The definition of a ‘smart contract’ and whether a smart contract is legally binding (even if both parties agree to use a smart contract)

As discussed previously, Gibraltar’s Distributed Ledger Technology Framework will be in effect as of January 1st 2018, and is part of a larger scheme to present Gibraltar as a sound, safe, and well-regulated place to engage in business in the field. The document stipulates that any DLT providers must be granted authority to operate by the regulatory body. While the framework does not stipulate the exact definition of a smart contract and the degree to which it is legally-binding, and although the exact licensing requirements for DLT businesses are still to be introduced, it does abide by nine regulatory principles, some of which are relevant to this discussion: [1]

• “A DLT Provider must conduct its business with honesty and integrity”
• “A DLT Provider must pay due regard to the interests and needs of each and all its customers and must communicate with them in a way that is fair, clear, and not misleading”
• “A DLT provider must have effective arrangements in place for the protection of customer assets and money when it is responsible for them”
• For more regulatory principles, please look here
  • The GFSC will be the body to authorize and supervise DLT framework principles and see that they are properly applied to the business operations of such companies

This positions Gibraltar as one of the few jurisdictions worldwide with a fully regulated framework for firms working with blockchain. This is furthered by the country’s plan to integrate blockchain into its trading and settlement systems, through its primary security exchange, the Gibraltar Stock Exchange (GSE), vis-à-vis the Gibraltar Blockchain Exchange (GBX), pending government approval [2]. For more details on the GBX look here. While the Gibraltar Financial Services Commission issued an investor warning on ICOs, as investors have no recourse to any financial compensation scheme [2], the risks contained in ICO investments has led authorities to consider creating a complementary framework for token sales, according to a statement.

Businesses based out of Gibraltar are offering opportunities for smart contracts. Based in Gibraltar, The Modex Platform appears to is a smart contract marketplace that leverages access to the blockchain with ready-to-use integrations and APIs. It allows user-friendly access to crypto-currencies and smart contracts and functions with the MDX token, based on ERC20. They hope to advance the market adoption for smart contracts and blockchain technology. As of December 24, RISE Vision, a platform for decentralized applications, smart contracts, and token asset creation, has officially signed documents to incorporate as a business in Gibraltar. The green energy exchange platform WePower is another example.

SOURCE
[1] GFSC.gi
[2] Coindesk.com