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.

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David Zaslowsky has a degree in computer science and, before going to Yale Law School, was a computer programmer. He is currently the Chairman of the Litigation Department of the firm’s New York office. His practice focuses on international litigation and arbitration. He has been involved in cases in trial and appellate courts across the United States and before arbitral institutions around the world. Many of David’s cases, including some patent cases, have related to technology. Since 2008, David has been included in Chambers for his expertise in international arbitration.