Smart contracts
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Are smart contracts regulated in Singapore?
Smart Contracts alone are not regulated. However, its applications in cryptocurrency and dispute resolution are.
"While considering blockchain’s inherent risks, the Monetary Authority of Singapore (MAS), Singapore’s financial regulatory authority, has nevertheless maintained a crypto-friendly attitude and provides for a flexible regulatory environment to promote expansion and innovation with regards to this technology... some of the key regulatory developments in Singapore are as follows:
• Personal Data Protection Act 2012 (PDPA)
• Payment Services Act (PSA)
• Securities and Futures Act (SFA)
• Proposed "Omnibus Act"
"It appears that both the PSA and the SFA do not regulate the formation or execution of smart contracts, unless they also involve payments using digital payment tokens, or a public offering or issue of digital tokens, respectively. Contract law principles instead appears to be the channel used to deal with such disputes."
What are the legal risks associated with Smart Contracts?
"In adverse situations where the contract goes unfulfilled, the traditional option would be to enforce it by going to court or via arbitration. However, due to the high levels of grey areas in the execution of smart contracts, it may cause the plaintiff to incur cost and time spent in legal proceedings. It is almost impossible to code every possible “if-then” scenario into the smart contract and therefore it may not align well with real-world business settings and legal dispute resolution methods."
"What happens when a smart contract fails? In particular, what happens when the code executes correctly (from a software point of view) but produces an outcome that is different from what the parties intended (a contract is, after all, defined by what the parties intended)? Indeed, there is a Singapore decision which involved cryptocurrency trading and the doctrine of mistake in contract law, and is best illustrated in the decision of Quoine Pte Ltd v B2C2 Ltd, which has been extensively commented on by academics."