- Bill passed by a majority 96-1 vote
- The bill gives blockchain and DLT a legally accepted definition
- This is considered a minor step in the right direction
Washington State has passed a bill that recognizes and protects the legal status of electronic records pertaining to Distributed Ledger Technology (DLT). The bill was signed into law by Washington Governor Jay Inslee.
Discrimination of Electronic Records
The new bill that was signed on April 26, 2019, is a substitute for the Senate bill 5638 which had its first reading by the Washington state legislature on January 25, 2019. The bill was passed with a 96-1 majority vote and will go into effect beginning July this year. The new law has a clause that addresses the prevention of discrimination of electronic records that originate from the distributed ledger. The clause states in part:
“An electronic record may not be denied legal effect, validity, or enforceability solely because it is generated, communicated, received, or stored using distributed ledger technology.”
The Senate Bill 5638 (SB 5638) entitled “AN ACT Relating to recognizing the validity of distributed ledger technology” was introduced on January 25, 2019, by a group of Washington legislators. The purpose of the bill was seeking the establishment of legal definitions for blockchain and the distributed ledger technology besides offering clarification on the legal status of the records created and stored using Distributed Ledger technologies (DLT).
Same Legal Standing
The bill that was submitted by Senators Brown, Rivers, Becker, and Short, SB 5638 sought to revise the “Washington Electronic Authentication Act” which is already part of state law. SB 5638 specifically contained proposed amendments to RCW 19.34.010 (Purpose and construction) and 19.34.020 (Definitions), besides adding a further section to the previously passed act.
The new bill is expected to encourage the development of distributed ledger technology,” and by defining “Blockchain” and “Distributed ledger technology” as it gives records created and stored using distributed ledger technologies the same legal standing as other electronic records. This means that smart contracts and communications generated by distributed ledger technologies will not be interpreted in a different manner because they exist on a blockchain or some other form of distributed ledger technology.
Washington State has been characterized as having a “bad rep on blockchain and cryptocurrency once being called out as “unethical, wasteful, and reckless” by ShapeShift after the passage of Senate Bill 5031 in the fall of 2017.
Companies working with blockchain and distributed ledger technologies have had to exorbitant legal fees due to the lack of familiarity with issues surrounding the development of these technologies in the legal system and the passing of this bill represents a minor step in the right direction.
