R3 forms expert group to work with legal institutions to create smart contract templates that are more compliant with regulation

The R3 banking blockchain consortium is forming a working group to come up with a blockchain solution. The team will include experts from Barclays, the International Swaps and Derivatives Association (ISDA), University College London and Norton Rose Fulbright.

The team’s work will focus on creating smart contract templates and analyzing the feasibility of implementing the templates within the current regulatory framework.

Commenting on the new project, Richard Brown, CTO of R3, said: “The potential of distributed ledger technology, namely blockchain, is that we can move towards a world where complex financial agreements between companies can be recorded and managed consistently and accurately, without duplication, error or unnecessary cost. However, to achieve this vision, more than just innovative technology is needed: it must be embedded in a wider legal context that is consistent with the realities of business.”

In the long run, this working group will collaborate with legal institutions and academia to find the best possible ways to optimize smart contracts and apply them in court to resolve disputes.

Today, each bank keeps its own copy of a given contract, which can lead to inconsistencies and reconciliation issues between institutions working with different banks. However, smart contracts based on distributed ledger technology enable every institution to have the same legal document.

Meanwhile, the R3 Alliance is still growing in membership. This week, South African bank Absa (a subsidiary of Barclays Bank) announced that it had joined the organization, becoming the first South African member of R3. The number of members of the organization has now reached 50, and Toyota Motor Corporation of Japan has just joined.

In April 2016, the R3 Alliance launched the Corda project, a distributed financial solution specifically for banks. Corda is a blockchain platform that can be used to manage and synchronize agreements between organizations.