The British regulator spoke about the benefits of using blockchain in legal practice

The Lawyers Regulatory Authority for England and Wales (SRA) has released a report on the benefits of using blockchain, smart contracts and NFTs, as well as the risks of cryptocurrencies.

The department’s specialists state that many law firms are already using blockchain technology and distributed ledger technology (DLT) for more transparent information exchange and secure documentation storage.. Due to the immutability of data, the blockchain provides trust between network participants without the need to involve an intermediary. Smart contracts significantly speed up many legal transactions, SRA experts argue. Most often, blockchain is used by law firms in Document Management Systems (DMS), for notarization of documents and proof of ownership.

The regulator also noted the use of digital signatures, which can prevent forgery of documents.. If a message is modified after it has been digitally signed, it becomes invalid. The message is encrypted with a key known only to the signer.. Because the public key can only decrypt documents that were originally encrypted with the signer's private key, this increases confidence in the authenticity of the documentation.

The SRA recalled that non-fungible tokens, due to their uniqueness, can be used not only in digital art, but also to represent real-world assets, such as property rights.

With regard to the use of cryptocurrencies, the SRA warns of their extreme volatility, which entails great risks when holding client assets, especially when dealing with real estate.. In addition, the SRA has doubts about the security of cryptocurrency exchanges, which may be at risk of bankruptcy and hacker attacks.. The regulator fears that anonymous cryptocurrencies increase the risk of money laundering, terrorist financing and sanctions circumvention.

Earlier, British lawyers formed the Crypto Fraud and Asset Recovery (CFAAR) organization to help investors affected by cryptocurrency scams.