The research arm of the U.S Commodity Futures Trading Commission (CFTC) known as LabCFTC has published a new guide about smart contracts. This document revealed among so many things that the nature of these contracts make them fit to be regulated under existing financial laws.
To this regard, the CFTC will subject smart contracts to laws such as the Commodity Exchange Act (CEA) and anti-money laundering (AML) rules.
However, the publication concedes the regulations may slightly vary depending on the use of the smart contract.
A line in the publication reads,
“Existing law and regulation apply equally regardless what form a contract takes. Contracts or constituent parts of contracts that are written in code are subject to otherwise applicable law and regulation,”
The Commission also said all transactions carried out on a smart contract would come under the CEA to guarantee investor protection.
Other key points covered in the guide include the origin of smart contracts, as well as its benefits and challenges.
An Insight Into How U.S Regulators View Smart Contract Based ICOs
Although the new guide labels itself as an ‘educational tool’ rather than an official policy, one can easily trust that it provides insight into how the CFTC and other U.S regulators view smart contracts and maybe ICOs which are primarily built on such technology.
Rather than formulating new rules for the invention which the document says was first discovered 20 years ago, the commission has chosen to use existing laws binding similar contracts. This stance is identical to the SEC's decision to classify most ICO tokens as ‘securities,’ instead of creating new regulations for the asset class.
The decision to use old laws to regulate new inventions means that revisions are expected to be made sometime in the future, perhaps, as the invention continues to evolve.
For instance, we reported earlier that a Stellar DApp developer said that smart contracts do not meet with some regulatory requirements, an opinion that has not been confirmed by U.S regulators. If claims such as this are proved right, then a revision on existing regulatory frameworks will have to be made.