House Study Bill 212 - Introduced HOUSE FILE _____ BY (PROPOSED COMMITTEE ON INFORMATION TECHNOLOGY BILL BY CHAIRPERSON LOHSE) A BILL FOR An Act relating to electronic transactions by permitting the 1 use of distributed ledger technology and smart contracts. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 2479YC (1) 89 jda/rn

H.F. _____ Section 1. Section 554D.103, subsections 4, 7, and 8, Code 1 2021, are amended to read as follows: 2 4. “Contract” means the total legal obligation resulting 3 from the parties’ agreement as affected by this chapter and 4 other applicable law. “Contract” includes any contract secured 5 through distributed ledger technology and a smart contract. 6 7. “Electronic record” means a record created, generated, 7 sent, communicated, received, or stored by electronic means. 8 “Electronic record” includes any record secured through 9 distributed ledger technology. 10 8. “Electronic signature” means an electronic sound, symbol, 11 or process attached to or logically associated with a record 12 and executed or adopted by a person with the intent to sign the 13 record. “Electronic signature” includes a signature that is 14 secured through distributed ledger technology. 15 Sec. 2. Section 554D.103, Code 2021, is amended by adding 16 the following new subsections: 17 NEW SUBSECTION . 4A. “Distributed ledger technology” means 18 an electronic record of transactions or other data to which all 19 of the following apply: 20 a. The electronic record is uniformly ordered. 21 b. The electronic record is redundantly maintained or 22 processed by one or more computers or machines to guarantee the 23 consistency or nonrepudiation of the recorded transactions or 24 other data. 25 c. The electronic record is validated by the use of 26 cryptography. 27 NEW SUBSECTION . 14A. “Smart contract” means an event-driven 28 program or computerized transaction protocol that runs on a 29 distributed, decentralized, shared, and replicated ledger that 30 executes the terms of a contract by taking custody over and 31 instructing transfer of assets on the ledger. 32 Sec. 3. NEW SECTION . 554D.106A Use of distributed ledger 33 technology. 34 A person who, in engaging in or affecting interstate or 35 -1- LSB 2479YC (1) 89 jda/rn 1/ 3

H.F. _____ foreign commerce, uses distributed ledger technology to secure 1 information that the person owns or has the right to use 2 retains the same rights of ownership or use with respect to 3 such information as before the person secured the information 4 using distributed ledger technology. This section does not 5 apply to the use of distributed ledger technology to secure 6 information in connection with a transaction to the extent that 7 the terms of the transaction expressly provide for the transfer 8 of rights of ownership or use with respect to such information. 9 Sec. 4. Section 554D.108, subsection 2, Code 2021, is 10 amended to read as follows: 11 2. A contract shall not be denied legal effect or 12 enforceability solely because an electronic record was used in 13 its formation or because the contract is a smart contract or 14 contains a smart contract provision . 15 EXPLANATION 16 The inclusion of this explanation does not constitute agreement with 17 the explanation’s substance by the members of the general assembly. 18 Code chapter 554D, the uniform electronic transactions Act, 19 facilitates the use of electronic transactions in commerce by 20 giving legal recognition to electronic records, signatures, and 21 contracts. This bill modifies the Code chapter by permitting 22 the use of distributed ledger technology and smart contracts in 23 electronic transactions. 24 The bill defines “distributed ledger technology” as an 25 electronic record of transactions or other data that is 26 uniformly ordered, redundantly maintained or processed by one 27 or more computers or machines to guarantee the consistency or 28 nonrepudiation of the recorded transactions or other data, and 29 is validated by the use of cryptography. The bill defines 30 “smart contract” as an event-driven program or computerized 31 transaction protocol that runs on a distributed, decentralized, 32 shared, and replicated ledger that executes the terms of a 33 contract by taking custody over and instructing transfer of 34 assets on the ledger. 35 -2- LSB 2479YC (1) 89 jda/rn 2/ 3

H.F. _____ The bill adds contracts secured through distributed ledger 1 technology and smart contracts to the definition of “contract”. 2 The bill adds the concept of security through distributed 3 ledger technology to the definitions of “electronic record” and 4 “electronic signature”. 5 The bill provides that a person who, in engaging in or 6 affecting interstate or foreign commerce, uses distributed 7 ledger technology to secure information that the person owns 8 or has the right to use retains the same rights of ownership 9 or use with respect to such information as before the person 10 secured the information using distributed ledger technology, 11 unless in connection with a transaction with terms that 12 expressly provide for the transfer of rights of ownership or 13 use with respect to such information. 14 The bill provides that a contract shall not be denied legal 15 effect or enforceability solely because the contract is a smart 16 contract or contains a smart contract provision. 17 -3- LSB 2479YC (1) 89 jda/rn 3/ 3