When parties interact in transactions conducted via blockchain technology, they may find themselves in relationships to one another that the law has not yet had the opportunity to clearly define. Courts, commentators, governmental officials, litigants and legislatures are now exploring which participants in various kinds of blockchain-based activities might be subject to liabilities for injuries or wrongs allegedly arising from those activities.

Liability for Smart Contract Coders?

Because courts have held that certain blockchain applications, such as virtual currencies, may be subject to the regulatory authority of the Commodity Futures Trading Commission (CFTC), CFTC v. McDonnell, 287 F. Supp. 3d 213 (E.D.N.Y. 2018); CFTC v. My Big Coin Pay, 334 F. Supp. 3d 492 (D. Mass. 2018), participants in those blockchains potentially can be subject to CFTC enforcement activity or other liabilities under the Commodity Exchange Act (CEA), 7 U.S.C. §1 et seq. In the fall of 2018, CFTC Commissioner Brian Quintenz addressed the subject of how, “[i]n the context of decentralized blockchains, … on top of which multiple applications can run autonomously via smart contracts,” the CFTC should “identify[] who is responsible for ensuring that activity on the blockchain complies with the law.” Remarks of Commissioner Brian Quintenz at the 38th Annual GITEX Technology Week Conference (Oct. 16, 2018).