Smart contracts

Introducing smart contracts

Smart contracts enabled by DLT refer to pieces of computer code stored in a DLT, which are executed automatically on multiple distributed nodes upon fulfilment of pre-defined conditions, to enforce the terms of an agreement between parties. Therefore, agreements are automatically enforceable. Smart contracts may store the status of a transaction, to avoid having to go through the list of records in the DLT, and their execution can be triggered by another contract, by an individual or by a group of individuals if multiple parties are involved in the approval process for the execution of the contract.

Smart contracts may be:

• Pieces of computer code designed to be executed when pre-defined conditions are met, without an underlying legal contract.
• Extensions to a legal contract written in computer code.
• Legal contracts or parts of legal contracts set down in writing, transposed into software code and executed by computers that participate in the DLT network. Not all parts of a contract are susceptible to be automated, and sometimes that automation might not even be desirable.

Documents of international standardization institutions

European Supervisory Authorities

International Financial Market Regulation Organizations