Law and ledger It is a news segment focused on legal news in crypto, and brought to you Kelmann Method – A law firm focused on digital asset commerce.
The following opinion editorial was written by Alex Forehand and Michael Handelsman of Kelman.law.
AI and smart contracts are focused
The intersection of artificial intelligence (AI) and blockchain technology is reshaping how cryptographic projects operate and how legal practitioners approach them. Smart Contracts (self-execute contracts coded in the blockchain) are increasingly developed, audited and even optimized, with the support of AI tools. These innovations promise efficiency and scalability, but also introduce new legal issues regarding liability, enforceability and professional liability.
AI for drafting and auditing smart contracts
Traditionally, smart contract development required highly specialized coding knowledge for experts to manually perform security audits. Today, AI models can generate and review robustness or rust codes in minutes. Some platforms may also integrate AI-based auditing tools that detect common vulnerabilities such as recurrence attacks and integer overflows.
This democratization of development could accelerate adoption, but it also raises the issue of accountability. If a smart contract vulnerability generated in AI leads to loss of funds, is it the responsibility of the developer using the tool, the AI model provider, or both? The courts have only begun to tackle such issues in the broader AI context, and there is no clear precedent yet to control disputes by code.
Enforcement and legal perception
Smart contracts occupies the grey area between the code and the law. Many jurisdictions recognize traditional contract requirements such as offers, acceptance, and consideration as binding contracts. However, if AI plays a role in drafting or deploying these contracts, disputes can arise. intention. Did the parties fully understand the code generated by the AI tool? Can a defect in the AI output be impaired?
As US Commodity Futures Trading Commission (CFTC) and Securities and Trade Commission (SEC) It seems plausible that future guidance will address AI-assisted smart contracts as it expands surveillance of the crypto market. For now, practitioners must assume that the court will apply existing doctrines of contract law and negligence.
Ethical and Professional Responsibility
Attorneys who advise on token issuance, decentralized finance (DEFI) projects, or smart contract disputes are beginning to experiment with AI in their workflows. Recent research highlights both the advantages and limitations of large-scale language models in the analysis of securities law and cryptographic cases (arxiv). Although AI can promote drafting and research, the American Bar Association’s model rules for professional conduct emphasize the supervision and capabilities of lawyers. A blind reliance on AI-generated work products can expose lawyers to medical malpractice claims.
Cross-border considerations
Cryptographic AI is not limited to the US. The European Union’s AI law imposes risk-based requirements on AI systems, potentially affecting developers of blockchain applications that rely on automated coding tools. Meanwhile, jurisdictions such as Singapore and Switzerland are seeking ways to balance innovation and consumer protection in both AI and crypto regulations. Therefore, cross-border projects must consider a diverse range of regulatory regimes.
Practical steps for crypto projects and legal advisors
- Document human surveillance Whenever an AI tool is used to draft or audit smart contracts.
- Performs independent code audits Verify AI output before deployment.
- Update risk disclosure With tokens that provide documentation that reflects the use of AI in development.
- Monitor evolving regulations From both Crypto and AI SEC, CFTC and international organizations.
Conclusion
AI has the potential to transform the way smart contracts are created, tested and implemented. However, this innovation has increased legal risk. Similar cases of crypto entrepreneurs and legal advisors, the key is to balance careful surveillance, strict compliance and active engagement with new regulatory frameworks.
All potential claims and issues related to the digital asset market can be discussed. Please contact us to set up a consultation here.
This article was originally published on kelman.law.
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