The California State Legislature is authorizing the Assembly Bill 2658. As a result, the bill provides a legal groundwork to recognize blockchain technology in the state’s insurance system.
Amendment in the bill is under Sections 1624.5, 1633.2, and 1633.75 of the Civil Code, Section 25612.5 of the Corporations Code, Section 16.5 of the Government Code, and Section 38.6 of the Insurance Code. All these changes are in relation to blockchain technology, electronic signatures, and above all, smart contracts.
New Comprehensions and Meanings
The new bill elaborates the description of “contract” under California law. Now the definition includes smart ‘contracts’ which renders lawful base for utilization of blockchain-founded electronic signatures in sealing off contracts.
Amendments to Clauses
Under the bill, the changes in Section 1633.2 of the Civil Code provides a legal clarity of blockchain technology.
Clause “e” after the amendment reads as follows:
“‘Contract’ means the total legal obligation resulting from the parties’ agreement as affected by this title and other applicable law. ‘Contract’ includes a smart contract.”
Clause “h” after its amendment reads as follows:
“‘Electronic record’ means a record created, generated, sent, communicated, received, or stored by electronic means. A record that is secured through blockchain technology is an electronic record.”
Amendment to Clause “i” includes the sentence: “A signature that is secured through blockchain technology is an electronic signature.”
Clause “p” after the amendment reads:
“‘Smart contract’ is an event-driven program that runs on a distributed, decentralized, shared, and replicated ledger that can take custody over, and instruct transfer of, assets on that ledger.”
Members of the Group
Hence per the bill, the Secretary of the Government Operations Agency has to make a blockchain working group on or before July 1, 2019.
The blockchain working group will comprise of 17 members. The members will be from the government and the private sector as well as technology and non-technology industries. They will assess the risks, gains, and legal significance of using blockchain in California-based businesses and the state government. As a result, the group has until July 1st, 2020 to draft its study.
The bill says, “The working group’s report shall include recommendations for modifications to the definition of blockchain in Section 11546.8 and recommendations for amendments to other code sections that may have an impact due to the deployment of the blockchain. The members of the working group shall serve without compensation, but shall receive reimbursements for all necessary expenses actually incurred in the performance of their duties.”