A New Era in International Trade Law:Distributed Ledger Technology

The digitalization of global trade encompasses not only the transition from paper to screen but also the change in infrastructures that ensure data reliability and the transfer of ownership. The Guide was approved at the fifty-eighth session of UNCITRAL (2025), and it was decided that it would be published in electronic format in all official UN languages. The Guide on legal issues relating to the use of DLT in trade Vienna, 2025 (Guide), prepared by UNCITRAL, establishes a global standard for the integration of Distributed Ledger Technology (DLT) into international trade law.

1. DLT Integration in the Legal Infrastructure of Trade

The primary subject of this Guide is the elimination of legal obstacles encountered during the migration of documents and processes used in the execution of trade onto DLT systems. By adopting the principle of technology neutrality, the Guide addresses how DLT records should be recognized within the framework of the principle of functional equivalence.

2. Scope of the Guide: The Union of Technical and Legal

The scope of the Guide forms the intersection between traditional trade law and modern computer science: Technological Scope: Decentralized networks, permissioned and permissionless ledger structures, and the data integrity of these systems. Legal Scope: Control of electronic transferable records, the binding nature of smart contracts, cyber risks and liability, and the balance with the protection of personal data.

3. Content Analysis and Core Components

• Electronic Transferable Records (MLETR): As detailed in the third section of the Guide, it explains how the functions of “possession” and “delivery” provided by a paper document (e.g., a bill of lading or a promissory note) can be substituted on DLT through the concept of “exclusive control.”
• Smart Contracts: The conditions for codes to be recognized as legal contracts, the manifestation of intent, and legal recourse mechanisms in case of errors in automatically executed codes are examined. As stated under the heading of contract automation in the Guide, the applicability of the MLAC (Model Law on Automated Contracting) to smart contracts is confirmed.
• Law of Evidence and Proof: Standards are established for time-stamped data on DLT to be accepted as immutable evidence before courts. As emphasized in the first section of the Guide, the “persistence of information” feature of DLT supports the concept of “integrity.”
• Liability and Cybersecurity: As addressed in the second section of the Guide, a legal framework is established for the distribution of liability among network participants and service providers in the event of a security breach or software error in the network.

4. Upcoming Developments

For the year 2025 and beyond, the Guide envisions that trade will evolve into a completely “paperless” ecosystem: Global Harmonization: It is expected that countries will move towards a global legislative unity compatible with UNCITRAL Model Laws instead of individual laws. Interoperability: The most priority future step is the development of common standards to enable different DLT networks (e.g., a port network and a bank network) to transfer data to each other while preserving legal validity. As explained in the first section of the Guide, both technical and legal dimensions of interoperability are addressed, emphasizing the importance of developing common standards. Algorithmic Audit: It is envisioned that customs and tax authorities will make audit processes real-time by connecting directly to DLT networks as a “node.”

5. Türkiye’s  Perspective and Strategic Effects

The Guide is of critical importance for Türkiye’s digital trade strategy: Legislative Adaptation: The negotiable instruments law section of the Turkish Commercial Code (TTK) will need to be modernized to include the DLT-based “exclusive control” concept regulated in MLETR. Logistics Advantage: Türkiye’s position on logistics corridors can be crowned with a “National Digital Logistics Platform” compatible with the standards in the guide. Judicial Reform: Taking the “technical accuracy” criteria in the guide as a reference in the evaluation of digital evidence in the Turkish legal system will accelerate the resolution of disputes.

6. Sectoral Potential Effects: Financial Architecture and Digital Transformation

The Guide emphasizes that DLT is not just a recording system, but also a “legal ground” that changes the nature of financial instruments. In this context, the following fundamental changes are expected in the capital markets, fintech, and banking sectors:

6.1. Capital Markets

The clarity brought by the Guide to ownership and transfer mechanisms will accelerate the “tokenization” (digital representation of assets) process in capital markets.

• Digitalization of Assets: The inclusion of assets such as real estate, commodities, and stocks in fractional ownership on DLT gains a legal basis. As stated under the tokenization heading of the Guide, tokenization acts as a bridge between the physical economy and the digital economy and can increase financial inclusion.
• T+0 Settlement Process: The 2-3 day settlement periods in existing systems will be significantly shortened thanks to the “simultaneous transfer of control” defined in the guide.
• Issuance Processes: The issuance of debt instruments (bonds/bills) through smart contracts will minimize brokerage costs and operational errors.

6.2. Fintech Ecosystem

For fintechs, the guide initiates the era of “Compliance as Code.” Programmable Money and Stablecoins: Under the cryptocurrencies heading of the Guide, stablecoin and digital asset standards will enable fintechs to produce safer and more auditable solutions in cross-border payments. Embedded Finance: Payment systems embedded in commercial DLT networks will combine trade finance and logistics data within a single “smart contract.” RegTech Applications: The standards provided by the guide will enable fintechs to perform real-time data reporting to regulatory authorities.

6.3. Banking and Trade Finance

Traditional banking will combine the role of “institution of trust” with the technical verification of DLT. Digital Letters of Credit and Guarantee: Paper-based letter of credit processes will be replaced by digital transferable records based on the “exclusive control” principle explained in the electronic transferable records heading of the Guide. This will significantly reduce the risk of fraud (double spending/double financing). Liquidity Management: Banks will be able to perform faster and more accurate credit scoring based on real-time commercial data on DLT. CBDC (Central Bank Digital Currencies) Integration: The principles in the Guide provide a legal prototype for how commercial banks will interact with Central Bank digital currencies on DLT networks. As stated in the payment systems heading of the Guide, CBDCs can be issued with or without using DLT, and HCCH’s work on their cross-border use continues.

6.4. Transformation in Public Administration and Government Services

The Guide envisions that DLT will play a revolutionary role not only between private law persons but also in relations with the state’s “trust-registering” institutions. The most prominent effects on the public side will be seen in the following areas:

• Title Deed and Cadastre Records: The principles of “immutability” and “exclusive control” emphasized in the Guide provide an international standard for moving title deed registries to a DLT-based structure. As explained in the first section of the Guide, persistence of information can lead to important legal consequences regarding rights requiring registration.
• Secure Transfer: Real estate sale transactions can be completed in seconds through smart contracts, in the form of an automatic update of the title deed record at the moment payment is made (with an escrow logic).
• Prevention of Forgery: The inability to change records retrospectively makes manipulations and corruption risks on the title deed technically extremely difficult. However, as stated in the DAO Hack case study of the Guide, security vulnerabilities can be exploited depending on the consensus mechanism.
• Customs and Foreign Trade Audit: The Guide encourages the sharing of customs declarations and certificates of origin over DLT with a “paperless trade” vision.
• Real-Time Audit: Public authorities can access data in the logistics network in real-time (by connecting as a node); this starts the era of “audit at the time of transaction” instead of “post-audit.”
• Digital Identity and Notary Services: The legal recognition of digital assets mentioned in the Guide allows notary services to perform “on-chain data verification” instead of “certified true copy” approval. Public institutions can reduce bureaucracy by verifying citizens’ digital identities over DLT. As stated in the identity management heading of the Guide, the MLIT (Model Law on Identity Management and Trust Services) can provide a suitable identity management framework for DAO members, developers, and operators.
• Tax Applications: As discussed under the contract automation heading of the Guide, the fact that commercial transactions take place on DLT opens the legal and technical way for VAT and other transaction taxes to be calculated and transferred to the public treasury at the time of transaction (real-time tax) through smart contracts.

7. Environmental Considerations

As included on page 10 of the Guide, the environmental footprint of DLT mining constitutes a significant regulatory concern. As stated in the environmental considerations case study on page 10 of the Guide, regulatory concerns regarding the environmental footprint of DLT mining are increasing. In particular, the proof of work consensus mechanism requires high energy consumption. Transitioning to a proof of stake mechanism can significantly reduce energy consumption. Commercial operators should be aware of relevant regulations, including financial obligations regarding the carbon footprint of DLT.

8. DAOs (Decentralized Autonomous Organizations) and Legal Status

The Guide draws attention to the uncertainty in the legal status of DAOs used in the management of DLT systems. As explained in the basic features of DAOs heading of the Guide, DAOs have a governance structure devoid of central management, based on token-based voting and smart contracts. The uncertain legal status of DAOs makes interaction with external parties such as service providers, investors, and regulatory agencies difficult. In some jurisdictions, DAOs can gain limited liability by being registered under special laws; however, it is not automatically guaranteed that this legal status will be recognized in other jurisdictions. Türkiye’s legal regulation in this field is of critical importance for the development of the DLT ecosystem.

9. Counterparty Vetting and Service Standards

As emphasized in the counterparty vetting heading of the Guide, counterparty vetting is of critical importance to ensure the reliability of DLT-based operations. Commercial operators should perform due diligence on DLT providers, ensure they are contracting with a legally recognized entity, and verify the company’s past performance in developing and maintaining DLT. As stated in the business continuity management heading of the Guide, business continuity management (BCM) and service level management are vital in building trust in the use of distributed ledgers. Additionally, independent third-party audits of the distributed ledger’s code can increase trust.

10. Data Privacy and the Right to be Forgotten

As stated in the data privacy and protection heading of the Guide, the decentralized structure and information persistence feature of DLT make compliance with data protection laws difficult. In particular, the right to be forgotten and the right to erasure may conflict with the immutability feature of DLT. Possible solutions proposed in the relevant case study of the Guide are: (i) agreement on data erasure in private permissioned ledgers, (ii) off-chain storage of personal data, (iii) encryption and anonymization of data. These issues should be taken into account in terms of KVKK compliance in Türkiye.

11. Pseudonymity and Service of Process

As stated in the identity and pseudonymity heading of the Guide, the use of pseudonyms is common in DLT systems, and this situation may conflict with identity verification obligations (KYC/AML). In litigation processes, serving process to parties whose only known address is a pseudonymized address poses a specific challenge. As explained in the service of process use case of the Guide, some courts have allowed service of process via NFT. However, the compatibility of these mechanisms with applicable treaties (e.g., the Hague Service Convention) must be verified.

12. Private International Law Issues

As emphasized in the private international law heading of the Guide, private international law rules are of importance in the context of DLT. In the event that parties do not make a valid choice of law, private international law rules assist in determining the applicable law. Due to the decentralized structure of DLT, various components of a DLT-based information system may be located in different jurisdictions or change location regularly. Therefore, the rule in ECC article 6(4), stating that the location of the equipment and technology supporting the information system is not a party’s place of business, may be particularly useful.

In summary, the Guide offers a comprehensive legal framework for the use of distributed ledger technology in international trade. Based on the principles of technology neutrality, functional equivalence, and legal recognition, the Guide brings a systematic approach to the legal issues encountered in commercial applications of DLT.

For Türkiye, the adaptation of the standards presented by the Guide to national legislation is of strategic importance in terms of strengthening the digital trade infrastructure and ensuring international harmony. In particular, the modernization of the negotiable instruments provisions of the TTK, clarifying the legal status of digital assets, and making legal regulations regarding DAOs are considered priority steps. The Guide also refers to the work carried out in coordination with HCCH and emphasizes the importance of ongoing cooperation for the resolution of private international law issues.