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CALIFORNIA CORPORATE & SECURITIES LAW

Nevada Precedes Delaware In Blockchain Legislation

On July 21, 2017, Delaware’s 74th Governor, John Carney, signed SB 69 into law.  This legislation amended various provisions of Delaware’s General Corporation Law (Title 8, Delaware Code) ostensibly to establish express statutory authority for Delaware corporations to use networks of electronic databases for the creation and maintenance of corporate records, including the stock ledger.  These databases are sometimes referred to as “distributed ledgers” or “blockchains”.

Delaware, which prides itself as a leader in corporate law, was not the first state to enact legislation authorizing blockchain technology, however.  Nevada beat the Blue Hen State to the punch by over a month when Governor Brian Sandoval signed SB398 into law on June 5, 2017.  Nevada’s legislation, unlike Delaware’s, does not amend Chapter 78, Nevada’s Private Corporation Law.  Nevada chose instead to amend Chapter 719, which is its version of the Uniform Electronic Transactions Act.  In this respect, Nevada follows Arizona which enacted amendments to its Electronic Transactions Act in March of this year (HB 2517).

Nevada’s legislation also differs from Delaware by providing a definition of “blockchain”:

“Blockchain” means an electronic record of transactions or other data which is:

1. Uniformly ordered;

2. 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

3. Validated by the use of cryptography.

This definition of “blockchain” differs significantly from Arizona’s (AZ Rev. Stat. § 44-7061(E)) and Vermont’s (VT. Stat. tit. 12, § 1913(a)).

Nevada’s legislation also bars cities from imposing taxes or fees on the use of blockchain technology or to require a permit or license for the use of that technology.

For more on Nevada’s bill, see Gayle M. Hyman & Matthew P. Digesti, New Nevada Legislation Recognizes Blockchain and Smart Contract Technologies, Nev. Law. 13 (Aug. 2017).

 

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