While Section 5 defines blockchain, cryptographic hash, and smart contracts, Section 10 elaborates on smart contracts and provides guidelines regarding its use. Notably, section 15 also clearly provides limitations to the use of blockchain as follows:
“If parties have agreed to conduct a transaction by use of a blockchain and a law requires that a contract or other record relating to the transaction be in wriing, the legal effect, validity, or enforceability of the contract or other record may be denied if the blockchain containing an electronic record of the transaction is not in a form that is capable of being retained and accurately reproduced for later reference by all parties or other persons who are entitld to reain the contract or other record.”
Finally, Section 20 lays down restrictions on local governments:
A unit of local government shall not:
(1) impose any tax or fee on the use of a blockchain or smart contract by any person or entity;
(2) require any person or entity to obtain from the unit of local government any certificate, license, or permit to use a blockchain or smart contract; or
(3) impose any other requirement relating to the use of a blockchain or smart contract by any person or entity.
The Bill also states “A home rule unit may not regulate a blockchain or smart contract in a manner inconsistent with the regulation by the State of a blockchain or smart contract under this Act.”
Similar bills have been tabled in the assembly of California, Wyoming, Arizona and a few other states. Globally, countries such as Switzerland, Spain, Australia, and Russia are trying to establish a clear cryptocurrency framework that encourages innovation, while preventing the misuse of distributed ledger technology.