California Passes Bill On Blockchain TechnologyAugust 31, 2018
The California Legislature has passed a bill which will recognize Blockchain technology. The bill, Assembly Bill 2658, will provide the legal framework for Blockchain technology that will fall under the insurance code for the state.
The Inclusion Of Blockchain Technology In California Laws
The bill was brought to the floor by Ian Calderon seeking for the amendment of the Civil Code, Sections 1624.5, 1633.2, and 1633.75, the Corporations Code, Section 25612.5, the Government Code, Section 16.5, and the Insurance Code, Section 38.6 in regard to smart contracts, Blockchain technology, and electronic signatures.
In the law that was in enforcement previously, electronic signatures and the ability to enforce them were legally protected by the Uniform Electronic Transactions Act in the creation of contracts. The Act stated that in the event that any document required writing or a signature, should there be an electronic record of the same, or an e-signature, it would be considered a legal document.
The previous Act did not make any mention of records or signatures which have been secured on a Blockchain network or through Blockchain technology and this created legal ambiguity for many businesses which operate through Blockchain. With the bill expanding its definition of a contract to include a smart contract, it has effectively created a legal framework under which contracts can legally be sealed in the Blockchain network.
The new bill also states that should any person be involved in interstate or foreign commerce through the use of Blockchain technology, they will be entitled to equal rights that they enjoy with securing their information in any other place to accessing and owning and usage in the state of California.
Amendments Made To The Bill
In the newly drafted bill, amendments have been made to the Civil Code Section 1633.2 including a Blockchain technology legal definition. The amended clause, Clause ‘e’ has been amended to state that the term ‘Contract’ will include a smart contract with Contract meaning the overall legal obligation as a result of the agreement reached by the parties involved.
The next clause that has been amended in the in the bill is ‘h’ and it has been amended to state that any record which has been secured using Blockchain technology will be considered an electronic record, with the term ‘Electronic Record’ defining all records which have been created, generated, sent, received or stored through electronic means.
Clause ‘i’ has a sentence added to it stating that any signature secured using Blockchain technology will be considered an electronic signature. Clause ‘p’ has been added to legally define smart contract in the California law stating that smart contract is a program running on a distributed and a decentralized public ledger which could have ownership over assets on the ledger as well as transfer them in the ledger.
Calderon’s Efforts For Blockchain Technology
Assembly Member Calderon who has been the first millennial state legislature, the first ever to be elected, has been since February been seeking to have the use of Blockchain technology in smart contracts and electronic signatures be recognized legally by the state. This passing of the amended bill has been a major win for him and the Blockchain-based businesses.