RFMLR TECHTALK, a webinar series organised by the Editorial Board was aimed to create awareness and promote discourse on Fintech law. In recent times, we constantly encounter aspects of fintech law and this has been reinforced during the COVID-19 Pandemic. Our knowledge partners for the event were SCC Online and EBC.
For the first session held on 11th September 2020, we were joined by Ms. Akshata Namjoshi who is the Lead (Fintech, Blockchain, and Emerging Tech) at KARM Legal Consultants, UAE. She pursued her B.A., LL.B. (Hons.) from the National Law Institute University (NLIU), Bhopal and LL.M. (Corporate and Financial Services Law) from the National University of Singapore (NUS). She has worked at leading law firms in India and UAE, and is currently a member of the Regulatory Fintech Working Group of the Arab Monetary Fund.
Through the course of the session, she discussed the legal landscape of Open Banking and Open Finance which was combined with an interactive Q&A Session.
She described the genesis of open banking and open finance as a culmination of numerous old concepts into one with a customer centric approach where the financial details of the customer are shared between players in the ecosystem. In this regard, the customers constantly have clarity about what the market is looking like and therefore, enjoy ease of financial decision making.
She highlighted the role played by regulators and the other major players in this sphere, role of account information service providers, payment initiation service providers, and Digital IDs in Open Banking and Open Finance. She also provided some practical examples on the topic from the Middle East.
She covered the privacy concerns and financial security issues associated with the process and legal implications revolving around the fintech ecosystem. The participants raised questions regarding the impact of AML programmes on the fintech organisations to which she replied in detail how solutions to technology related concerns will also arise from technology.
For the second session held on 12th September 2020, we were joined by Mr. Ratul Roshan, who is an Associate at Ikigai Law with expertise in Blockchain Technology, Fintech, and Tech Policy. He pursued his LL.B. from Delhi University. He has authored a number of articles on blockchain, cryptocurrency, fintech, and data protection and has worked on projects related to crypto regulations and blockchain technology in India.
The session dealt with Smart Contracts and their Enforceability along with an interactive Q&A Session and insightful contributions from the participants.
Mar. Ratul Roshan began with describing the process of blockchain and the hashing of blocks. He defined smart contracts as a piece of code which runs in the blockchain, executes itself, and is safe and efficient. Additionally, he emphasised that these are completely automatic, protected from any sort of tampering and reduce the burden of manual intervention.
He discussed the concept of Chameleon Hashes, where hash remains the same but contents may be changed and how this technology is useful if there arises a concern with respect to the execution of the contract in a way it’s not expected to execute. He also shed light upon the technology and utility behind Ricardian Contracts in the Blockchain sphere which are essentially human readable language contracts further translated into smart contracts.
He dealt with the complications that may arise in the execution of Smart Contracts. He stated the need for architecting a smart contract in a manner that it possesses the tenets of a traditional legal contract to ensure that if something was to misfire in the future between the two parties, the aggrieved party can take the other party to court. He also emphasised the need for reform in the IT Act and how clarity among judges, lawyers and people, in general, is vital to ensure that contracts formed with blockchain technology are also enforceable.
The participants raised a few questions on the subjectivity of the smart contracts and “if” and “then” clauses in them, queries regarding chameleon hashes and their effect on traditional databases, and concerns on the matters of jurisdiction. In conclusion, he mentioned that there is a need for decentralised agencies to specifically deal with issues of enforceability and jurisdiction and therefore, parties may avoid going to courts for the same.