The Law Commission, the statutory independent body constantly reviewing the law of England and Wales and offering recommendations for change, has launched a call for evidence to inform its project on private international law in the context of digital assets and electronic trade documents.

Having launched a digital assets report in June 2023, the Law Commission is also seeking views on draft legislation as well.

Digital assets and ETDs in private international law

In its call for evidence, the Law Commission aims to gain a better understanding of the most challenging and prevalent issues that digitisation, the internet, and distributed ledger technologies pose for private international law.

When parties to a private law dispute are based in different countries, or the facts and issues giving rise to the dispute cross national borders, questions of private international law arise: in which country’s courts should the parties litigate their dispute, and which country’s law should be applied to resolve it?

The project has a particular focus on crypto-tokens and electronic trade documents. This is because these assets are prevalent in market practice, whilst also posing novel theoretical challenges to the traditional methods of private international law.

Digital assets and personal property rights

Additionally, the Law Commission is also launching a short consultation exercise on draft legislation to confirm the existence of a third category of personal property into which crypto-tokens and other assets could fall.

Its report in June concluded that certain digital assets, including crypto-tokens and non-fungible tokens (NFTs), are capable of attracting personal property rights. However, because digital assets differ significantly from physical assets, and from rights-based assets like debts and financial securities, they do not fit within traditional categories of personal property. The Law Commission recommends that legislation should confirm the existence of a ‘third’ category of personal property.

It has prepared draft legislation to reflect this recommendation and is seeking views on the draft clauses as to their potential impact.

Generative AI is handy for condensing and simplifying vast amounts of info. Use cases for marketers and business execs include:

• Explaining complicated documents, such as patents.
• Summarizing long narratives into key points and definitions.
• Extracting important sections of ebooks and whitepapers for blogs and promotional materials.

What follows are four gen AI tools to accomplish those tasks. To test, I instructed the tools to analyze a 2023 patent from Google for Search Generative Experience, with three prompts:

• What is this document about?
• How does SGE select external resources in its answers? Do the resources originate from organic search results?
• Define essential terms from the document.

My goals were to evaluate the accuracy of the responses and check for “hallucinating” — inventing info.

ChatGPT

ChatGPT can now process uploaded documents, including PDF files. It provided a generic overview of the prompt, “What is this document about?”

But it was the only tool that answered the second question, “Did the resources originate from organic search results?”

According to the patent document, not all documents are selected solely from organic search results. The selection process involves different categories of search result documents:

Query-Responsive Search Result Documents: These are documents obtained in response to the original query submitted by the user.

Related-Query-Responsive Search Result Documents: These documents are derived from searches performed for queries related to the original query.

Recent-Search-Responsive Search Result Documents: These are documents that responded to recent queries, possibly related to the current query or user’s search history.

ChatGPT made up the names of the categories (in bold)! The patent does not use those terms.

So I prompted, “I don’t see these category names in the original document. Did you make them up?”

ChatGPT’s response:

You are correct, and I apologize for the confusion. The category names I used (“Query-Responsive Search Result Documents,” “Related-Query-Responsive Search Result Documents,” and “Recent-Search-Responsive Search Result Documents”) were indeed my own phrasing to summarize the concepts described in the patent. They are not directly quoted from the document.

The patent actually discusses the process of selecting documents based on their responsiveness to a given query, related queries, and recent searches. These selections can include documents that responded to the original query, as well as those responding to related or recent queries. My intent was to clarify this process, but I should have stated clearly that these category names were my own summarizations, not direct quotations from the document.

Thank you for pointing out this discrepancy.

ChatGPT’s response is an example of hallucinating, a weakness of many gen-AI tools.

Claude

Claude is an independent generative AI model from Anthropic that does not use ChatGPT, unlike the other tools on this list. In my testing, Claude was the most cautious in responding.

For example, the other three tools answered “Yes” to “Are the documents selected from the organic search results?” Only Claude offered a nuanced response:

The patent does not explicitly state if the documents are selected from organic search results.

However, there are a few contextual clues that suggest they are referring to organic search results:

• • The background describes providing query-based summaries of “search result documents” without specifying if these are organic or paid results. Typically “search results” refers to organic results returned by a search engine.
  • There is no mention of filtering out or handling paid/promoted result documents differently than organic documents when selecting documents to summarize.
  • The goal seems to be summarizing the most relevant documents to the search query to provide an overview for users. Organic search results are generally more optimized for relevancy than promotional or paid results.
  • Related queries are used to expand document selection. Related/expanded queries are typically used with organic document sets, not paid advertising results.

So while not definitively stated, the patent language strongly suggests the query-responsive documents being selected to generate summaries are organic search results rather than paid or promotional results.

PDF Pals

PDF Pals is a desktop application that offers 30 free questions for testing. It requires a ChatGPT API key for those tests.

Once installed, PDF Pals can process uploaded PDF documents.

The tool helpfully includes page numbers with its responses, making it easier to verify the info. Clicking any page number will take you to that section in the document.

In my testing, PDF Pals didn’t simplify the patent to my level of understanding. Its responses were too technical, despite my prompting it otherwise. Still, the summaries were useful, albeit complicated.

AskYourPDF

AskYourPDF is a web app requiring no API key for testing. After scanning a document, AskYourPDF suggests optional follow-up questions. Like PDF Pals, it includes page numbers, although they are not clickable.

AskYourPDF’s responses were easier to understand than PDF Pals’ and, conversely, less comprehensive. And it didn’t extract definitions from the PDF patent, stating incorrectly that none were there.

Thus AskYourPDF in my testing was helpful for higher-level overviews but not detailed. A benefit of that approach, however, is likely fewer hallucinations.

Interestingly, all four tools analyzed the Google PDF patent slightly differently. Each provided unique explanations. The key is verifying the info. All of the tools made mistakes.

A suite of documents was published in the United Kingdom on Nov. 6 that concern stablecoin regulation. The Financial Conduct Authority (FCA) released a discussion paper, as did the Bank of England (BOE). To accompany those, the BOE’s Prudential Regulatory Authority (PRA) released a letter to CEOs of deposit-taking institutions, and the BOE released a “cross-authority roadmap” to link them together.

His Majesty’s Treasury set the stage for the flurry of releases on Oct. 30 with a short document previewing plans for regulation. The FCA paper explored the same ground in much greater detail.

Stablecoin regulation is the first step to broader crypto asset regulation, the FCA said. The discussion paper outlined potential retail and wholesale stablecoin use cases. Its discussion included auditing and reporting, the backing of coins owned by the issuer and the independence of the backing assets’ custodian.

The paper concentrated on ways in which the principle of “same risk, same regulator outcome” could be applied. It proposed using the existing client assets regime as the basis of rules on redemption and custodianship and the senior management arrangements, systems and controls sourcebook to organize business affairs. There are existing operational resilience and financial crime frameworks, as well as numerous others.

The UK FCA is proposing that stablecoin holders have the right of direct redemption. Which makes issuers a lot more like banks and will raise a bunch of AML/KYC issues for issuers pic.twitter.com/lZLQXlmemu

— Sean Tuffy (@SMTuffy) November 6, 2023

The FCA is considering adapting existing prudential requirements for regulated stablecoin issuers and custodians from the existing regime and making them applicable to other crypto assets eventually.

The BOE paper looked at the use of sterling-based retail-focused stablecoin in systemic payment systems. It considered transfer function and requirements for wallet providers and other services, and it partially overlapped with the FCA’s discussion of stablecoin issuers and deposit protection.

Related: UK crypto businesses to comply with FATF Travel Rule beginning in September

The BOE will “rely on” the FCA to regulate custodians, it said, but it left open the possibility of imposing requirements of its own, if necessary. It pointed to Anti-Money Laundering and Know Your Customer requirements for unhosted wallets and off-chain transactions as potential regulatory sore points.

The BOE PRA letter emphasized that the difference between “e-money or regulated stablecoins” and other types of deposit have to be clearly maintained:

“With the emergence of multiple forms of digital money and money-like instruments, there is a risk of confusion among customers, especially retail customers, if deposit- taking entities were to offer e-money or regulated stablecoins under the same branding as their deposits.”

Deposit-taking institutions should limit their innovation to deposits. Issuance activities should have distinct branding, the PRA advised. An issuer that wants to take deposits as well should move quickly and involve the PRA in the process. Finally, innovations in deposit taking are also subject to rules and requirements, it reminded.

The BOE roadmap included a timeline, with an implementation date of 2025.

Magazine: Unstablecoins: Depegging, bank runs and other risks loom