The state of California has just recently amended its legislation to create a legal environment to define blockchain and cryptocurrency terms. The Assembly Bill 2658 “amends the California Civil Code, Government Code, Corporations Code, and Insurance Code to legalize the use of blockchain secured data and smart contracts in local and foreign commerce.”
The bill which covers critical definitions which are related to cryptocurrency and blockchain, also recommends the establishment of a working group on blockchain technology. After its passage by the state legislature, it is now awaiting the governor’s approval.
Definitions for Blockchain and Cryptocurrency Terms
The Assembly Bill 2658 aims to revise provisions of the act that defines “electronic record” and “electronic signature” to include a record or a signature secured through blockchain technology. It would also add the term “smart contract” to the legal definition of “contract.”
The newly passed bill defines blockchain technology as “a mathematically secured, chronological, and decentralized ledger or database,” and requires the Secretary of the Government Operations Agency to form a blockchain working group on or before July 1, 2019.
Additionally, the draft specifies that a person who uses blockchain technology to secure information in relation to interstate or foreign commerce retains the same rights of ownership and use as before the data was secured with a distributed ledger.
The working group based on the recommendation by the bill should consist of participants from both technology and non-technology industries, and also, appointees with a background in law, and representatives of privacy and consumer organizations.
Other important changes made through the amendment and adoption of the bill included changes of the provisions of Sections 1624.5 and 1633.2 and adding a new Section 1633.75 to the state’s Civil Code. The act also amends Section 25612.5 of the Corporations Code, Section 16.5 of the Government Code, and Section 38.6 of the Insurance Code relating to electronic records.