The crypto community has ridiculed the recent Illinois Senate Bill for its ‘unworkable plans,’ including asking blockchain miners and validators to reverse transactions if ordered by a state court.
On February 9, Illinois Senator Robert Peters quietly passed the Senate Bill into the state legislature. However, it wasn’t until Florida-based lawyer Drew Hinkes tweeted about the bill on February 19 that awareness of this legislation among the community began to spread quickly.
The Digital Property Protection and Law Enforcement Act permits courts to order blockchain transactions completed through a smart contract to be amended or revoked if the attorney general or state attorney requests.
The act would apply to any blockchain network that processes an Illinois-based blockchain transaction. This includes, but is not limited to, Bitcoin and Ethereum networks.
According to Hinkes, this bill is the most impractical state legislation dealing with blockchain and cryptocurrency he has ever encountered. Furthermore, under the terms of this legislation, those who mine or validate on a blockchain but do not adhere to court orders could be subject to penalties ranging from $5,000-$10,000 per day.
“This is a stunning reverse course for a state previously pro-innovation. Instead, we now get possibly the most unworkable state law related to #crypto and #blockchain I’ve ever seen.”Drew Hinkes
Charles Hoskinson, the founder of Cardano, recently tweeted his assumption that FTX’s collapse initiated such a regulatory response to all cryptocurrencies.
Bill requires miners and validators to comply with regulations
Hinkes acknowledged the need for stronger consumer protection through legislation. Still, he was dismayed that miners and validators would not be exempt from repercussions if their blockchain networks failed to implement reasonable compliance measures.
This bill mandates that anyone who utilizes smart contracts to deliver goods and services must embed code within the agreement, which can be used to comply with court orders.
The proposed bill in Illinois aims to protect users from fraud and unintentional errors by allowing courts to order a blockchain transaction to be returned to the victim or original sender. Additionally, it seeks to help users recover their assets if they misplace their private keys, thus safeguarding them against the potential loss of funds.