The Blockchain Technology Act comes into force in Illinois | Data Driven Investor

State of Illinois, in the USA, legalize smart contract and blockchain technologies

An industry study announces 2020 as the breakthrough year of the blockchain technology and of the smart contracts. The phenomenon, sometimes misunderstood, seems to get to the heart of the matter! The correct definition and implementation of smart contracts is what has attracted the attention of the legislator. For this reason, the state of Illinois legalizes the smart contracts and the blockchain technology.

Within and parallel to the phenomenon of distribuited ledger technologies, among which the blockchain stands out, we now hear daily talk about smart contract, also defined as self-executable software on blockchain platform, whose execution automatically binds two or more parts on the basis of predefined effects by the same.

As a result, several legislators, some faster than others, are issuing regulations that guide a correct and conscious use of these technologies, also in the commercial and business field. Like many other statutes (i.e. the CCPA), the Blockchain Technology Act (BTA) came into force in the US State of Illinois on January 1, 2020 to resolve some legal uncertainties. One of the issues that needed to be clarified was, precisely, the enforceability of smart contracts, defined as electronic records stored on blockchain, in judicial contexts, given the obvious difference with typical contracts.

List of smart contracts’ cases of use

The BTA clarifies and lists four use cases:

  • a smart contract cannot be denied legal effect or enforceability simply because a blockchain has been used to create, store or verify the contract, record or signature;

Other states, prior to Illinois, have provided for such an opening, such as Arizona, Tennessee (House Bill 1507), Vermont (Vermont Statutes § 1913) and not least Wyoming (SF0125 — Digital assets-existing law).

Although the BTA is the last “statute” on this matter, it would also seem to be the most complete, since, unlike other regulatory pronouncements, it catalogs as legally valid not only smart contracts but also digital registrations or signatures, which are born and live on blockchain platforms, extending their future enforceability, in state courts.

List of smart contract’s limitations

Not only that, but it also dictates the discipline with limitations.

  • For example, if a written contract is required, a smart contract cannot be denied validity if it can be reproduced and stored by all parties involved.

The provisions of the BTA may not be disregarded, unless there are clauses providing for changes made by mutual agreement.

BTA provides that local governments may not impose any limits or requirements on the use of blockchain or smart contracts, including taxes, fees or certification requirements.

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Lawyer and consultant, Raffaella has worked as the director of a communications agency for many years. A legal soul lent to marketing and business, she has made this combination of skills her strong point! She writes legal insights in her specializations (IP, innovation technology, communication, blockchain). Actually, she’s following a blockchain development project in the luxury sector. She loves reading, writing, and movies.

Originally published at on February 11, 2020.

Lawyer and consultant for innovation technology, IP, copyright, communication & marketing, likes movies and books, writes legal features and books reviews