- The contacts will be considered as evidence in court and will be recognized as an alternative to paper-based records.
- Crypto industry in Illinois will be free from local government’s interference (taxation and regulations).
Having taken effect on Jan 1, Illinois’s “Blockchain Technology Act” made way for potential new legal scenarios for blockchain-based contracts. The contracts will be considered as evidence in court, statutorily exempt from local taxes and considered an alternative to paper-based records.
The law reads:
A smart contract, record or signature may not be denied legal effect or enforceability solely because a blockchain was used to create, store or verify the smart contract, record or signature.
Illinois law extends the legal recognition that is already enjoyed by paper contracts to blockchain agreements and contracts so they are recognized as legal entities by the state. The law also protects the crypto sphere from taxation and regulations from local government.
Alison Mangiero, president of blockchain technology company TQ Tezos, said:
The law ensures that businesses and individual community members will not have to navigate a patchwork of local blockchain regulation.
Counsel at InfoLawGroup’s Chicago offices, Tatyana Ruderman, said that the law might support the firms that are planning to use blockchain-based record systems. She also believes that the law’s wording is vague and that could pose a legal challenge later.
She said:
The law is likely to be tested in courts by parties who later want to try and invalidate a blockchain transaction.
Ruderman said that just because Illinois has implemented the law, does not mean that neighboring states like Indiana will do too.
It may not make sense for businesses who operate outside of Illinois to implement blockchain-based contract management only in Illinois and not elsewhere,” she said. “This may be an area where it makes sense for the industry to come together and agree on some standards to fill the gaps.
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