The bill also advocates for distributed-ledger technology to be viewed as a reliable electronic store of record
The midwestern US state of Iowa has passed a bill that seeks to legally recognize transactions and registrations made through blockchain smart contracts in its House of Representatives yesterday. The bill, SF541, was approved by the Senate earlier this month. The legal recognition of the use of blockchain smart contracts is a major step towards achieving visibility and regulatory clarity for the crypto community.
The new bill proposes that smart contracts be given the same legal status as of regular contracts. The contents of the bill also advocate for distributed-ledger technology (DLT) to be viewed as a reliable electronic store of record which is being seen as a very promising sign for the future of innovation in the state.
“The bill provides that a contract shall not be denied legal effect or enforceability solely because the contract is a smart contract or contains a smart contract provision”, the bill states with regards to smart contracts.
It further adds that any registration of rights or ownership will not be deemed invalid by its broadcast on a blockchain network unless such registration or transaction was specifically related to the transfer of the rights in question.
“A person who, in engaging in or affecting interstate or foreign commerce, uses distributed ledger technology to secure information that the person owns or has the right to use retains the same rights of ownership or use with respect to such information as before the person secured the information using distributed ledger technology”, explains the bill.
It adds that such rights will be retained “unless in connection with a transaction with terms that expressly provide for the transfer of rights of ownership or use with respect to such information”.
The bill made it through the Senate unanimously with a vote of 47—0, earlier this month. It was also approved by the House of Representatives with similar ease yesterday as the representatives voted for the bill 94—0.
Steve Hansen, the democratic representative in the house highlighted the significance of the bill for Iowa by suggesting that the implementation of the bill would eventually lead to broader regulation of cryptocurrencies including Bitcoin.
Republican representative Jeff Shipley commenting on the bill to the Iowa daily newspaper pointed out that the bill was concerned with laying down definitions than regulations for the time being. However, he believed that this step was crucial for border regulations and added that Bitcoin would also fall under the scope of the definitions the bill aims to define.