Vermont is Close to Passing a Law That Would Make Blockchain Records Admissible in Court

A legislative effort in the state of Vermont to recognize blockchain data in the court system is inching closer to completion, and only needs a governor’s signature to become enshrined in law.

Buried inside an economic development bill recently passed by both the Vermont House and Senate is legislative language that, if approved, would make it so that “a fact or record” verified through blockchain technology is “authentic”.

Put more simply, a document notarized using a network like the bitcoin blockchain will have more legal bearing in court. This use case has emerged as one of the more notable applications of the technology, being used to certify physical objects like artworks, precious stones and even high-value footwear.

The bill effectively harmonizes blockchain data with existing state law related to the kinds of evidence admissible in court, according to Rep Bill Botzow, who chairs the Vermont House Committee on Commerce and Economic Development. He said the final language was the result of collaboration between the Vermont Law School – spearheaded by academic Oliver Goodenough – legislators, the Uniform Law Commission and representatives from the state court system.

Botzow told CoinDesk:

“With this bill, what I’m most pleased about is the way which it passed. It received final input from the courts – the judge on the Supreme Court is the court administrator from the law school – and others from that community to make sure what we wrote lined up with the rules of evidence.”

The efforts come months after the Vermont legislature approved and subsequently published a report on the effectiveness of using a blockchain to enhance state recordkeeping processes.

While that report ultimately concluded that any savings derived from building a new system wouldn’t be worth the cost, it did recommend that the government explore legislative options for encouraging applications of the technology in the state.

“Providing legal recognition of blockchain technology may create a ‘first mover’ advantage with the potential to bring economic activity surrounding the development of blockchain technology to Vermont, but this potential is difficult to quantify and challenging to capture due to the nature of the technology,” the report noted at the time.

What the bill says

According to the version passed by both the House and Senate, a document timestamped on a blockchain “shall be considered a record of regularly conducted business” when considered against the state’s rules of evidence.

The bill details:

“A digital record electronically registered in a blockchain shall be self-authenticating pursuant to Vermont Rule of Evidence 902, 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 bill also establishes how the veracity of that certification can be challenged in court.

“A person against whom the fact operates has the burden of producing evidence sufficient to support a finding that the presumed fact, record, time, or identity is not authentic as set forth on the date added to the blockchain, but the presumption does not shift to a person the burden of persuading the trier of fact that the underlying fact or record is itself accurate in what it purports to represent,” the bill states.

In interview, Botzow highlighted that the legislation is narrowly tailored to apply only to documents as opposed to financial transactions. He cited the study committee’s recommendations, pointing to the bill as it stands as a starting point for future efforts.

“It makes sense to me that the study committee recommended that’s where we start – building a platform for further innovation that positions Vermont at the forefront of using this and other innovative technology,” he said.

How efforts developed

The economic development bill, marked H.868, has been moving through the legislature since it was first introduced in mid-March. It passed the House on 8th April and the Senate on 6th May.

The blockchain-specific language, according to legislators involved in the process, grew out of an effort that began last year with the blockchain study, as well as more ad-hoc investigations by individual legislators.

State senator Becca Balint said that she introduced the Senate version of the legislation following consultation with the Vermont Law School’s Goodenough, as well as personal investigation of the developments in the bitcoin space.

“I was intrigued by the notion of passing legislation that would declare that blockchain technology would be a valid form of verification of a document’s authenticity,” she told CoinDesk, adding:

“I’d followed the bitcoin phenomenon and after hearing Goodenough’s presentation, I thought there was an opportunity for us here in Vermont to get somewhat ahead of the national curve on the use of this technology.”

Looking ahead

With the bill set to be inked by Governor Peter Shumlin – Botzow said he had no reason to believe it wouldn’t ultimately be signed into law – the question now turns to whether state legislators will pursue other avenues of either promoting or overseeing areas of the technology.

In the past, state officials have indicated a willingness to apply existing state statues to issues related to digital currencies.

Rep Fred Baser, one of the sponsors of the House version of the bill, echoed others in saying that this move puts in place a foundation for future efforts.

“This year’s legislation was our statement that this technology might very well be something that is used universally, in some form or another, in the future,” he told CoinDesk. “We are anxious to learn more.”

Balint indicated that she and other legislators see the bill as an opportunity to broadcast Vermont’s openness to technological innovation and the companies pursuing new lines of development, including in the bitcoin and blockchain industry.

“It may just be symbolic for now, as blockchain technology is still in its infancy,” she said.

Balint concluded:

“We are hopeful that it will help to usher in an age in which people start to think about Vermont as the hub of innovation it already is, and not just think about our marvelous cheese, beer, farms and ski slopes.”

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