How should lawyers cite the blockchain? For the first time there is an answer

by Arthur · October 20, 2022

Every new technology ends up in court sooner or later, and crypto is no exception. Today, judges around the world hear cases involving everything from stolen Bitcoin to disputes over crypto contracts to who gets to keep NFTs in a divorce. But as lawyers become more familiar with crypto and blockchain, they face a new problem: How to describe them in court documents?

While the challenge of citing blockchain data may seem relevant only to legal geeks, it has real-world implications. Citations—which can point to previous cases, journal articles, or other sources—are the building blocks of legal precedent, and as more disputes about NFTs land in court, judges and lawyers will need a reliable way to find them.

In the handful of NFT cases that have come before the courts, the citations do not point to a blockchain—which would provide a definitive account of transactions involving NFTs—but instead refer to a website or just a written description. This includes a high-profile case from this summer that saw the Ministry of Justice charge a senior executive at NFT Marketplace OpenSea with insider trading.

Blockchains and NFTs are not the first time lawyers have struggled with how to cite new technology. In the 1990s, important sources of information and evidence began to appear on what people called the World Wide Web. In response, popular citation guides such as Blue book— usually edited by law students — created standards for citing online sources similar to those that have long existed for books, journals, and other parts of the law.

Now, as blockchains and NFTs become more widespread, the first standard citation for these has come courtesy of some crypto-curious law students.

Citing “token standards” and “smart contract IDs”

Alexandra Champagne is a third-year law student at McGill University in Montreal. She is also the citation editor of the McGill Law Journal, which publishes The Canadian Guide to Uniform Legal Citation (aka The McGill Guide), Canada’s most widely used legal citation guide, as is the Blue book used in the United States

In the course of considering changes to the next edition of the guide, Champagne realized that the legal world has yet to account for crypto — a field in which she and others at the journal have pursued their personal lives, including an editor who had bought NFTs . While Blue book and other guides include rules for citing online sources, simply pointing to a website may be insufficient in the case of NFTs.

As Champagne told Fortune, blockchain and smart contracts (which serve to create and transfer NFTs) are a new and distinct technology from the web. And given that blockchains create a permanent, public and tamper-proof record of technologies, it made sense to incorporate them into a system of legal citation. To that end, she and her colleagues developed citation rules that include references to blockchain-specific elements such as token standards—Bitcoin or Ethereum, for example—and the strings of characters, known as smart contract IDs, that point to NFTs on the blockchain. . Here is a screenshot of the upcoming standard:

As you can see above, the guide provides examples of quotes for famous NFTs such as the artist Beeple sold for $69 million and one from the Bored Apes set popular with celebrities.

The new blockchain and citation rules go into effect when the 10th edition of the The McGill Guide will be published next year by Thomson Reuters.*

In response to an inquiry from Fortuneeditors at Blue book said the guide has not yet explored a citation format for blockchain-based data, but would recommend future editors consider the issue before an updated edition is published in 2025.

Blockchains and “permalinks”

Jennifer Allison, a librarian at the Harvard Law School Library, says that in the course of researching NFT citations, she discovered a law journal article discussing the topic. The article included an image of an NFT, describing it as a “tokenized representation of a mural”, but with a reference that simply pointed to a website on Open Sea.

Allison said Fortune that the issue of NFT citation is likely to come up more and more as digital assets become the subject of legal disputes over insider trading, breach of contract and even probate cases. She says that for now, lawyers and judges can be content to simply describe NFTs as they would any other piece of art, naming the title and where it was sold – but over time this is likely to prove insufficient.

“A painting does not have the same digital footprint as an NFT, and McGill’s proposed citation model seems to do a better job of informing the user of what is being cited and how the reader can find it or more information about it,” Allison said by e-mail.

Allison also addressed the issue of “link rot” – a term that describes the phenomenon of URLs becoming broken or unusable. By 2013, link rot had become a major issue before the highest court in the land, and led New York Times to publish an article headlined “In Supreme Court Opinions, Web Links to Nowhere” which revealed that half of the websites cited in the court’s decision no longer worked.

In response has Blue book and other citation guides asked Web site references to include so-called permalinks—a duplicate URL, but one maintained by Harvard or other university libraries. The idea is that even if the original link no longer works, the permalink always will. Today, the system has become the standard across courts and academic publishers.

However, in the case of smart contracts and NFTs, it is unclear whether permalinks will be necessary since blockchains are inherently designed to be permanent and immutable. In the meantime, in case future citation editors require a secondary source that locates NFTs, one option could be to incorporate decentralized file storage services such as Arweave or Filecoin that are linked to different blockchains.

It will likely take years for all of this to happen, but for now it seems inevitable that blockchains will become a source of authority for the legal system in the same way that the web did two decades ago.

“We don’t know what kind of unique forms of technology will emerge from the blockchain that may not even be tangentially associated with a particular URL,” explains McGill’s Champagne. “Having a way to cite blockchain technology that directly references the smart contract, token ID, etc. will hopefully give authors a sustainable approach to communicating information to their readers.”

*The quotation is reproduced with the permission of Thomson Reuters Canada Limited from the Canadian Guide to Uniform Legal Citation, 10^th Edition / Manual canadien de la référence juridique 10E edition; Publication will come in 2023.