Smart Contracts are Seeping into U.S Law – Tennessee Passes Bill

Tennessee has become the latest U.S state to pass a bill recognizing the legal authority of blockchain technology and smart contracts in conducting electronic transactions. The bill was passed by Tennessee Governor, Bill Haslam on March 26th, 2018, confirming the legal authority of blockchain and smart contract powered electronic transactions and also protecting the ownership […]
Tennessee has become the latest U.S state to pass a bill recognizing the legal authority of blockchain technology and smart contracts in conducting electronic transactions. The bill was passed by Tennessee Governor, Bill Haslam on March 26th, 2018, confirming the legal authority of blockchain and smart contract powered electronic transactions and also protecting the ownership […]

Tennessee has become the latest U.S state to pass a bill recognizing the legal authority of blockchain technology and smart contracts in conducting electronic transactions.


The bill was passed by Tennessee Governor, Bill Haslam on March 26th, 2018, confirming the legal authority of blockchain and smart contract powered electronic transactions and also protecting the ownership rights of “certain information secured by blockchain technology.”

Immutable and Auditable

An amendment clarifies the application of the bill to:

Any distributed ledger protocol and supporting infrastructure, including blockchain, that uses a distributed, decentralized, shared, and replicated ledger, whether it be public or private, permissioned or permissionless, and which may include the use of electronic currencies or electronic tokens as a medium of electronic exchange.

The new legislation describes cryptographically protected data on a ledger as “immutable and auditable,” and that it “provides an uncensored truth.”

In the bill, a smart contract is classified as event-driven computer program “that executes on an electronic, distributed, decentralized, shared, and replicated ledger that is used to automate transactions.”

This bill allows for smart contracts to exist in commerce, and specifies that no such contract relating to a transaction will be denied legal effect, validity, or enforceability solely because that contract contains a smart contract term.

Smart Contract Legislation Across the U.S

Smart Contract Legislation Across the U.S

Similar bills are at various stages across the U.S. Vermont passed a bill in 2016, Arizona in May 2017, and Nevada in June 2017. Similar bills in Hawaii, Maine, and Nebraska are pending, but one in Florida failed to progress.

The bill in Nevada was part of an effort to “ensure Nevada has an environment welcoming and inclusive of startups,” and states:

If a law requires a record to be in writing, submission of a blockchain which electronically contains the record satisifes the law.

Are Specific Bills Necessary?

Blockchain technology advocates the Chamber of Digital Commerce, however, believe that individual states have no need to address the legality of smart contracts and that doing so could cause confusion and hinder innovation:

The Chamber believes that existing U.S. law, without further revision, supports the formation and enforceability of smart contracts under state and federal law. The Electronic Signatures in Global and National Commerce Act (“ESIGN Act”) and the Uniform Electronic Transaction Act (“UETA”) provide sufficient legal basis for smart contracts executing terms of a legal contract. Additional legislation, inconsistently drafted, will confuse the marketplace and potentially hinder innovation.

Do you think specific legislation for smart contracts and blockchain technology is necessary? Or, should existing legislation be applied as and when required? What are your thoughts on the legalities of smart contracts?


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