Ohio has become the latest U.S state to recognize that smart contracts and data stored on the blockchain are legally enforceable electronic transactions.
The news comes after lawmakers introduced a bill, SB300, in May that sought to update sections of Ohio’s Uniform Electronic Transactions Act (UETA) to include blockchain-based transactions and smart contracts as electronic records. The goal is to create an enabling environment that makes the state more attractive to blockchain businesses and talents.
SB300 failed to pass but portions of its wording were later incorporated into the new legislation SB220 as amendments. SB220 was approved by Ohio Senate in June and finally signed into Ohio law early this month. The legislation amends Ohio’s Uniform Electronic Transactions Act to state that “a record or contract that is secured through blockchain technology is considered to be in an electronic form and to be an electronic record”. The amendments also allow for electronic signatures secured through blockchain technology to be legally enforceable as those made with ink.
Ohio cities have been pushing to launch initiatives that are aimed at attracting blockchain-based businesses to bring emerging technologies to the region. For instance, the city of Columbus recently launched the Smart Columbus Operating System (SCOS), which utilizes transportation data, as well as the Internet of Things and blockchain to better understand the city and its challenges.
Meanwhile, Columbus-based SafeChain is already making strides with its blockchain solution designed for title insurance companies. It uses blockchain technology to secure property transactions and help eliminate fraud in the real estate industry. In Cincinnati, another blockchain development startup 10XTS is building enterprise blockchain products and solutions for a broad range of industries.
Ohio is home to many FinTech startups and Fortune 500 companies. According to JobsOhio, Ohio’s financial services industry is the fifth-largest in the U.S and is the second-largest private sector within the state. That explains why blockchain adoption in the financial sector is important to Ohio.
Ohio Senator, Matt Dolan commented:
“In order for Ohio to compete for new investments and jobs, we must welcome innovation, new technology, and advanced energy. Embracing blockchain technology is a step forward to achieve those goals”.
The legislation may reduce chances of litigation regarding blockchain contracts, helping to eliminate the uncertainty that revolves around the use of distributed ledger technologies. This not only attracts blockchain businesses to the state but allows startups and innovators to focus on developing new applications and products that leverage DLT, especially in the field of financial technology.
Other states that have also been adopting new legislation to clarify the legal validity of blockchain transactions and signatures include Vermont, Arizona, Tennessee, Wyoming, and Nevada. However, the states of Florida and Nebraska have postponed their proposed bills indefinitely.