The State of Illinois is on the forefront of implementing blockchain regulation as the “Blockchain Technology Act” sponsored by Rep. Keith Wheeler (R), took effect on Jan 1, 2020. The new laws will govern the development of blockchain technologies, purchase and transfer of digital currencies and governing smart contracts.
The new laws opens up the discussion on regulation in blockchain contracts and smart contracts to a much wider scope. The new laws will now witness state courts treat blockchain contracts (smart contracts) as legal binding contracts similar to the paper based contracts.
“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.”
The new enacted laws sees the Illinois courts join a number of states across the U.S in recognizing blockchain contracts as legally enforceable. Vermont and Arizona kicked off the regulation spree across the 50 states. Vermont started accepting Blockchain contracts as legal binding in 2016 followed by Arizona that legalized the smart contracts a year later.
Steering clear of private investments in blockchain
The regulation developments will come as welcome news to the crypto communities in Illinois with a clear direction forged by the local government. The blockchain friendly environment will remain so despite the regulatory changes with the laws stating the blockchain field will not be bound by cities and towns. These entities cannot collect taxes from blockchain entities or offer permits and licenses to blockchain entities and their users.
The “Blockchain Technology Act” faces deep challenges
The overall sentiment on the enacted laws on blockchain technology is positive and gives a bullish signal in the field as the new decade starts on a boom. However, there remains challenges in the vagueness and carefully worded nature of the law which Tatyana Ruderman, counsel at InfoLawGroup’s Chicago offices, believes will cause a problem in future.
Moreover, the laws are bound by Illinois borders and do not apply to every state and the progressive nature of the laws will only be effective if other states collaborate together. Ruderman said,
“It may not make sense for businesses who operate outside of Illinois to implement blockchain-based contract management only in Illinois and not elsewhere. This may be an area where it makes sense for industry to come together and agree on some standards to fill the gaps.”
At the end of the year, the U.S Senate drafted its crypto regulation bill 2020 to bring clarity in the field of digital asset payments and set a regulation path across the country in blockchain development.