California Legislature Says Yes To Blockchain Bill Defining Crypto Terms
A draft law has been recently approved in California. The new law was designed to create the legal grounds for the implementation of technology related to cryptocurrencies. Called Assembly Bill 2658 and amends the California Corporations Code, Government Code and Civil Code to legalize the blockchain technology in the state for local and foreign commerce.
Known as the DLT bill, the bill was drafted by Ian Calderon, a 32-year old democrat Assembly member from California. It was one of his most notable successes during his term. The goal was to determine the basic terms related to cryptos and the distributed ledger technology (also known as the blockchain). The draft was co-sponsored by Bob Hertberg, a Senate Democrat.
The Assembly Bill 2658 introduces legal definitions for blockchain, smart contracts and revises some older ones like an electronic record and electronic signature to upgrade these definitions.
It is important to notice that several laws will be amended when the bill is adopted. They include Sections 1624.5 and 1633.5 of the Civil Code, Section 25612.5 from the Corporations Code, Section 16.5 from the Government Code, Section 38.6 of the Insurance Code for electronic records and even a new section, 1633.75 to the Civil Code.
Another important aspect of the bill is to revise provisions and to define how electronic records and signatures are defined in the context of blockchain at the same time that it adds smart contracts to the equation.
The major merit of the bill created by Ian Calderon is to determine all the terms related to DLT technologies and cryptos in general. For instance, it defined that blockchains mean DLT that is decentralized and shared via a reciprocal ledger that may be public, private, permissioned or permissionless and that it will be driven by tokenized assets.
Blockchain’s data, another section determines, is protected by cryptography, is immutable, auditable and provides an “uncensored truth”. Smart contracts are defined as event-driven programs that run on a distributed ledger and can take custody over assets on that ledger of instruct their transfer.
The section on the Civil Code states that records secured via this technology are to be treated as electronic records and signatures as electronic signatures.
Bill 2658 has already passed the Senate on August 23 and the State’s Assembly on August 27. Now, it waits for the signature of the Governor Jerry Brown.