April 4, 2018: ESRA and the Chamber of Digital Commerce today issued a joint statement in response to State “Smart Contracts” legislation. Legislation seeking to define blockchain technology or smart contracts or to ensure smart contracts are legally enforceable, while well-intentioned, is harmful for the following reasons.
- Redundancy: Redundancy is confusing, unnecessary, and potentially harmful if courts determine the legislature intended a different effect
- Inconsistency: Bills introduced in California, New York, Illinois, Nebraska, and Tennessee this year contain definitions of blockchain and smart contracts inconsistent with each other (in some cases) and the definition published by the Chamber of Digital Commerce. The potential for a network of conflicting state laws is obvious.
- Federal preemption: ESIGN provides that any state law giving special effect to a specific technology is preempted. Moreover, conflicting state laws provide additional incentive for Congress to preempt those laws to remove barriers to interstate commerce.
Because existing laws – notably the Uniform Electronic Transactions Act (UETA) and the Federal Electronic Signatures in Global and National Commerce (ESIGN) – already provide a sufficient legal foundation for the enforcement of these types of agreements, we believe additional state legislation will only serve to create inconsistent and redundant state laws, hindering innovation, and are opposed to such efforts.
Read the entire joint statement here for further explanation.