Drew Hinkes, a blockchain and cryptocurrency lawyer from Florida, called the measure the most impractical state legislation he had ever seen.
The crypto world has slammed an Illinois Senate Bill for forcing blockchain miners and validators to undertake “impossible things” including undoing transactions if ordered by a state court.
Illinois Senator Robert Peters stealthily presented the Senate Bill into the Illinois senate on Feb. 9. Florida-based lawyer Drew Hinkes tweeted about the measure on Feb. 19.
The Digital Property Protection and Law Enforcement Act would allow Illinois courts to change or cancel smart contract-executed blockchain transactions upon a legitimate request from the Attorney General or State’s Attorney.
The statute covers “blockchain networks that execute a blockchain transaction originating in the State.”
Hinkes called the blockchain and cryptocurrency laws “the most impractical state law” he has ever seen.
“This is a stunning reverse course for a state that was previously pro -innovation. Instead we now get possibly the most unworkable state law related to #crypto and #blockchain I’ve ever seen,” he said.
The measure fines blockchain miners and validators $5,000–10,000 per day for not following court rulings.
SB1887 focuses on consumer protection (this is GOOD). But, the manner in which it seeks to protect consumers is to require #node operators ##miners & #validators to do impossible things, or things that create for themselves new criminal & civil liability at pain of fines/ fees /3
Hinkes acknowledged the necessity for consumer protection measures but claimed it would be “difficult” for miners and validators to comply with Senator Peters’ plan.
Miners and validators on a blockchain network that “has not adopted reasonably available processes” to comply with court orders have “no defense,” Hinkes was astonished to learn.
“Every individual utilizing a smart contract to supply goods and services” must incorporate code to comply with court rulings, according to the law.
“Any person using a smart contract to deliver goods or services in this State shall include smart contract code capable of enforcing court orders regarding the smart contract.”
If you thought that was bad. Get ready to #Illinoize your blockchain! Yes, #Illinois is going to force you to re-write your blockchain- specifically by including smart contract code capable of responding to court orders. And if you don’t, you can be sued /10
Several bitcoin community members have mocked Peters’ bill.
On Feb. 19, crypto analyst “foobar” tweeted to his 120,800 followers that court-ordered transactions must be altered “without having the private key” of the participants, which he found “hilarious.”
On Feb. 19, Delphi Laboratories lawyer and general counsel Gabriel Shapiro briefly told his 34,100 Twitter followers that the measure will aim to outlaw blockchain immutability:
On Feb. 19, Southern Methodist University School of Law assistant professor Carla Reyes tweeted that politicians should only present measures if they understand technology.
Blockchains and distributed ledgers are immutable, but the Peters-sponsored measure indicated that courts cannot enforce them:
“As a result, the cost to enforce legal rights in digital property is often prohibitive such that the property rights cannot be vindicated and the vast majority of blockchain crimes go unpunished.”
The measure said that fraud and error are two of the most prominent reasons Illinois courts may direct a blockchain transaction to the victim or original sender.
But, Hinkes suggested this may fix a lost private key if the owner dies.
The bill, submitted on Feb. 9, must be “read” and approved on by three committees before Illinois Governor Jay Pritzker can sign it into law.
Peters introduced it to the Illinois General Assembly and it was read the same day.
The measure would take effect 30 days after passing.
