Co-authored by Boris Inderbitzin, Leandro Lepori and Raj Unny
Distributed ledger technology (DLT) has great potential and is increasingly being used in different industries. Many legal challenges in connection with DLT do not differ from already known ones in the field of information and communication technology (ICT). Some other challenges, though, are inherent to the design of certain DLTs and raise specific legal questions. The authors aim to show in an extremely succinct overview how DLT can be embedded into the existing legal framework for data protection and anti-money laundering (AML), two concepts of high relevance for banks.
Introduction: DLT and Blockchain
DLT can be categorised into: (1) permissioned, private shared ledger (technology is owned, participants are limited and known, i.e. BankChain); (2) permissioned, public shared ledger (technology is owned, validation through known and trusted validators, everybody can participate, i.e. Ripple); (3) unpermissioned, public shared ledger (technology is open source, the public can participate and contribute to the validation process through a consensus and is a digital data structure (ledger) in which records are organised in blocks that are cryptographically sealed and time stamped, replicated, distributed, and synchronised over a peer-to-peer network, and often maintained by a consensus algorithm. Block- chain technology is often used as a status transition machine, whereby a certain «thing» represented by a cryptographic value within the blockchain («token» / «coin») is given a status. The legally most challenging combination is an unpermissioned, public blockchain, which is the type of DLT that the following overview refers to (hereinafter called «Blockchain»).
Originally published by banken magazin.
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