Antonio Tejeda Encinas. President Comité Euro Americano de Derecho Digital – CEA Digital Law. Euro-American Digital Law Committee
The technological functionalities of smart contracts have considerable scope in terms of on-chain automation, enabling process automation and interaction both on and off-chain. This is achieved by executing commands coded in the contract.
However, it is important to note that the ability to encode instructions, carry out clearing and settle transactions, payments versus payments and deliveries versus payments, does not necessarily imply automatic legal effects.
The illustration provided exemplifies this point. The description of the operation exposed there would allow a transaction of a real-world asset (RWA) to be carried out on the chain, facilitating access to the asset (previously deposited) through tokenization and smart contracts (delivery versus payment). This would occur once the buyer has paid the price set by the seller using tokenized money.
However, it is crucial to understand that to acquire a real-world asset, it is not enough to simply code the transfer of access to the asset. It is necessary to comply with established legal requirements. This implies the existence of an effective transfer of property or rights of use (requiring consent, object and cause). In addition, appropriate procedures must be followed, either for the acquisition or for the legitimation of the acquirer. It is also essential that the holder of the token is the legitimate owner or has the necessary power over it. Otherwise, legal recognition of good faith acquisitions based on appearances, among other aspects, should be considered.
In summary, possession of a TOKEN acquired through a smart contract does not automatically guarantee the status of owner or legitimate holder of the value or right hypothetically supported by the TOKEN. The legal effects of smart contracts will be established according to regulations, applicable both between the parties involved and in a broader context.
Image reference: Hashcash Consultants (2023)
