The Blockchain Technology Act comes into force in Illinois

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blockchain technology recognized in the state of Illinois

State of Illinois, in the USA, legalize smart contract and blockchain technologies

An industry study announces 2020 as the breakthrough year of the blockchain technology and of the smart contracts. The phenomenon, sometimes misunderstood, seems to get to the heart of the matter! The correct definition and implementation of smart contracts is what has attracted the attention of the legislator. For this reason, the state of Illinois legalizes the smart contracts and the blockchain technology.

Within and parallel to the phenomenon of distribuited ledger technologies, among which the blockchain stands out, we now hear daily talk about smart contract, also defined as self-executable software on blockchain platform, whose execution automatically binds two or more parts on the basis of predefined effects by the same.

As a result, several legislators, some faster than others, are issuing regulations that guide a correct and conscious use of these technologies, also in the commercial and business field. Like many other statutes (i.e. the CCPA), the Blockchain Technology Act (BTA) came into force in the US State of Illinois on January 1, 2020 to resolve some legal uncertainties. One of the issues that needed to be clarified was, precisely, the enforceability of smart contracts, defined as electronic records stored on blockchain, in judicial contexts, given the obvious difference with typical contracts.

List of smart contracts’ cases of use

the utility of the smart contracts in the blockchain technology
Law enforcement in Illinois gives a definition of the smart contract

The BTA clarifies and lists four use cases:

  • a smart contract cannot be denied legal effect or enforceability simply because a blockchain has been used to create, store or verify the contract, record or signature;
  • in legal proceedings, evidence of a smart contract, or record or signature should not be excluded just because a blockchain has been used to create, file or verify the contract, record or signature;
  • where a law requires a record to be written, the submission of a blockchain containing such a record electronically satisfies the law;
  • where a law requires a signature, the submission of a blockchain electronically containing the signature or verifying a person’s intention to provide a signature, meets the law.

Other states, prior to Illinois, have provided for such an opening, such as Arizona, Tennessee (House Bill 1507), Vermont (Vermont Statutes § 1913) and not least Wyoming (SF0125 – Digital assets-existing law).

Although the BTA is the last “statute” on this matter, it would also seem to be the most complete, since, unlike other regulatory pronouncements, it catalogs as legally valid not only smart contracts but also digital registrations or signatures, which are born and live on blockchain platforms, extending their future enforceability, in state courts.

List of smart contract’s limitations

Not only that, but it also dictates the discipline with limitations.

  • For example, if a written contract is required, a smart contract cannot be denied validity if it can be reproduced and stored by all parties involved.
  • Or if a registration is required to be sent or published in a given manner, the digital registration must also comply with this requirement in order to be considered valid and enforceable.
  • If a person inhibits an individual’s ability to store or retrieve information contained in a blocking chain, such information will not be applicable, by the person who inhabited the storage or retrieval. The purpose of this provision is to facilitate those parts of smart contracts that were not aware of the drafting of the code of the same.
  • In certain public order circumstances, such as notification of default or eviction, cancellation of health benefits or recall of products, the above technology is not considered applicable for notices and notifications. Nor in the case of transport of hazardous materials.

The provisions of the BTA may not be disregarded, unless there are clauses providing for changes made by mutual agreement.

BTA provides that local governments may not impose any limits or requirements on the use of blockchain or smart contracts, including taxes, fees or certification requirements.


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Raffaella Aghemo Innovative Lawyer and Business Consultant, and recently Co-Founder of IUSINTECH Team, Raffaella has worked as the director of a communications agency for many years. A legal soul lent to marketing and business, she has made this combination of skills her strong point! She writes legal insights in her specializations (IP, innovation technology, communication, blockchain). Actually, she's following a blockchain development project in the luxury sector. She loves reading, writing, and movies.

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