Study On Legal Issues Of Applying Blockchain Technology To Asset-Backed Security

At present,the application of blockchain technology in the Asset-Backed Security(ABS)has received extensive attention.Some of the ABS products using the consortium blockchain technology have been successfully issued in China’s security market,and most of them are enterprise ABS products.The penetration of blockchain technology into the ABS not only facilitates financial innovation,but also creates certain legal risks.This paper takes the enterprise ABS products that apply blockchain technology in China as the research object,focuses on the key points of each link of the ABS,and discusses relevant legal problems.Starting from the specific application of relevant laws and regulation in China,this paper will make corresponding legal responses to those legal issues in each link,in order to provide legal guidance for the exploration of mature application models of blockchain technology in ABS.This paper is divided into six parts.The first part is the introduction.This part briefly outlines the obstacles to the application of blockchain technology in the ABS practice and the limitations of related legal researches,and explains the ideas of this paper.The second part is the combination of blockchain technology and ABS.First,it summarizes the practice of combining blockchain technology with ABS in China and abroad.Second based on the application of blockchain technology in China’s enterprise ABS products,this part describes the operation process of blockchain in ABS from the aspects of the selection and transfer of basic assets,the issuance and transaction of securities,and the management and liquidation of the duration.The third part discusses the legal problems existing in the application of blockchain technology in the selection and transfer of basic assets.This link mainly centers on the basic assets,the autonomy of the design of the ABS transaction structure,and the limitations of China’s understanding of the special purpose vehicle.As a result,the application of blockchain technology in this aspect further amplifies the legal risks existing in the enterprise ABS itself.By clarifying the scope of the selection of basic assets,the legal nature of the special purpose vehicle and the legal nature of the smart contract,we will improve the screening criteria for basic assets,the setting up of SPV accounts and the rules for transferring basic assets on the blockchain service platform.The fourth part discusses the legal problems existing in the application of blockchain technology in the securities issue and transaction.This session focuses on the investor protection in advance.Based on the excessive worship of blockchain technology and the over-trust in institutional investors’ ability to invest,the application of blockchain technology has certain legal risks in the aspects of credit enhancement,suitability obligation of the underwriting institutions to investors and disclosure of each information disclosure subject.These risks can be resolved through the refinement of algorithm rules related to blockchain technology,the differentiated fulfillment of underwriting institutions’ suitability obligation,and the standardization and transparency of information disclosure requirements.The fifth part discusses the legal problems existing in the application of blockchain technology in the life-span management and liquidation.The key point of this link is the distribution of investment income.In this link,blockchain technology as tools shows limited value in the aspects of the distribution of investment income,the risk prevention and the remedies afterwards,and we should seek the solution from the current legal system of ABS.The sixth part is the conclusion,summarizing above research results.