Bill Text: IL HB2540 | 2019-2020 | 101st General Assembly | Engrossed

Bill Title: Creates the Blockchain Business Development Act. Provides for the creation and regulation of personal information protection companies. Provides for the creation and regulation of blockchain-based limited liability companies as businesses that utilize blockchain technology for a material portion of their business activities. Provides for a public record blockchain study and report. Provides for a blockchain insurance and banking study and report. Requires the Department of Commerce and Economic Opportunity to incorporate into one or more of its economic development marketing and business support programs, events, and activities topics concerning blockchain technology and financial technology. Defines terms.

Spectrum: Strong Partisan Bill (Democrat 10-1)

Status: (Engrossed) 2019-04-11 - Referred to Assignments [HB2540 Detail]

Download: Illinois-2019-HB2540-Engrossed.html

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1 AN ACT concerning business.
2 Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4 Section 1. Short title. This Act may be cited as the
5Blockchain Business Development Act.
6 Section 5. Definitions. As used in this Act:
7 "Blockchain" means an electronic record created by the use
8of a decentralized method by multiple parties to verify and
9store a digital record of transactions which is secured by the
10use of a cryptographic hash of previous transaction
12 "Blockchain technology" means computer software or
13hardware or collections of computer software or hardware, or
14both, that utilize or enable a blockchain.
15 "Participant" means: (1) each person that has a partial or
16complete copy of the decentralized consensus ledger or database
17utilized by the blockchain technology, or otherwise
18participates in the validation processes of such ledger or
19database; (2) each person in control of any digital asset
20native to the blockchain technology; and (3) each person that
21makes a material contribution to the protocols.
22 "Personal information" means data capable of being
23associated with a particular natural person, including gender

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1identification, birth information, marital status, citizenship
2and nationality, biometric records, government identification
3designations, and personal, educational, and financial
5 "Protocols" means the designated regulatory model of the
6software that governs the rules, operations, and communication
7between nodes on the network utilized by the participants.
8 Section 10. Blockchain-based limited liability company.
9 (a) For the purposes of this Section, "company" means a
10blockchain-based limited liability company.
11 (b) A limited liability company organized under the Limited
12Liability Company Act for the purpose of operating a business
13that utilizes blockchain technology for a material portion of
14its business activities may elect to be a blockchain-based
15limited liability company (BBLLC) by:
16 (1) specifying in its articles of organization that it
17 elects to be such a company (BBLLC); and
18 (2) meeting the requirements of subsections (c) and
19 (d).
20 (c) Notwithstanding any provision of law to the contrary, a
21blockchain-based limited liability company established under
22this Section may provide for its governance, in whole or in
23part, through blockchain technology. The operating agreement
24for the company shall:
25 (1) provide a summary description of the mission or

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1 purpose of the company;
2 (2) specify whether the decentralized consensus ledger
3 or database utilized or enabled by the company will be
4 fully decentralized or partially decentralized and whether
5 such ledger or database will be fully or partially public
6 or private, including the extent of participants' access to
7 information and read and write permissions with respect to
8 protocols;
9 (3) adopt voting procedures, which may include smart
10 contracts carried out on the blockchain technology, to
11 address:
12 (A) proposals from managers, members, or other
13 groups of participants in the company for upgrades or
14 modifications to software systems or protocols, or
15 both;
16 (B) other proposed changes to the company
17 operating agreement; or
18 (C) any other matter of governance or activities
19 within the purpose of the company;
20 (4) adopt protocols to respond to system security
21 breaches or other unauthorized actions that affect the
22 integrity of the blockchain technology utilized by the
23 company;
24 (5) provide how a person becomes a member of the
25 company with an interest, which may be denominated in the
26 form of units, shares of capital stock, or other forms of

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1 ownership or profit interests; and
2 (6) specify the rights and obligations of each group of
3 participants within the company, including which
4 participants shall be entitled to the rights and
5 obligations of members and managers.
6 (d) A member or manager of a blockchain-based limited
7liability company may interact with the company in multiple
8roles, including as a member, manager, developer, node, miner,
9or other participant in the company, or as a trader and holder
10of the currency in its own account and for the account of
11others, provided such member or manager complies with any
12applicable fiduciary duties. The activities of a member or
13manager who interacts with the company through multiple roles
14are not deemed to take place in this State solely because the
15company is organized in this State.
16 (e) A blockchain-based limited liability company may adopt
17any reasonable algorithmic means for accomplishing the
18consensus process for validating records, as well as
19requirements, processes, and procedures for conducting
20operations, or making organizational decisions on the
21blockchain technology used by the company.
22 (f) A blockchain-based limited liability company may, in
23accordance with any procedure specified under subsection (c),
24modify the consensus process, requirements, processes, and
25procedures, or substitute a new consensus process,
26requirements, processes, or procedures that comply with the

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1requirements of law and the governance provisions of the
3 (g) Except as expressly provided otherwise, this Section
4does not exempt a blockchain-based limited liability company
5from any other judicial, statutory, or regulatory provision of
6Illinois law or federal law, including State and federal
7securities laws. Except to the extent inconsistent with the
8provisions of this Section, the provisions of the Limited
9Liability Company Act govern.
10 Section 15. Public record blockchain study; report.
11 (a) On or before January 1, 2021, the Secretary of State
13 (1) evaluate blockchain technology for the systematic
14 and efficient management of public records;
15 (2) recommend legislation, including uniform laws,
16 necessary to support the possible use of blockchain
17 technology for public records; and
18 (3) submit its findings and recommendations to
19 Governor and the General Assembly.
20 (b) This Section is repealed January 1, 2022.
21 Section 20. Blockchain banking study.
22 (a) The Department of Financial and Professional
23Regulation shall review the potential application of
24blockchain technology to the provision of banking, and consider

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1areas for potential adoption and any necessary regulatory
2changes in Illinois.
3 (b) On or before January 1, 2021, the Department shall
4submit a report of its findings and recommendations to the
5Governor and General Assembly.
6 (c) This Section is repealed January 1, 2022.
7 Section 25. Blockchain and financial technology promotion.
8The Department of Commerce and Economic Opportunity shall
9incorporate into one or more of its economic development
10marketing and business support programs, events, and
11activities the following topics:
12 (1) opportunities to promote blockchain technology and
13 financial technology-related economic development in the
14 private sector, including in the areas of banking,
15 insurance, retail and service businesses, and
16 cryptocurrency;
17 (2) legal and regulatory mechanisms that enable and
18 promote the adoption of blockchain technology and
19 financial technology in this State; and
20 (3) educational and workforce training opportunities
21 in blockchain technology, financial technology, and
22 related areas.