A number of states have jumped into the FinTech fray by enacting legislation or issuing guidance regarding new technologies and digital currencies. The latest of these technology-forward states is Nevada. Following the example set by Arizona, Nevada recently passed a bill clarifying blockchain’s legal status under state law. The law, Senate Bill 398, was signed by the governor June 5 and prohibits local governments from imposing taxes or fees on the use of a blockchain; requiring a certificate, license, or permit to use a blockchain; or imposing any other requirement relating to the use of blockchain. Additionally, the Nevada law states that “if a law requires a record to be in writing, submission of a blockchain which electronically contains the record satisfies the law.” Arizona passed a similar law, House Bill 2417, in March 2017, also requiring that smart contracts and blockchain signatures be given legal binding status.
Blockchain is a distributed digital ledger technology (DLT) originally devised for Bitcoin, but which is now being experimented with for numerous other use cases. Blockchain is catching the attention of states presumably because there has been limited federal action on blockchain or digital currencies, mostly consisting of guidance regarding anti-money-laundering requirements and consumer protection notices. State regulators recently have made statements regarding gaps in digital currency and FinTech regulations and blockchain certainty. To close these perceived gaps, states are using their authorities to, so far, clarify state money transmission applicability to digital currencies, and to provide consumer protection within their states. Venture capitalists and other investors also are increasingly interested in blockchain technology and its applications. Experts in the blockchain research field estimate that investments in blockchain startups in 2016 exceeded $1.5 billion. With this significant and continuing growth in investment, we expect that the application of DLT and smart contracts will continue to increase.