‘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” – like 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 appears to have been only recently. noticed by the community after Florida-based attorney Drew Hinkes discussed it in a February 19 tweet.
Titled the “Digital Property Protection and Law Enforcement Act,” the bill 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 used to be pro-innovation. Instead we now get possibly the most useless #crypto and #blockchain state law I’ve ever seen,” he tweeted.
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.
SB1887 focuses on consumer protection (this is GOOD). But the way it seeks to protect consumers is demanding #urge operators ##miners & #validators to do impossible things, or things that create for themselves new criminal and civil liability with fines/fees /3
— Drew Hinkes (@propelforward) 19 February 2023
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.”
If you thought it was bad. Get ready for #Illinoize your blockchain! Yes, #Illinois is going to force you to rewrite your blockchain – specifically by including smart contract code capable of responding to court orders. And if you don’t, you can be sued /10
— Drew Hinkes (@propelforward) 19 February 2023
Other members of the cryptocurrency community have responded with similar ridicule of the bill.
Cryptoanalyst “foobar” wrote 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 ».
this is funny, Illinois is proposing a bill that would make miners and validators “respond to a court order by including transactions on the blockchain without needing the private key”
why do you refuse to comply transfer satoshis bitcoin to governor pritzker! to prison pic.twitter.com/FPKLsFNE3e
— foobar (@0xfoobar) 19 February 2023
Gabriel Shapiro, an 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:
TLDR – they are trying to ban immutability https://t.co/HSg00pcFHx
— _gabrielShapir0 (@lex_node) 19 February 2023
Meanwhile, Carla Reyes, assistant professor at Southern Methodist University School of Law, chimed in with one chirping Feb. 19 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.
The bill also wants to help users recover their assets if they lose their private keys.
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.
