An overview of various legislative approaches to regulating – and recognizing – blockchain in the US
While blockchain technology is increasingly utilized in public sectors around the world, several US states have been especially active when it comes to legislating the various corollaries of blockchain technology. Some bills have passed, while others are still being proposed, revealing the flow on effect that simultaneous debates can have in a given country. As one state passes a bill, another sees a use for blockchain in their own government, and the process flows on. The following examples provide an overview of the legislative models for blockchain use and regulation being enacted on the ground.
Delaware has been a leader in this area. Thanks to recent state legislation, Delaware now allows for corporations to maintain shareholder lists via use of blockchain. While the technology predated the legislation, the bill’s enactment provides legal protection for users of the blockchain who previously would have stored shareholder names via a spreadsheet or other conventional methods.
As corporations in Delaware are required by law to keep a list of shareholder names, this process has shown a common sense approach to blockchain adoption, allowing the technology to enhance operations, while also ensuring necessary regulations are retained.
Both Nevada and New Hampshire now have crypto-friendly laws on the books. Nevada’s as state senate Bill 398 (passed in June 2017) provided official recognition of blockchain and smart contract use among its residents. The bill officially recognizes “blockchain technology as a type of electronic record for the purposes of the Uniform Electronic Transactions Act; prohibiting a local government from taxing or imposing restrictions upon the use of a blockchain.”
New Hampshire’s so called Bitcoin regulation exempts currency traders from being required to register as money transmitters. This is done while ensuring the general protections provided for by the state’s consumer laws remain in place.
This approach to cryptocurrencies taken by Concord has seen the state come to be regarded by some as “the blockchain capital of the world,” despite the fact that the state is almost entirely concerned with the crypto aspects of blockchain.
Arizona is another state that has officially recognized blockchain technology for the purposes of electronic signatures on contracts with House Bill 2417. Another pioneer of legislative recognition of blockchain is Illinois’s House Resolution 120, which formed a task force to explore how Illinois state and municipal governments could benefit from blockchain technology for record-keeping and service-delivery purposes. The state’s research into the use of blockchain technology to record real estate title transfers has also shown promising results.
Of the most interesting debates to watch has been within Hawaii’s consideration of House Bill 1481. As a state with a robust tourism industry, Hawaii identifies in cryptocurrency and blockchain the potential for greater intergovernmental engagement (within the United States and other nations) as well as the potential to draw new business to the Pacific state.
Bill 1481 would seek to establish a working group to explore how blockchain could benefit the state’s health care, legal, financial, and tourism industries, among others. Legislation that seeks to authorize working groups and further research have been seen in other states.
At the federal level, the U.S Department of Defence has also been active. The new Modernizing Government Technology Act (MGT) provides for capital to “transition legacy information technology to cloud computing and other innovative platforms and technologies”. The MGT is part of the broader National Defense Authorization Act (NDAA). Based on conversations surrounding the bill, it appears that the US Armed Forces are actively weighing in on whether blockchain will form part of national security and strategy in the future.
The Act is also illustrative of how legislators may ultimately seek to approach blockchain: gradual adoption may be more preferable than diving into the deep end.
Ultimately, the increasingly widespread legislation related to blockchain technology has revealed an interesting trend: grassroots support for the technology for a range of applications. Yet, it remains to be seen which legislative models will prove most effective for their respective purposes. As diverse as these approaches may be, collectively, they have undoubtedly flung open the door for further research and adoption of blockchain technology within the public sector, both inside and outside the US.