I’m a developer working on a blockchain-based payment system that will be used in multiple EU countries. Given the regulatory landscape, how does DORA affect our project, and what specific compliance measures should we be planning for?
Understanding the Legal Question
The legal question is regarding the implications of the Digital Operational Resilience Act (DORA) on a new blockchain-based payment system intended for use across the EU. The user is seeking guidance on the regulatory requirements under DORA that would apply to this project and is looking for insight into compliance measures that should be anticipated and integrated during development.
Ambiguities in the Legal Question
Scope of the Payment System: The specifics of how the blockchain-based payment system operates and what functions it will perform are not detailed.
Targeted Users and Entities: It is unclear whether the system will be used by consumers, financial institutions, or both.
Interconnectedness with Financial Entities: The extent to which the payment system will be interconnected with traditional financial entities versus operating independently is not specified.
Data Handling: There is no information on the types of data the system will handle, particularly whether it will process or store any personal data or sensitive financial information that could trigger additional compliance obligations.
Jurisdictional Presence: The details about whether the developer has a physical presence in the EU or is operating remotely are absent.
Assumptions for the Legal Analysis and the Plan for the Junior Lawyer
Note: The junior lawyer is what we call a subsystem of Hotseat that completes helper tasks
Scope of the Payment System: The blockchain-based payment system is assumed to be a complex system with functionalities that may impact the financial sector and potentially fall under the category of financial entities as addressed in DORA.
Targeted Users and Entities: It is assumed that the system will be available to both consumers and financial institutions.
Interconnectedness with Financial Entities: The payment system is assumed to be designed to interact with other financial systems and entities within the EU.
Data Handling: It is presumed that the system will handle financial transactions, which may involve processing personal data and sensitive financial information.
Jurisdictional Presence: We will assume that the developer has or plans to have a legal entity established within the EU, making DORA’s provisions directly applicable to the project.
Plan for the Junior Lawyer:
Investigate DORA’s Scope and Definitions:
Start with Article 2 and Recital 37 to determine if the payment system qualifies as a ‘financial entity’ under DORA.
Examine Digital Operational Resilience Requirements:
Delve into Articles 5 through 14 to understand the ICT risk management requirements relevant to the payment system.
Understand Reporting Obligations:
Thoroughly review Articles 17 and 19 regarding the management and reporting of ICT-related incidents.
Analysis of High-Risk ICT Third-party Service Providers:
Read Articles 28 to 31 to grasp the oversight and risk management obligations connected to critical ICT third-party service providers, which may include blockchain service providers.
Evaluate Compliance Measures for Security and Testing:
Consult Articles 24 to 27 for insight into the expected testing and resilience measures for the payment system.
Clarify Transparency and Reporting Responsibilities Toward Users:
Consider Recitals 53 and 54 and Article 23 for guidelines on communicating with data subjects and reporting relevant events.
Establish a Compliance Checklist for the Project:
Synthesize the information obtained into a checklist that maps specific DORA requirements to the payment system’s functions and user interactions.
Complete a Detailed Legal Report:
Based on the findings, draft a report that outlines how DORA affects the blockchain-based payment system and the compliance measures to be planned, addressing any noted ambiguities or assumptions.
Definitions and Terms from the Digital Operational Resilience Act (DORA):
Financial Entity: As per Article 2 and Recital 37, entailing a diverse set of institutions and entities engaged in financial activities within the EU.
ICT Risk: Article 3, a broad term describing the potential for disruptions arising from digital operational activities.
ICT-related Incident: Article 3, unspecified events that might compromise the integrity, availability, and confidentiality of data.
Critical ICT Third-Party Service Providers: Article 28 and onwards, referring to entities that provide essential technology services to financial entities and are subject to scrutiny to ensure financial sector integrity.
Digital Operational Resilience: As per Article 1, the ability to remain operational through various ICT challenges.
Question Clarity Rating
Somewhat clear
Clarity Rating Explanation
The original question is somewhat clear on the user’s intent, which is to understand the compliance measures needed for a blockchain-based payment system in light of DORA. However, it lacks specificity regarding the type of financial services provided, the current compliance framework status, the involvement of third-party service providers, the project timeline, and the status of the ICT risk assessment. These specifics are crucial for determining the exact obligations under DORA and providing a detailed answer.