Relating to electronic transactions by permitting the use of distributed ledger technology and smart contracts

Code chapter 554D, the uniform electronic transactions Act, facilitates the use of electronic transactions in commerce by giving legal recognition to electronic records, signatures, and contracts. This bill modifies the Code chapter by permitting the use of distributed ledger technology and smart contracts in electronic transactions. The bill defines “distributed ledger technology” as an electronic record of transactions or other data that is uniformly ordered, redundantly maintained or processed by one or more computers or machines to guarantee the consistency or nonrepudiation of the recorded transactions or other data, and is validated by the use of cryptography. The bill defines “smart contract” as an event-driven program or computerized transaction protocol that runs on a distributed, decentralized, shared, and replicated ledger that executes the terms of a contract by taking custody over and instructing transfer of assets on the ledger. The bill adds contracts secured through distributed ledger technology and smart contracts to the definition of “contract”. The bill adds the concept of security through distributed ledger technology to the definitions of “electronic record” and “electronic signature”. The bill provides that 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, 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 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.