In 2017, the state of Illinois announced the Illinois Blockchain Initiative, which calls for a consortium of state and county agencies to “collaborate to explore innovations presented by Blockchain and distributed ledger technology”. The goal of the initiative is to determine if this groundbreaking technology can be leveraged to create more efficient, integrated and trusted state services, while providing a welcoming environment for the Blockchain community.
Colorado has also taken a blockchain-friendly approach, also aiming to exempt cryptocurrencies and certain digital tokens from securities laws. The Colorado Digital Token Act proposes that digital tokens with a “primarily consumptive” purpose should be exempted from securities laws provided they are not marketed for “speculative or investment” purposes.
Ohio’s Uniform Electronic Transactions Act has been amended to state that “a record or contract that is secured through blockchain technology is considered to be in an electronic form and to be an electronic record.” Electronic signatures secured through blockchain technology are also considered to have the same legal standing as any other electronic signatures defined under the act.
House bill 584
On 8 May 2019, Montana passed the House bill 584, titled “Generally revise laws relating to cryptocurrency”, which recognises utility tokens and exempts them from state securities. Under the new law, a utility token is defined as a digital unit that is created, recorded on blockchain, capable of being exchanged without a third party, and issued to enable owners to access a good or service delivered by the issuer “without vesting the holder with any ownership interest or equity interest in the issuer.” For such a token to be exempt from securities laws, the issuers must not market the token as an investment or for speculation. The token’s purpose must rather be “primarily consumptive” i.e. used to provide or receive goods, services or content.
Delaware Governor Jack Markell launched the Delaware Blockchain Initiative (May 2016), a comprehensive program to provide an enabling regulatory and legal environment for the development of blockchain technology and to welcome blockchain companies to locate in the state.
Delaware’s General Corporation Law
Delaware’s General Corporation Law was amended to provide statutory authority for Delaware corporations to use blockchain for creating and maintaining corporate records, including the corporation’s securities register. Blockchain enables the maintenance of corporate records in a way that addresses a problem with the current system, especially for larger companies with millions of stockholders, for example, about who owns the stock and how they voted in a merger. Delaware corporate law now specifically recognises blockchain maintenance of corporate records by allowing such records to be kept on one or more electronic networks or databases provided certain conditions are met, including:
- that the records can be converted into clearly legible paper form within a reasonable time and,
- with respect to securities registers, that such registers be used, among other things, to prepare the list of shareholders or record share transfers.