Node licensing
Are any licences required to operate a blockchain/DLT node?
The mere fact of operating a blockchain/DLT node should not be subject to registration or licensing requirements.
Law stated - 22 November 2021
Restrictions on node operations
Luxembourg entities operating a blockchain/DLT node are required to apply international financial sanctions.
Law stated - 22 November 2021
DAO liabilities
What legal liabilities do the participants in a decentralised autonomous organisation (DAO) have?
DAOs do not fall within the scope of a specifc legal or regulatory framework. In Luxembourg, the legal and regulatory status of DAOs is still in a premature phase and, thus, there are no specifc rules determining the legal liabilities of the participants in such an organisation. Legal liabilities can potentially be established on the basis of the smart contracts that constitute agreements that have been codifed inside a blockchain.
Depending on the status and characteristics of the DAO, different legal regimes may also be applicable (such as the Alternative Investment Fund Managers Directive). This will be examined on a case-by-case basis in the absence of uniform rules that regulate the status of DAOs.
Law stated - 22 November 2021
DAO assets
Who owns the assets of a DAO?
The rules that apply to a DAO are generated, defined and enforced through the distributed network that organises the DAO and no other regulation can alter the rules.
In principle, the assets of a DAO are understood as the information that is contained in the blockchain itself and is exchanged between the participants by way of using each decentralised platform. The assets of a DAO are identified by virtue of the contractual obligations that derive from the use of the smart contracts and are deemed to be held by the participants in a DAO.
Different opinions have been expressed as to the ownership of assets. Some financial and legal experts maintain that in the absence of a legal personality, the owners of a DAO are the developers who are carrying out activities on behalf of the DAO, whereas others argue that each participant in a DAO becomes an owner of the asset by virtue of owning the tokens proportional to the amount of contribution. For the time being, the ownership of DAOs is still an area of debate.
Law stated - 22 November 2021
Open source
Is DLT based on open-source protocols or software treated differently under the law than private DLT?
The Luxembourg legislature has integrated the use of DLTs as a way to keep a record of the transfer of securities that are placed on securities accounts. However, under Luxembourg law, there is no different treatment from a legal perspective with regard to DLT based on open-source protocols and private DLT.
Law stated - 22 November 2021
Smart contracts
Are smart contracts legally enforceable?
There are no specific rules or case law as to whether smart contracts are legally enforceable. However, if the legal requirements of a contract, as provided for by the Luxembourg Civil Code, are fulfilled, smart contracts should, in principle, be enforceable. This would, nevertheless, be rather difficult in practice, given that a counterparty to a smart contract may be unknown.
Law stated - 22 November 2021
Patents
Can blockchain/DLT technology be patented?
In Luxembourg, software is not directly protected by a patent but may be protected by copyright.
Law stated - 22 November 2021
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