The State Of Illinois Legalizes Blockchain-Based Smart Contracts
The US State of Illinois made a massive step towards further blockchain adoption. According to the Blockchain Technology Act, which took effect on January 1st, blockchain-based smart contracts satisfy the law under certain circumstances.
Smart Contracts Admissible In Court
One of the biggest challenges in front of regulators when it comes to crafting legislation for the cryptocurrency field is definitions. The SEC, for instance, has been struggling for quite some time before stating that Bitcoin and Ether (ETH) are not considered securities, while other digital assets launched in Initial Coin Offerings, for instance, pertain to that definition.
The State of Illinois, however, has made a serious step towards regulating blockchain-based technologies with the Blockchain Technology Act.
The bill, which is sponsored by Rep. Keith Wheeler, took effect on January 1st, 2020, and one of the first things that it addresses is the very definition for blockchain itself.
“Blockchain means an electronic record created by the use of a decentralized method by multiple parties to verify and store a digital record of transactions which is secured by the use of a cryptographic hash of previous transaction information.” – Reads the document.
More interestingly, the bill also provides definitions for cryptographic hashes, electronic records, and smart contracts.
Going further, the bill also stipulates that “a smart contract, record, or signature may not be denied legal effect or enforceability solely because a blockchain was used to create, store, or verify the smart contract, record, or signature.” It adds that the submission of a blockchain-based smart contract that electronically contains the record satisfies the law if it requires that document to be in writing.
In other words, smart contracts are now admissible in court, and they can be used to prove merit or to claim enforceability. This is undoubtedly a massive step towards further adoption.
China Already Ahead
While this may seem like a serious legislative breakthrough for the US, it’s worth noting that China is already far ahead in this regard.
Back in 2018, the Internet Court of Hangzhou confirmed that a defendant could use Blockchain to prove innocence
As it was translated by Katherine Wu, the court opined that when an issue involves blockchain technology, “an open and neutral attitude must be adopted.”
In any case, it remains interesting to see how this Act in the state of Illinois will be put into practice and whether or not it will pose additional challenges.
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