Delaware has passed a bill that legally recognizes the trading of stocks using blockchain technology. Although the state has sought to promote itself as a bastion for blockchain investment, the bill is extremely limited in its scope – leading many to view Delaware’s government as attempting to cash in on bitcoin’s recent boom.
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Delaware’s Blockchain Bill Has Been Championed by Blockchain Start-Up Symbiont
Recent reports have announced the near unanimous passing of a bill in the US state of Delaware that will explicitly recognize the right to trade stocks using a blockchain. The chair of the Delaware bar association’s corporate law section describing the vote as “keep[ing] Delaware at the forefront of corporate law and in the lead in terms of enabling the use of ‘distributed ledger shares’.” The bill is expected to be signed into law by Delaware’s governor, John Carney, before the end of July.
Delaware’s blockchain bill has been championed by blockchain start-up Symbiont, who has partnered with Hong Kong-based Privatemarket.io to build an “alternative investment marketplace for closed-end funds” that is built using Symbiont’s smart-contract software. The bill was developed under close legal guidance from Marco Santori of Cooley LLP and Symbiont’s Caitlin Long – suggesting that Symbiont will be among the early high-profile blockchain businesses seeking to operate within Delaware. When announcing the partnership with Privatemarket to offer stock trading via blockchain technology, Symbiont stated “We see blockchain technology having a significant positive impact on the investment world, and it starts with the fact that the foundational document for any investment — the registration of a company — will likely soon be possible to do on a blockchain in Delaware”.
The Bill Draws Attention to the Absence of Legal Consensus Pertaining to Blockchain Technology
Although the passing of the bill is positive step toward permissive bitcoin regulation, many see the bill having been custom tailored to the desires of Symbiont’s legal team – with the recognition of stock trading via blockchain comprises a very limited step toward blockchain regulation – especially when contrasted with recent moves by Japan, South Korea and Australia in recognizing bitcoin as a legal form of payment.
The passing of the bill draws attention to the absence of clear legal definitions and apparatus pertaining to blockchain technology. The lack of federal legal consensus regarding basic bitcoin and blockchain technology suggests that some the problems within the regulatory framework dealing with cannabis-based businesses could potentially emerge within bitcoin, such as overlapping or contradicting federal laws. It is entirely possible that particular states may seek to become early bastions of blockchain investment, seeking to capitalize on a nascent booming industry in the same fashion as Colorado or Seattle with regards to the cannabis industry.
Although the positive ramifications from further government embracement of bitcoin and blockchain technology are undeniable, the risk of hastily rushed state legislations running afoul of future federal regulations is very real – especially given the absence of legal consensus on the definition of fundamental terminology such as ‘blockchain’. In the case of Delaware, it is entirely possible that future federal laws may not recognize stock trading via blockchain technology, creating potential future legal and logistical challenges for businesses that seek to build their operations according to the laws of a single state.
Do you think that Delaware passing a bill recognizing stock trading via blockchain technology is a significant step toward cryptocurrency regulations? Share your thoughts in the comments section below!
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