On November 27, the Commodity Futures Trading Commission’s LabCFTC released “A CFTC Primer on Smart Contracts” to provide information on a variety of financial technology (FinTech) topics. LabCFTC is a hub designed for the CFTC to engage with the FinTech community.
The primer defines a “smart contract” as “a set of coded computer functions” that may or may not be a binding contractual agreement. Among other attributes, smart contracts can authenticate the identities of parties (and contra-parties), access data to trigger actions based on external stimuli (delivery of an asset, weather conditions, change in a reference rate, etc.), and automate the execution process. The primer also delves into the challenges and risks of smart contracts, as well as the potentially applicable legal frameworks.
More information on the primer is available here.