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Bill Would Legally Recognize Blockchain Data in California

By William Vogeler, Esq. | Last updated on

California may soon join other states that have made blockchain records legally enforceable, including smart contracts and electronic signatures.

Under California's Uniform Electronic Transactions Act, proposed legislation expands the definition of electronic records to include blockchain and electronic signatures. Blockchain, which is like electronic DNA, creates an electronic ledger of the origins and history of records.

It is the same technology that makes bitcoin a trustworthy virtual currency. For many lawyers, blockchain is becoming the best way to create verified documents.

Assembly Bill 2658

Arizona was the first state to acknowledge blockchain data and smart contracts as legally enforceable. Florida introduced similar legislation last month.

In California, Assembly Bill 2658 states that a "record that is secured though blockchain technology is an electronic record." If signed by the governor, a signature on a blockchain document would be legally enforceable in court.

It would provide that "a record or signature may not be denied legal effect or enforceability solely because it is in electronic form and that a contract may not be denied legal effect or enforceability solely because an electronic record was used in its formation."

The legislation bears out what the tech law industry has know for some time. Blockchain is transforming the legal industry.

Increasingly, law firms have adopted blockchain technology. Many accept bitcoin for legal services, but they also use the technology for smart contracts and secure record-keeping.

"You don't need to be doing initial coin offerings or issuing tokens to benefit from the blockchain," Judith Rinearson, a partner in K&L Gates, one of the largest law firms in the world. The firm wants to build its own blockchain to use in time-keeping, filing deeds and handling mergers and acquisitions, according to Bloomberg.

"The Blockchain: A Guide for Legal and Business Professionals," published by Thomson Reuters (which owns FindLaw), explains how blockchain is used in the industry. For example, the guide shows how smart contracts are verified with blockchain.

"Smart contract use has important legal implications, not just because drafting a smart contract requires significant computer coding," wrote Casey Sullivan. "As 'The Blockchain: A Guide' notes, smart contracts implicate everything from choice of law issues, notarization, and federal electronic transactions and money laundering laws."

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