BLOCKCHAIN REGULATION AND SMART CONTRACTS: LEGAL IMPLICATIONS FOR COMMERCIAL TRANSACTIONS

Abstract

We examine how legal governance structures influence the reliability of blockchain based commercial transactions within emerging digital markets. We develop and empirically evaluate the Blockchain Legal Transaction Integrity Model using the Global Blockchain Regulation and Smart Contract Adoption Dataset covering the period 2020 to 2025 across major blockchain adopting jurisdictions including the United States, the United Kingdom, Singapore, Estonia, and Ghana. The model links regulatory clarity, compliance enforcement mechanisms, and legal recognition of smart contracts with commercial transaction integrity while accounting for institutional legal capacity as a conditioning factor. Quantitative analysis shows that stronger regulatory clarity, active enforcement supervision, and legally recognized smart contracts significantly improve transaction transparency, contract execution reliability, fraud reduction, and business trust in blockchain systems. Institutional legal capacity amplifies these effects by strengthening regulatory interpretation and dispute resolution capability. The results demonstrate that blockchain markets achieve reliable digital commerce not only through technological design but through coordinated legal governance structures. The findings advance institutional governance theory and provide policy guidance for regulators seeking to strengthen digital financial ecosystems and cross border blockchain commerce.