRC

Professor Renato Mangano.

Academics and regulators attend Professor Mangano's seminar.

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