Analysis Of Smart Contracts, DLT And Fintech Laws In India

Prakhar Tiwari, Partner at Tiwari Law Chambers LLP

ABSTRACT

The commercial markets have been revolutionised in the past decade like never before, especially due to the adoption of technology and related neo- evolved concepts like smart contracts, blockchain, e-contracts, digital currency & assets etc.. Fintech, as it has come to be known, started as a service for aiding traditional Financial sectors but has emerged as a complete business sector in itself. In view of the significant growth of this industry it is important to make an attempt at analysing the eminent technologies involved; laws governing the sector; regulatory frameworks; and how it has & it may affect the commercial transactions in the future, as it stands today.

In furtherance, the interaction between the blockchain technology and smart contracts is the interdisciplinary concept which has turned out to be of great significance in practical commercial transactions. This invites us to analyse the laws regulating the Blockchain technology, which is heavily used in the fintech industry and Contract laws, essentially governing the smart contract structures. As first explained by Nick Szabo a smart contract refers to a coded standard of making transactions.1 The truth of the matter is that there is no direct law available in India which explicitly deals and regulates this upcoming field of technology-aided commercial transactions. In such an absence, we are to interpret the law in this regard from the legal position available for components of such technology, from the prevalent legislature, such as Evidence Act, 1872, Information Technology Act, 2000; Circulars, Regulations and other forms of delegated legislations.

This brings us to the reformative part of this article, which deals with identifying the specific needs and qualities desired for governing such an unprecedented neo-technical practice of concepts, which the traditional legal system of India fails to address. In doing so, we will discuss here the prevalent legal frameworks in India as well as in other jurisdictions, and international initiatives and finally, in the concluding part of this article we underline the most apt and progressive ways as available in present time, for governing Fintech and allied sectors in India and we suggest an amalgamation of these for tackling such dynamic markets.