IL
Illinois Senate Bill SB1887

Illinois 2023-2024 Regular Session

Illinois Senate Bill SB1887 Compare Versions

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11 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
22 103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 SB1887 Introduced 2/9/2023, by Sen. Robert Peters SYNOPSIS AS INTRODUCED:
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55 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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1111 1 AN ACT concerning regulation.
1212 2 Be it enacted by the People of the State of Illinois,
1313 3 represented in the General Assembly:
1414 4 Section 1. Short title. This Act may be cited as the
1515 5 Digital Property Protection and Law Enforcement Act.
1616 6 Section 5. Legislative findings; intent. The General
1717 7 Assembly finds all of the following:
1818 8 (a) Private and corporate citizens in Illinois
1919 9 increasingly own cryptocurrencies, nonfungible tokens, and
2020 10 other forms of digital property stored on blockchains.
2121 11 (b) Digital property owners are particularly susceptible
2222 12 to injury due to frauds, hacks, phishing scams, and ransomware
2323 13 extortion as well as from the loss of cryptographic private
2424 14 keys and mistaken transactions. Hacks involving digital
2525 15 property have become routine and often result in hundreds of
2626 16 millions of dollars in losses while frauds and the loss of
2727 17 private keys have caused billions of dollars of injury to
2828 18 digital property owners.
2929 19 (c) Illinois citizens have suffered and continue to suffer
3030 20 unnecessary losses due to these causes. Moreover, these losses
3131 21 are often visited on those least able to bear them. Younger
3232 22 persons and persons from disadvantaged communities are more
3333 23 likely than others to own digital property and more likely to
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4040 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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6868 1 choose digital property over stocks or mutual funds to invest
6969 2 their savings. As a result, disadvantaged communities bear the
7070 3 brunt of losses due to digital property crimes, loss of
7171 4 private keys, and fluctuations in prices of digital assets.
7272 5 (d) Illinois citizens have asserted legal rights regarding
7373 6 digital property but many blockchain networks lack procedures
7474 7 to enforce court orders regarding digital property or have
7575 8 adopted methods of operation that inhibit such enforcement. As
7676 9 a result, the cost to enforce legal rights in digital property
7777 10 is often prohibitive such that the property rights cannot be
7878 11 vindicated and the vast majority of blockchain crimes go
7979 12 unpunished.
8080 13 (e) The difficulty of enforcing the law reduces the value
8181 14 of digital property, imposes burdensome costs to protect
8282 15 against risk, and inhibits the adoption of technology that
8383 16 could benefit the private and corporate citizens of the State.
8484 17 (f) Fostering development of technologies to protect
8585 18 blockchain transactions and legal interests in digital
8686 19 property presents an economic opportunity for Illinois
8787 20 businesses.
8888 21 (g) The public welfare, security, and safety will be
8989 22 served by regulating blockchain transactions and digital
9090 23 property in the State.
9191 24 Section 10. Definitions. As used in this Act:
9292 25 "Blockchain", "cryptographic hash", "electronic",
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103103 1 "electronic record", "record", and "smart contract" shall have
104104 2 the meanings ascribed to them in Section 5 of the Blockchain
105105 3 Technology Act.
106106 4 "Blockchain network" means a network of 2 or more nodes
107107 5 that maintain or append a blockchain.
108108 6 "Blockchain operator" means a person or entity operating a
109109 7 full or partial node, including, without limitation, operating
110110 8 a blockchain mining node, mining pool, validator, validator
111111 9 pool, staking pool, and staking a validator.
112112 10 "Blockchain transaction" means the processing and storage
113113 11 of a record on a blockchain.
114114 12 "Digital property" refers to any form of property recorded
115115 13 on a blockchain, including, without limitation,
116116 14 cryptocurrency, digital tokens, nonfungible tokens, and
117117 15 tokenized real-world assets.
118118 16 "Private key" means a cryptographic key used to sign a
119119 17 blockchain transaction.
120120 18 "Smart contract code" refers to computer code written to a
121121 19 blockchain and used to execute a smart contract agreement in
122122 20 whole or in part.
123123 21 "Secured party" shall have the meaning ascribed to it in
124124 22 subsection (a) of Section 9-102 of the Uniform Commercial
125125 23 Code.
126126 24 "Staking" means providing digital assets to a validator to
127127 25 enable that validator to participate in operating a
128128 26 proof-of-stake blockchain network.
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139139 1 Section 15. Enforcement of warrants and court orders;
140140 2 penalties.
141141 3 (a) Upon a valid request from the Attorney General or a
142142 4 State's Attorney made pursuant to the substantive or
143143 5 procedural laws of this State, a court may order any
144144 6 appropriate blockchain transaction for digital property or for
145145 7 the execution of a smart contract.
146146 8 (b) A blockchain network that processes a blockchain
147147 9 transaction originating in this State at any time after the
148148 10 effective date of this Act shall process a court-ordered
149149 11 blockchain transaction without the need for the private key
150150 12 associated with the digital property or smart contract.
151151 13 (c)(1) Each blockchain operator that has mined, validated,
152152 14 or otherwise participated in processing a blockchain
153153 15 transaction on the blockchain network which originated in this
154154 16 State at any time after the effective date of this Act is
155155 17 liable to this State for a violation of subsection (b).
156156 18 (2) Upon a petition by the Attorney General or a
157157 19 State's Attorney, the court shall assess a civil penalty
158158 20 of between $5,000 and $10,000, as adjusted by the Federal
159159 21 Civil Penalties Inflation Adjustment Act of 1990, 28
160160 22 U.S.C. 2461 note, Public Law 104410, for each day that
161161 23 the blockchain network fails to comply with the order.
162162 24 (d) The fact that a blockchain network has not adopted
163163 25 reasonable available procedures to comply with subsection (b)
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174174 1 shall not be a defense to an action under subsection (c).
175175 2 Section 20. Protection of digital property and contract
176176 3 rights.
177177 4 (a) Any person using a smart contract to deliver goods or
178178 5 services in this State shall include smart contract code
179179 6 capable of enforcing court orders regarding the smart
180180 7 contract. Any person who violates this subsection (a) shall be
181181 8 liable to return all digital property or other consideration
182182 9 given by the plaintiff, without regard to any benefits that
183183 10 may have been received by the plaintiff, and liable for the
184184 11 costs of the action and reasonable attorney's fees as
185185 12 determined by a court.
186186 13 (b)(1) A court may order a blockchain transaction as a
187187 14 remedy if a party to a smart contract or an owner of digital
188188 15 property loses the private key associated with the smart
189189 16 contract or digital property or if the owner of the private key
190190 17 is deceased and the private key is unknown to the executor or
191191 18 administrator of the estate. A court may also order that a
192192 19 blockchain transaction originating in this State be refunded
193193 20 to the sender if there is a legal right to a refund, such as in
194194 21 cases of fraud or mistake.
195195 22 (2) A blockchain network that processes a blockchain
196196 23 transaction originating in this State at any time after
197197 24 the effective date of this Act shall process the
198198 25 court-ordered blockchain transactions without the need for
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209209 1 the private key associated with the digital property or
210210 2 smart contract.
211211 3 (3) Each blockchain operator that has mined or
212212 4 validated a blockchain transaction on the blockchain
213213 5 network which originated in this State at any time after
214214 6 the effective date of this Act is liable to the plaintiff
215215 7 for damages suffered due to a violation of paragraph (2)
216216 8 of this subsection together with the plaintiff's costs of
217217 9 the action and reasonable attorney's fees, as determined
218218 10 by a court.
219219 11 (4) The fact that a blockchain network has not adopted
220220 12 reasonable available procedures to comply with paragraph
221221 13 (2) of this subsection shall not be a defense to an action
222222 14 under paragraph (3) of this subsection.
223223 15 Section 25. Security interests.
224224 16 (a) Upon a valid request made pursuant to the substantive
225225 17 or procedural laws of this State from a secured party claiming
226226 18 an interest in digital property or right in a smart contract of
227227 19 another, a court may order any transaction deemed appropriate.
228228 20 (b) A blockchain network that processes a transaction
229229 21 originating in this State at any time after the effective date
230230 22 of this Act shall enforce a court order without need for the
231231 23 private key associated with the digital property or smart
232232 24 contract.
233233 25 (c)(1) Each blockchain operator that has mined, validated,
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244244 1 or otherwise participated in processing a blockchain
245245 2 transaction on the blockchain network originating in this
246246 3 State at any time after the effective date of this Act is
247247 4 liable to the secured party for any damages suffered due to a
248248 5 violation of subsection (b) together with the plaintiff's
249249 6 costs of the action and reasonable attorney's fees, as
250250 7 determined by a court.
251251 8 (2) The fact that a blockchain network has not adopted
252252 9 reasonable available procedures to comply with subsection
253253 10 (b) shall not be a defense to an action under this
254254 11 subsection (c).
255255 12 Section 30. Service of process. A blockchain network may
256256 13 be served by leaving a copy of the pleading, paper, filing, or
257257 14 order with a blockchain operator who has participated in the
258258 15 blockchain network at any time after the effective date of
259259 16 this Act in any manner provided for service on individuals.
260260 17 Section 99. Effective date. This Act takes effect 30 days
261261 18 after becoming law.
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