Bill Text: IL SB1887 | 2023-2024 | 103rd General Assembly | Introduced

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Bill Title: Creates the Digital Property Protection and Law Enforcement Act. Provides that upon a valid request from the Attorney General or a State's Attorney, made pursuant to the substantive or procedural laws of the State, a court may order any appropriate blockchain transaction for digital property or for the execution of a smart contract. Provides that a blockchain network that processes a blockchain transaction originating in the State at any time after the effective date of the Act shall process a court-ordered blockchain transaction without the need for the private key associated with the digital property or smart contract. Provides that upon a petition by the Attorney General or a State's Attorney, the court shall assess a civil penalty of between $5,000 and $10,000 for each day that the blockchain network fails to comply with the order. Sets forth provisions concerning protection of digital property and contract rights, security interests, and service of process. Defines terms. Effective 30 days after becoming law.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced) 2023-02-09 - Referred to Assignments [SB1887 Detail]

Download: Illinois-2023-SB1887-Introduced.html

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103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 SB1887 Introduced 2/9/2023, by Sen. Robert Peters SYNOPSIS AS INTRODUCED:
New Act
Creates the Digital Property Protection and Law Enforcement Act. Provides that upon a valid request from the Attorney General or a State's Attorney, made pursuant to the substantive or procedural laws of the State, a court may order any appropriate blockchain transaction for digital property or for the execution of a smart contract. Provides that a blockchain network that processes a blockchain transaction originating in the State at any time after the effective date of the Act shall process a court-ordered blockchain transaction without the need for the private key associated with the digital property or smart contract. Provides that upon a petition by the Attorney General or a State's Attorney, the court shall assess a civil penalty of between $5,000 and $10,000 for each day that the blockchain network fails to comply with the order. Sets forth provisions concerning protection of digital property and contract rights, security interests, and service of process. Defines terms. Effective 30 days after becoming law.
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A BILL FOR
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AN ACT concerning regulation.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 1. Short title. This Act may be cited as the
Digital Property Protection and Law Enforcement Act.
Section 5. Legislative findings; intent. The General
Assembly finds all of the following:
(a) Private and corporate citizens in Illinois
increasingly own cryptocurrencies, nonfungible tokens, and
other forms of digital property stored on blockchains.
(b) Digital property owners are particularly susceptible
to injury due to frauds, hacks, phishing scams, and ransomware
extortion as well as from the loss of cryptographic private
keys and mistaken transactions. Hacks involving digital
property have become routine and often result in hundreds of
millions of dollars in losses while frauds and the loss of
private keys have caused billions of dollars of injury to
digital property owners.
(c) Illinois citizens have suffered and continue to suffer
unnecessary losses due to these causes. Moreover, these losses
are often visited on those least able to bear them. Younger
persons and persons from disadvantaged communities are more
likely than others to own digital property and more likely to

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choose digital property over stocks or mutual funds to invest
their savings. As a result, disadvantaged communities bear the
brunt of losses due to digital property crimes, loss of
private keys, and fluctuations in prices of digital assets.
(d) Illinois citizens have asserted legal rights regarding
digital property but many blockchain networks lack procedures
to enforce court orders regarding digital property or have
adopted methods of operation that inhibit such enforcement. As
a result, the cost to enforce legal rights in digital property
is often prohibitive such that the property rights cannot be
vindicated and the vast majority of blockchain crimes go
unpunished.
(e) The difficulty of enforcing the law reduces the value
of digital property, imposes burdensome costs to protect
against risk, and inhibits the adoption of technology that
could benefit the private and corporate citizens of the State.
(f) Fostering development of technologies to protect
blockchain transactions and legal interests in digital
property presents an economic opportunity for Illinois
businesses.
(g) The public welfare, security, and safety will be
served by regulating blockchain transactions and digital
property in the State.
Section 10. Definitions. As used in this Act:
"Blockchain", "cryptographic hash", "electronic",

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"electronic record", "record", and "smart contract" shall have
the meanings ascribed to them in Section 5 of the Blockchain
Technology Act.
"Blockchain network" means a network of 2 or more nodes
that maintain or append a blockchain.
"Blockchain operator" means a person or entity operating a
full or partial node, including, without limitation, operating
a blockchain mining node, mining pool, validator, validator
pool, staking pool, and staking a validator.
"Blockchain transaction" means the processing and storage
of a record on a blockchain.
"Digital property" refers to any form of property recorded
on a blockchain, including, without limitation,
cryptocurrency, digital tokens, nonfungible tokens, and
tokenized real-world assets.
"Private key" means a cryptographic key used to sign a
blockchain transaction.
"Smart contract code" refers to computer code written to a
blockchain and used to execute a smart contract agreement in
whole or in part.
"Secured party" shall have the meaning ascribed to it in
subsection (a) of Section 9-102 of the Uniform Commercial
Code.
"Staking" means providing digital assets to a validator to
enable that validator to participate in operating a
proof-of-stake blockchain network.

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Section 15. Enforcement of warrants and court orders;
penalties.
(a) Upon a valid request from the Attorney General or a
State's Attorney made pursuant to the substantive or
procedural laws of this State, a court may order any
appropriate blockchain transaction for digital property or for
the execution of a smart contract.
(b) A blockchain network that processes a blockchain
transaction originating in this State at any time after the
effective date of this Act shall process a court-ordered
blockchain transaction without the need for the private key
associated with the digital property or smart contract.
(c)(1) Each blockchain operator that has mined, validated,
or otherwise participated in processing a blockchain
transaction on the blockchain network which originated in this
State at any time after the effective date of this Act is
liable to this State for a violation of subsection (b).
(2) Upon a petition by the Attorney General or a
State's Attorney, the court shall assess a civil penalty
of between $5,000 and $10,000, as adjusted by the Federal
Civil Penalties Inflation Adjustment Act of 1990, 28
U.S.C. 2461 note, Public Law 104–410, for each day that
the blockchain network fails to comply with the order.
(d) The fact that a blockchain network has not adopted
reasonable available procedures to comply with subsection (b)

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shall not be a defense to an action under subsection (c).
Section 20. Protection of digital property and contract
rights.
(a) Any person using a smart contract to deliver goods or
services in this State shall include smart contract code
capable of enforcing court orders regarding the smart
contract. Any person who violates this subsection (a) shall be
liable to return all digital property or other consideration
given by the plaintiff, without regard to any benefits that
may have been received by the plaintiff, and liable for the
costs of the action and reasonable attorney's fees as
determined by a court.
(b)(1) A court may order a blockchain transaction as a
remedy if a party to a smart contract or an owner of digital
property loses the private key associated with the smart
contract or digital property or if the owner of the private key
is deceased and the private key is unknown to the executor or
administrator of the estate. A court may also order that a
blockchain transaction originating in this State be refunded
to the sender if there is a legal right to a refund, such as in
cases of fraud or mistake.
(2) A blockchain network that processes a blockchain
transaction originating in this State at any time after
the effective date of this Act shall process the
court-ordered blockchain transactions without the need for

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the private key associated with the digital property or
smart contract.
(3) Each blockchain operator that has mined or
validated a blockchain transaction on the blockchain
network which originated in this State at any time after
the effective date of this Act is liable to the plaintiff
for damages suffered due to a violation of paragraph (2)
of this subsection together with the plaintiff's costs of
the action and reasonable attorney's fees, as determined
by a court.
(4) The fact that a blockchain network has not adopted
reasonable available procedures to comply with paragraph
(2) of this subsection shall not be a defense to an action
under paragraph (3) of this subsection.
Section 25. Security interests.
(a) Upon a valid request made pursuant to the substantive
or procedural laws of this State from a secured party claiming
an interest in digital property or right in a smart contract of
another, a court may order any transaction deemed appropriate.
(b) A blockchain network that processes a transaction
originating in this State at any time after the effective date
of this Act shall enforce a court order without need for the
private key associated with the digital property or smart
contract.
(c)(1) Each blockchain operator that has mined, validated,

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or otherwise participated in processing a blockchain
transaction on the blockchain network originating in this
State at any time after the effective date of this Act is
liable to the secured party for any damages suffered due to a
violation of subsection (b) together with the plaintiff's
costs of the action and reasonable attorney's fees, as
determined by a court.
(2) The fact that a blockchain network has not adopted
reasonable available procedures to comply with subsection
(b) shall not be a defense to an action under this
subsection (c).
Section 30. Service of process. A blockchain network may
be served by leaving a copy of the pleading, paper, filing, or
order with a blockchain operator who has participated in the
blockchain network at any time after the effective date of
this Act in any manner provided for service on individuals.
Section 99. Effective date. This Act takes effect 30 days
after becoming law.