Illinois House Bill Would Ban Restrictions On Blockchain, Smart Contract Use

HB5553, which was recently introduced to Illinois’s legislature, would prevent local governments from restricting individuals’ and companies’ use of blockchain technology and smart contracts.

  • A bill recently submitted to Illinois’s House of Representatives seeks to ban certain types of official restrictions on the use of blockchain technology and smart contracts, also known as EDCCs.

    Section 20 of HB5553, submitted to the legislature by Rep. Michael Zalewski (D), states:

    “A unit of local government shall not:
    (1)   impose any tax or fee on the use of a blockchain or smart contract by any person or entity;
    (2)   require any person or entity to obtain from the unit of local government any certificate, license, or permit to use a blockchain or smart contract; or
    (3)   impose any other requirement relating to the use of a blockchain or smart contract by any person or entity.”

    In other words, no local government may hinder an individual or company from using blockchain technology or EDCCs by requiring them to pay a fee, obtain a license, or jump through any other kind of hoop.

    The bill would, however, define certain types of notices as non-legally binding when issued via a blockchain, such as those announcing a person’s eviction from their “primary residence.” 

    Additionally, it paves the way for legally binding smart contracts by providing that 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.”

    Florida’s HB1357, filed on January 8, seeks this outcome as well, among other measures, and even shares some language with Illinois’s HB5553.

    Officials in Illinois have demonstrated significant interest in blockchain technology. In a January 2018 report, the Illinois Blockchain and Distributed Ledger Task Force related that “blockchain technology and its built-in encryption can facilitate highly-secure methods for interacting with government and keeping paperless records, increasing data accuracy and providing better cybersecurity protections for Illinois residents.”

    A variety of state and county agencies, including the Department of Innovation and Technology, have also formed a consortium called the Illinois Blockchain Initiative. Its projects include a partnership with industry to put birth certificates on the blockchain. 

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