A leap forward has been done by Italian Law No 12/2019 (the “Law”) – published on 11 February 2019 – which completed the conversion procedure of Law Decree No 135/2018, better known as Decreto Semplificazioni. The Law introduces a definition of Distributed Ledger Technologies and Smart Contracts and sets out the legal effects deriving from the adoption of such technologies.
Distributed registers-based technologies (or DLT), including blockchain, are defined by the Law as “technologies and information protocols that use a shared, distributed, replicable, simultaneously accessible, architecturally decentralized registry on a cryptographic basis, such as to allow registration, validation, updating and archiving of data, both in clear and further protected by cryptography, that are verifiable by each participant, are not alterable and not modifiable”.
The Law further sets out which legal effects arise from the adoption of such technologies by stating that that storing a digital document in a DLT shall produce the legal effects of an “electronic time stamp” under Article 41 of Regulation (EU) No 910/2014 on electronic identification (so called eIDAS Regulation), which reads that “an electronic time stamp shall not be denied legal effect and admissibility as evidence in legal proceedings solely on the grounds that it is in an electronic form or that it does not meet the requirements of the qualified electronic time stamp”.
Through this reference to the eIDAS regulation, digital documents stored in a distributed ledger technology may be more widely used as evidence in legal proceedings allowing the technology to be put to use as proof in those circumstances where it is fundamental to have proof of date and time of a certain activity.
The Law goes on to define smart contracts as computer programs that operate on distributed registers-based technologies and whose execution automatically binds two or more parties according to the effects predefined by said parties”. It is also established that smart contracts satisfy the requirement of written form, which is set out by Italian law for certain types of transactions and contracts.
The public agency Agenzia per l’Italia Digitale (AgID) will have to lay down the technical standards that distributed ledger technologies will have to meet to produce the legal effects described above within 90 days from entry into force of the Law.