‘Useless’ bill to ban blockchain immutability introduced in Illinois

A recently introduced Illinois Senate Bill has been ridiculed by the crypto community for its “unworkable” plans to force blockchain miners and validators to do “impossible things” — such as reversing transactions if ordered to do so by a state court .

The Senate bill was quietly introduced into the Illinois Legislature on February 9 by Illinois Sen. Robert Peters, but it appears to have been only recently. noticed by Florida-based attorney Drew Hinkes who discussed the bill in a Feb. 19 Twitter post.

The bill, titled the “Digital Property Protection and Law Enforcement Act,” would authorize courts — upon a valid request by the attorney general or an attorney general created under the laws of Illinois — to order a blockchain transaction executed via a smart contract to be changed or revoked.

The law would apply to any “blockchain network that processes a blockchain transaction originating in the state.”

Hinkes described the bill as “the most useless state law” related to blockchain and cryptocurrency that he has ever seen.

“This is an amazing reversal of course for a state that was previously pro-innovation. Instead, we now get possibly the most useless state law related to #crypto and #blockchain I’ve ever seen,” he said.

The bill states that all blockchain miners and validators could be fined between $5,000-10,000 for each day they fail to comply with court orders.

While acknowledging the need to implement bills that strengthen consumer protections, Hinkes said it would be “impossible” for miners and validators to comply with the bill proposed by Senator Peters.

Hinkes was also shocked to see that “no defense” would be available to miners or validators operating on a blockchain network that “have not adopted reasonably accessible procedures” to comply with the court orders.

The bill also appears to mandate “any person using a smart contract to deliver goods and services” to include code in the smart contract that can be used to comply with court orders.

“Any person using a smart contract to provide goods or services in this state shall include smart contract code capable of enforcing court orders regarding the smart contract.”

Other members of the cryptocurrency community have responded with similar ridicule of the bill proposed by Peters.

Cryptoanalyst “foobar” noted to his 120,800 Twitter followers on February 19 that the court ordered that transactions must somehow be changed “without needing the private key” of the participants, which he considered “funny” .

Gabriel Shapiro, attorney and general counsel at investment firm Delphi Labs, very briefly explained to his 34,100 Twitter followers on February 19 that the bill would essentially try to ban immutability on blockchains:

Meanwhile, Southern Methodist University School of Law assistant professor Carla Reyes said in a tweet on February 19, tired that lawmakers should only introduce bills if they understand how the technology works.

While immutability is a common property of blockchains and distributed ledgers, the Peters-sponsored bill explained that such networks lack an enforcement mechanism that can be used by the courts:

“As a result, the costs of enforcing legal rights in digital property are often prohibitive, so that property rights cannot be vindicated and the vast majority of blockchain crimes go unpunished.”

Fraud and error would be two of the most common cases in which Illinois courts could order a blockchain transaction to the victim or original sender, the bill noted.

However, Hinkes said this could be a remedy for a lost private key if the owner loses the key or dies.

Related: What is blockchain technology? How does it work?

Although the bill was first introduced on February 9, it must be “read” and voted on in three separate committee hearings before it is sent on to Illinois Governor Jay Pritzker to officially sign the bill into law.

The first reading took place the same day it was introduced in the Illinois General Assembly by Peters.

If ever passed, the contents of the bill would take effect 30 days after it became law.