Kentucky Continues Progress in Blockchain Technology and Smart Contracts
Successful July 15, 2020, Kentucky statutorily empowered its 1st “Blockchain Technological innovation Working Team.” Beneath KRS § 42.747(3), this operating group is billed with analyzing “the feasibility and efficacy of utilizing blockchain technological innovation to enhance the security of and improve defense for the state’s vital infrastructure, like but not minimal to the electric powered utility grid, pure gasoline pipelines, drinking h2o provide and shipping, wastewater, telecommunications, and crisis providers.” The doing work group then is charged with recommending which of the Commonwealth’s significant infrastructure can reward from the integration of blockchain technological know-how. Although the legislative definition of significant infrastructure appears broadly drawn, it is noteworthy that the state’s economic units or payments infrastructure is not bundled.
In conducting its get the job done, the working group plans to concentration on blockchain technology’s suit for the infrastructure, the stakeholders’ willingness to employ blockchain alternatives, as nicely as the predicted cost-reward returns. The doing the job group is billed with reporting to the governor and the Legislative Investigate Commission its results and tips on December 1 of every single yr.
The composition of the 9-member group will be: (1) Main Details Officer (CIO) for the Commonwealth Business of Technologies (who will serve as chairperson) (2) Secretary for the Vitality and Atmosphere Cupboard (3) CIO for the Finance and Administration Cabinet (4) a consultant selected by the Government Director of the Kentucky General public Service Commission (5) Executive Director of Kentucky Section of Homeland Stability (6) a member in academia, selected by the CIO of the Commonwealth Place of work of Technological know-how, who has abilities in blockchain technological innovation and its applicability to distinct industry sectors (7) an ex officio member symbolizing the Kentucky Municipal Utilities Association, to be selected by its Executive Director (8) an ex officio member representing the trader-owned electrical utilities as designated by the Kentucky Public Company Fee and (9) an ex officio symbolizing Kentucky’s electric cooperatives. Specified of the officers mentioned higher than are licensed to nominate a delegate in their stead.
This new legislation is critical in that it also includes Kentucky’s very first legislative adoption of definitions central to blockchain’s performance, which includes “blockchain know-how,” “peer-to-peer networks” and “smart contracts”. “Blockchain technology” is outlined as “shared or distributed information buildings or digital ledgers applied in peer-to-peer networks that keep electronic transactions, confirm and secure transactions cryptographically, and make it possible for automated self-execution of sensible contracts.” A “smart contract” is “a computerized transaction protocol that self-executes the conditions of a contract and that is built-in into the blockchain software architecture.”
Frost Brown Todd normally takes a measure of pleasure in Kentucky’s continued development in this crucial discipline. In live testimony to the Standard Assembly in late Drop of 2019, our attorneys urged the legislators to “assist in economic growth and expansion in the area by consideration of a process power and prospective legislation to offer lawful recognition” of critical blockchain concepts, as was recorded in a press launch at the time.
In 2019 Kentucky adopted a resolution to “[u]rge the Kentucky Cupboard for Economic Growth to perform with point out and federal officials and analyze the difficulty of blockchain technological know-how.” Also in 2019, the point out amended its guidelines to seize extra condition tax revenue from persons who “provides a digital forex that purchasers are authorized or essential to use to order tangible private home, electronic house, or products and services,” as a ““marketplace facilitator.”
Kentucky was one particular of the initial states in the nation to undertake the product Uniform Abandoned Residence Act. See KRS § 393A.010 – .860. Within just the model statute’s text, as adopted by Kentucky, “virtual currency” indicates ““a electronic illustration of benefit utilised as a medium of trade, device of account or shop of value that does not have authorized tender standing identified by the United States.” Regarding statutorily deserted assets current in the form of virtual currency, Kentucky now demands a “holder” to report these types of belongings to the Point out Treasurer’s office environment, to convert the cryptocurrency to a U.S. dollar worth in 90 times of reporting the very same (as needed below KRS § 393A.220), to transfer that converted dollar-amount worth to the Point out Treasurer, and upon so undertaking, the virtual currency’s actual owner “shall have no recourse against the holder” to get better any gains or losses. KRS § 393A.330(9). No dialogue is made available within just the Uniform Deserted Property Act about expected protocol for liquidation of cryptocurrency or what dormancy charges may perhaps be charged by a holder, save that all those dormancy expenses will have to not be “unconscionable.” KRS § 393A.220.
In spite of the adjustments pointed out over, Kentucky has not still taken a position on digital forex revenue transmission in link with the Kentucky Income Transmitter Act. KRS § 286.11-001 et seq.
