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. LRB103 28369 BMS 54749 b A BILL FOR 103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 SB1887 Introduced 2/9/2023, by Sen. Robert Peters SYNOPSIS AS INTRODUCED: New Act 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. LRB103 28369 BMS 54749 b LRB103 28369 BMS 54749 b A BILL FOR
103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 SB1887 Introduced 2/9/2023, by Sen. Robert Peters SYNOPSIS AS INTRODUCED:
New Act New Act
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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1 AN ACT concerning regulation.
2 Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
4 Section 1. Short title. This Act may be cited as the
5 Digital Property Protection and Law Enforcement Act.
6 Section 5. Legislative findings; intent. The General
7 Assembly finds all of the following:
8 (a) Private and corporate citizens in Illinois
9 increasingly own cryptocurrencies, nonfungible tokens, and
10 other forms of digital property stored on blockchains.
11 (b) Digital property owners are particularly susceptible
12 to injury due to frauds, hacks, phishing scams, and ransomware
13 extortion as well as from the loss of cryptographic private
14 keys and mistaken transactions. Hacks involving digital
15 property have become routine and often result in hundreds of
16 millions of dollars in losses while frauds and the loss of
17 private keys have caused billions of dollars of injury to
18 digital property owners.
19 (c) Illinois citizens have suffered and continue to suffer
20 unnecessary losses due to these causes. Moreover, these losses
21 are often visited on those least able to bear them. Younger
22 persons and persons from disadvantaged communities are more
23 likely than others to own digital property and more likely to
103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 SB1887 Introduced 2/9/2023, by Sen. Robert Peters SYNOPSIS AS INTRODUCED:
New Act New Act
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
New Act
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1 choose digital property over stocks or mutual funds to invest
2 their savings. As a result, disadvantaged communities bear the
3 brunt of losses due to digital property crimes, loss of
4 private keys, and fluctuations in prices of digital assets.
5 (d) Illinois citizens have asserted legal rights regarding
6 digital property but many blockchain networks lack procedures
7 to enforce court orders regarding digital property or have
8 adopted methods of operation that inhibit such enforcement. As
9 a result, the cost to enforce legal rights in digital property
10 is often prohibitive such that the property rights cannot be
11 vindicated and the vast majority of blockchain crimes go
12 unpunished.
13 (e) The difficulty of enforcing the law reduces the value
14 of digital property, imposes burdensome costs to protect
15 against risk, and inhibits the adoption of technology that
16 could benefit the private and corporate citizens of the State.
17 (f) Fostering development of technologies to protect
18 blockchain transactions and legal interests in digital
19 property presents an economic opportunity for Illinois
20 businesses.
21 (g) The public welfare, security, and safety will be
22 served by regulating blockchain transactions and digital
23 property in the State.
24 Section 10. Definitions. As used in this Act:
25 "Blockchain", "cryptographic hash", "electronic",
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1 "electronic record", "record", and "smart contract" shall have
2 the meanings ascribed to them in Section 5 of the Blockchain
3 Technology Act.
4 "Blockchain network" means a network of 2 or more nodes
5 that maintain or append a blockchain.
6 "Blockchain operator" means a person or entity operating a
7 full or partial node, including, without limitation, operating
8 a blockchain mining node, mining pool, validator, validator
9 pool, staking pool, and staking a validator.
10 "Blockchain transaction" means the processing and storage
11 of a record on a blockchain.
12 "Digital property" refers to any form of property recorded
13 on a blockchain, including, without limitation,
14 cryptocurrency, digital tokens, nonfungible tokens, and
15 tokenized real-world assets.
16 "Private key" means a cryptographic key used to sign a
17 blockchain transaction.
18 "Smart contract code" refers to computer code written to a
19 blockchain and used to execute a smart contract agreement in
20 whole or in part.
21 "Secured party" shall have the meaning ascribed to it in
22 subsection (a) of Section 9-102 of the Uniform Commercial
23 Code.
24 "Staking" means providing digital assets to a validator to
25 enable that validator to participate in operating a
26 proof-of-stake blockchain network.
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1 Section 15. Enforcement of warrants and court orders;
2 penalties.
3 (a) Upon a valid request from the Attorney General or a
4 State's Attorney made pursuant to the substantive or
5 procedural laws of this State, a court may order any
6 appropriate blockchain transaction for digital property or for
7 the execution of a smart contract.
8 (b) A blockchain network that processes a blockchain
9 transaction originating in this State at any time after the
10 effective date of this Act shall process a court-ordered
11 blockchain transaction without the need for the private key
12 associated with the digital property or smart contract.
13 (c)(1) Each blockchain operator that has mined, validated,
14 or otherwise participated in processing a blockchain
15 transaction on the blockchain network which originated in this
16 State at any time after the effective date of this Act is
17 liable to this State for a violation of subsection (b).
18 (2) Upon a petition by the Attorney General or a
19 State's Attorney, the court shall assess a civil penalty
20 of between $5,000 and $10,000, as adjusted by the Federal
21 Civil Penalties Inflation Adjustment Act of 1990, 28
22 U.S.C. 2461 note, Public Law 104410, for each day that
23 the blockchain network fails to comply with the order.
24 (d) The fact that a blockchain network has not adopted
25 reasonable available procedures to comply with subsection (b)
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1 shall not be a defense to an action under subsection (c).
2 Section 20. Protection of digital property and contract
3 rights.
4 (a) Any person using a smart contract to deliver goods or
5 services in this State shall include smart contract code
6 capable of enforcing court orders regarding the smart
7 contract. Any person who violates this subsection (a) shall be
8 liable to return all digital property or other consideration
9 given by the plaintiff, without regard to any benefits that
10 may have been received by the plaintiff, and liable for the
11 costs of the action and reasonable attorney's fees as
12 determined by a court.
13 (b)(1) A court may order a blockchain transaction as a
14 remedy if a party to a smart contract or an owner of digital
15 property loses the private key associated with the smart
16 contract or digital property or if the owner of the private key
17 is deceased and the private key is unknown to the executor or
18 administrator of the estate. A court may also order that a
19 blockchain transaction originating in this State be refunded
20 to the sender if there is a legal right to a refund, such as in
21 cases of fraud or mistake.
22 (2) A blockchain network that processes a blockchain
23 transaction originating in this State at any time after
24 the effective date of this Act shall process the
25 court-ordered blockchain transactions without the need for
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1 the private key associated with the digital property or
2 smart contract.
3 (3) Each blockchain operator that has mined or
4 validated a blockchain transaction on the blockchain
5 network which originated in this State at any time after
6 the effective date of this Act is liable to the plaintiff
7 for damages suffered due to a violation of paragraph (2)
8 of this subsection together with the plaintiff's costs of
9 the action and reasonable attorney's fees, as determined
10 by a court.
11 (4) The fact that a blockchain network has not adopted
12 reasonable available procedures to comply with paragraph
13 (2) of this subsection shall not be a defense to an action
14 under paragraph (3) of this subsection.
15 Section 25. Security interests.
16 (a) Upon a valid request made pursuant to the substantive
17 or procedural laws of this State from a secured party claiming
18 an interest in digital property or right in a smart contract of
19 another, a court may order any transaction deemed appropriate.
20 (b) A blockchain network that processes a transaction
21 originating in this State at any time after the effective date
22 of this Act shall enforce a court order without need for the
23 private key associated with the digital property or smart
24 contract.
25 (c)(1) Each blockchain operator that has mined, validated,
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1 or otherwise participated in processing a blockchain
2 transaction on the blockchain network originating in this
3 State at any time after the effective date of this Act is
4 liable to the secured party for any damages suffered due to a
5 violation of subsection (b) together with the plaintiff's
6 costs of the action and reasonable attorney's fees, as
7 determined by a court.
8 (2) The fact that a blockchain network has not adopted
9 reasonable available procedures to comply with subsection
10 (b) shall not be a defense to an action under this
11 subsection (c).
12 Section 30. Service of process. A blockchain network may
13 be served by leaving a copy of the pleading, paper, filing, or
14 order with a blockchain operator who has participated in the
15 blockchain network at any time after the effective date of
16 this Act in any manner provided for service on individuals.
17 Section 99. Effective date. This Act takes effect 30 days
18 after becoming law.
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