Fornaro Law’s litigators spend an inordinate amount of time following trends in both the legal community and the world of the Blockchain. We all know that the Blockchain continues to revolutionize how business is done and will be done. What is surprising is just how fast the Blockchain is being adopted into seemingly disparate fields. An excellent example of this is Vermont’s recent adoption of 12 V.S.A. § 1913 or the “Blockchain Enabling” statute. With this forward-looking statute Vermont has allowed self-authentication of certain records on the Blockchain. This is an excellent forward step for the Blockchain, and this law should be adopted by other jurisdictions.

Illinois: what are you waiting for?

In Illinois, self-authentication of documents is limited to certain categories of documents. Specifically, domestic public documents that are sealed and signed; domestic public documents that are not sealed but are signed and certified; foreign public documents; certified public documents; official publications; newspapers and periodicals; trade inscriptions and the like; acknowledged documents; commercial paper and related documents; presumptions under a federal statute; certified domestic records of a regularly conducted activity; certified foreign records of a regularly conducted activity; certified records generated by an electronic process or system; and certified data copied from an electronic device, storage medium, or file. While this may seem like many categories, most documents fall outside of these categories.

Fornaro Law had hoped that Illinois would have been one of the first states to delve into adopting all things Blockchain after the great start by the Illinois Department of Professional Responsibility guidance in 2017.  Fornaro Law provided an excellent comment in 2017 to help drive Illinois toward utilization of the Blockchain.

https://www.idfpr.com/Forms/PDFs/Fornaro%20Law%20%20Digital%20Currency%20Guidance%20Comment.pdf

Although Illinois has not yet embraced the full potential of the Blockchain, Fornaro Law is looking forward to working with Illinois governmental officials to continue to be progressive toward use of the Blockchain’s many benefits.

The Blockchain was made for self-authentication of documents!

A Blockchain is a database that is shared across a network of computers. Once a record has been added to the Blockchain, it is nearly impossible to change that record. This all but eliminates fraudulent manipulation of records on the Blockchain. Further, in addition to just storing the initial copy of the record on the Blockchain, the record is checked for authenticity by other computers on the network (these are called nodes). The individual nodes verify the authenticity of the information and it the record is permanently saved on the Blockchain.

Vermont has recognized the useful nature of the Blockchain for authentication of documents. Pursuant to 12 V.S.A. § 1913, a digital record electronically registered in a Blockchain shall be self-authenticating if it is accompanied by a written declaration of a qualified person, made under oath, stating the qualification of the person to make the certification and: (A) the date and time the record entered the Blockchain; (B) the date and time the record was received from the Blockchain;

(C) that the record was maintained in the Blockchain as a regular conducted activity; and (D) that the record was made by the regularly conducted activity as a regular practice.

The Vermont Courts, pursuant to Rule 902 of the Vermont Rules of Evidence (which codified 12 V.S.A. § 1913 as a rule of evidence, have stated that the need for a qualified person to provide a written declaration is like the requirement that makes business records self-authenticating. Namely, that the record was made in the course of regularly conducted activity and maintained in the Blockchain as a regular conducted activity. This would be a certification that the document is on the Blockchain and was placed there in the normal course of activity.

Although Vermont is in the lead when it comes to utilizing the Blockchain for self-authentication of documents, other states are currently studying the concept. Arizona, Illinois, Hawaii and California have all made positive moves toward allowing self-authentication of documents on the Blockchain. These states are studying how Blockchain technology might be integrated into contracts, recordkeeping and other areas where the Blockchains natural properties would prove to be a benefit.

While not yet making Blockchain records self-authenticating, Arizona and Nevada are embracing Blockchain records by conferring legally binding status to Blockchain records, including smart contracts. This is perhaps the first step toward recognition of the self-authenticating nature of the Blockchain and its usefulness in this area.

Fornaro Law recognizes the useful nature of the Blockchain and fully supports its use for self-authentication of information contained on the Blockchain. This will reduce the number of hours spent by attorneys having to authenticate documents and therefore, provide a net benefit to our clients.

By Mark Scarlato

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