Senate Bill 398, unanimously passed by the Nevada legislature and signed into law by the Governor on June 5th, represents the most far-reaching state legislation to date concerning the use of blockchain technology. Blockchain is a decentralized database system that can be used to track and manage a broad range of digital transactions. Originally conceived as the technology underlying Bitcoin virtual currency, blockchain technology continues to expand into other applications including “smart contracts.”
Nevada’s new law has two principal components. First, the act grants legal recognition to blockchain transactions by bringing these transactions into line with existing laws governing electronic records and signatures, providing that: “If a law requires a record to be in writing, submission of a blockchain which electronically contains the record satisfies the law.” Second, Nevada’s law prohibits local government entities from (a) taxing or charging fees for use of blockchain, (b) requiring a license or permit to use blockchain, and (c) imposing any other requirements relating to the use of blockchain.
While Nevada becomes the third state (after Vermont and Arizona) to recognize the legal enforceability of blockchain transactions, it is the first to explicitly exclude blockchain from local taxation and licensing requirements and is clearly designed to promote Nevada as a safe haven for start-ups and entrepreneurs looking to build on blockchain’s enormous potential.
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