EU Regulator: DLT In Trade Finance Still Faces Legal Uncertainty

The EBA’s comment notably follows news that a bunch of European banks have conducted a string of live cross-border trades utilizing a jointly-developed blockchain platform.  Those firms have said they need to expand the stage to elsewhere in the area.

That saidthe EBA also noted that the emerging technology still faces potential dangers as applicable law remains unclear right now. Therefore, conflict of interests may happen one of DLT nodes which are in various jurisdictions.
With a comprehensive explanation of how smart contracts and DLT can be utilized in the instance of cross-border trades, the EBA claims the nascent technology will help solve a variety of issues. The writers of the paper wrote:

“A variety of chances emerge in the usage of DLT and clever contracts for trade finance. The most promising would be the potential efficiency gains, price reduction, and lower chance of duplicate financing and manipulation or loss of documents”
Elsewhere in the analysis, the European banking regulator also said that DLT can possibly streamline the ID verification process in European banks’ customer due diligence because information can be shared in a distributed network.
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“For instance, a digitally signed contract might not be enforceable in most of the jurisdictions. It is Crucial to establish the pertinent authority, in case of conflict, and the dispute mechanisms, when a dispute arises”
The chief at blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and standards by a strict set of qualitative policies.

In a report released on Tuesday which discusses that the rising tendency of financial technology, the European Banking Authority (EBA) highlighted two banking-related usage instances of blockchain: cross-border trade finance and identity authentication.

However, the EBA said one of the unresolved questions in the program is the way to guarantee each party on a DLT network conducts a comprehensive due diligence process in order that incomplete or unstructured information won’t be shared among various nodes.

Published at Wed, 04 Jul 2018 12:00:51 +0000

An EU banking regulator has recently released a new report exploring the advantages and risks associated with the use of dispersed ledger technology (DLT) in finance.