The US state of Illinois has moved the needle on blockchain adoption by passing the Illinois Blockchain Technology Act, a bill that legalizes the use of smart contracts. The Blockchain Technology Act allows smart contracts to be admissible as evidence in court. The Illinois blockchain bill was sponsored by Republican Representative, Keith Wheeler and took effect on January 1st, 2020.
Illinois Blockchain Bill: The Blockchain Technology Act
Ambiguity within the blockchain space is one of the major hindrances to mass adoption and proper regulation. This is because there is no clear law on how regulators should deal with blockchain technology or its applications since this emerging tech is relatively new and mostly uncharted territory. The Illinois Blockchain bill attempts to simplify things and bring more clarity on how to handle blockchain technology and smart contracts. This piece of legislation kicks off by establishing a law-backed definition for blockchain technology.
The Act reads:
“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.”
The bill also seeks to provide definitions for other blockchain terminologies like cryptographic hashes, smart contracts, and electronic records. It also mandates that smart contracts can be presented as valid evidence, admissible in court, to prove merit or make enforceable claims.
To this end, the bill 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.”
What are the implications for Illinois?
The implementation of the Illinois blockchain bill means that blockchain-based records and data evidence can now be recognized as a suitable alternative to paper-based records and will now be exempt from local taxation. Also, with the new clarity surrounding blockchain laws and potential regulation, more blockchain-based companies will be encouraged to establish themselves in the state of Illinois, knowing that the law of the land now protects this technology. This will inadvertently lead to the creation of more jobs and internships in the state.
More importantly, the Illinois Blockchain Bill protects blockchain companies from local government interference. The local government will no longer be able to impose unfavorable blockchain regulations, taxes, or demand permits for using blockchain systems. Illinois could eventually become a hub for blockchain development as tech companies are consistently looking for “blockchain green pastures;” where they can pursue their projects without government interference.
Blockchain is Penetrating the Courts
By allowing blockchain-based evidence in the court, the US has joined many other nations that are using blockchain technology to enhance their judicial process. In March last year, it was reported that the National Council of Clerks (NCC) in France would begin using a blockchain platform (Hyperledger) to keep track of the legal status of firms across the country. The idea behind this blockchain database is to help speed up the process of updating records, enhancing the clerks’ duties and responsibilities.
Far away on the Perisian Gulf Coast, Dubia also hatched its plan to revitalize its judiciary system by leveraging blockchain technology. This gave birth to the world’s first blockchain court, a blockchain network designed to simplify the process of verifying court judgment, sharing documents, and promoting prompt cross border enforcement. These developments indicate that as blockchain utility continues to grow amongst the nations of the world, more judiciary focused blockchain applications are definitely underway.