Illinois lawmakers have introduced a new bill that could potentially spell doom for blockchain technology in the state. The Digital Property Protection and Law Enforcement Act, or SB1887, was proposed with the aim of addressing digital property crimes, loss of private keys, and fluctuations in the prices of digital assets.
However, it has been met with concern by blockchain and cryptocurrency advocates who fear that the bill could set a dangerous precedent and stifle innovation in the industry.
The legislative findings and intent of the bill
In Illinois, residents who possess cryptocurrencies, non-fungible tokens (NFTs), and other forms of digital property that are kept on blockchains are the target audience for the legislation that was presented with the intention of safeguarding them.
The bill states that digital property owners are particularly susceptible to injury due to fraud, hacks, phishing scams, and ransomware extortion, as well as from the loss of cryptographic private keys and mistaken transactions.
It also mentions the fact that crimes committed using blockchain technology have become commonplace and often result in losses of hundreds of millions of dollars, and that residents of Illinois have suffered and are continuing to suffer needless losses as a direct consequence of these causes.
The primary objective of this legislation is to encourage the development of technologies that secure blockchain transactions and legal rights in digital property. This will provide an opportunity for economic growth for companies located in the state of Illinois.
The bill would make it possible for the Attorney General or a State’s Attorney to issue a legitimate request for any acceptable blockchain transaction involving digital property or for the execution of a smart contract. This would be made possible by the fact that the law would be enacted.
A court may then mandate any such transaction, and a blockchain network that processes a transaction originating in the state is required to conduct a court-ordered blockchain transaction without the requirement for the private key associated with the digital property or smart contract.
Blockchain industry concerns
The blockchain industry has voiced fears that the measure may possibly cripple the technology, notably with the clause that blockchain networks must perform court-ordered transactions without the need for a private key.
As a result of this clause, blockchain networks may become susceptible to interference and censorship by the government.
Additionally, the provision that blockchain operators are liable for a civil penalty of between $5,000 and $10,000 for each day that the blockchain network fails to comply with the order is concerning for blockchain operators as it could potentially bankrupt their operations.
Another concern is that the proposed legislation mandates that any individual who uses a smart contract to supply goods or services in the state of Illinois must include a smart contract code that is able to enforce court judgments pertaining to the smart contract.
Since this rule involves the inclusion of an extra layer of code to guarantee compliance with court orders, it may create an undue burden on firms and people that use blockchain technology.
