We have previously written about how U.S. states have, one by one, passed legislation relating to blockchain. As we enter 2020, Illinois has become the latest state to do so.
The Blockchain Technology Act took effect on January 1, 2020. Under the Act, “blockchain” is defined as “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.”
The Act provides legal recognition to smart contracts and blockchain-based records and signatures. Specifically, according to the statute’s sponsor, it:
- Provides that evidence of a smart contract or blockchain-based record or signature must not be excluded in a proceeding solely because it was created or stored on a blockchain
- Provides certain limitations for blockchain transactions and smart contracts
- Prohibits local governments from regulating or taxing blockchain technology or smart contracts
- Defines key terms
The statute does not mandate the use of blockchain technology or smart contracts, nor direct state or local governments to adopt blockchain technology. Instead, it simply provides regulatory certainty for blockchain developers and adopters that blockchain-based records, signatures, and contracts will not be denied legal effect because of the technology used.