Blockchain, or distributed ledger, is a new technology designed to keep records secure in a decentralized fashion that can be verified mathematically or cryptographically. Best known as the technology behind Bitcoin, blockchain has a recognized potential that goes beyond virtual currency. Some real-world examples under study or development for blockchain include managing food supply chains; “smart contracts,” where computer protocols themselves enforce the contract if specified conditions are met; and maintaining property titles, stock ledgers, and other records of ownership.
Many states have implemented new laws and regulations that cover uses of blockchain in business or government, including
- application of state money-transmitter laws to virtual currencies,
- treatment of virtual currencies and other blockchain digital assets under state securities laws,
- recognition of blockchain records as electronic records that have the same status as paper records, and
- maintenance of corporate records on blockchain.
Some states have gone even further. They have authorized new types of corporate entities for blockchain businesses. They have enacted laws that encourage the development of in‑state blockchain industry. And they have created new regulatory “sandboxes,” which allow innovative financial products or services to develop in a sheltered regulatory environment.
These state-law efforts to regulate blockchain began as early as 2015, when New York created its BitLicense, a comprehensive and rigorous licensing framework for virtual-currency businesses. Delaware launched a government blockchain initiative in 2016; and the following year, it became the first state to amend its corporate law to authorize blockchain stock records. In 2018, Arizona opened the first state regulatory sandbox for FinTech companies. Also last year, Wyoming enacted five blockchain-friendly statutes designed to bring business to the state. These are only a few examples of a nationwide trend that seeks to balance the potential economic benefits of emerging blockchain technology with the protection of consumers and markets.
The pace of state blockchain legislation has not slackened in 2019. Ten key developments have emerged in the states in just the first quarter of this year.