Delaware Gov. Jack Markell announced a state initiative to embrace blockchain and smart contract technology to help public and private enterprises lower transactional costs, automate and speed up transactions and reduce fraud.
Markell announced the plan to look into blockchain technology while delivering a keynote address at Consensus 2016, a New York technology conference on blockchain innovation.
The Delaware Blockchain Initiative is designed to provide a legal and regulatory environment for developing blockchain technology and encourage blockchain companies to locate in Delaware.
Legal Clarifications Sought
The state’s legal community will explore the need for clarifications in Delaware corporate law to allow the authorization of “distributed ledger shares” by Delaware corporations, Markell said.
The initiative is important since the state is home to 66% of Fortune 500 companies, 85% of U.S. initial public offerings, and numerous venture capital backed companies worldwide.
Markell said smart contracts provide an innovative way to streamline back-office procedures, reduce transaction costs for businesses and consumers, and reduce risk.
We are delighted that Delaware has this opportunity to help lead the way in promoting blockchain technology and its growing role in digital commerce.
Blockchain-based Smart Contracts To Digitize Records
Smart contracts in distributed ledgers will digitize records to autonomously share, delete, update or be acted upon when certain conditions are achieved, such as expirations. The state expects the technology to bring major efficiencies and speed to commercial transactions for which Delaware has long set the standard.
Markell also noted the state has started to explore its own use cases for distributed ledger technology.
Symbiont, a smart securities startup focusing on smart contracts and a distributed ledger, is a leader in the blockchain industry that is working with the Delaware Public Archives to store state records on a distributed ledger. The project will demonstrate the chance for the state to use the technology to help archive, cryptographically secure and catalog government records held by state and local agencies that exist in digital form only.
Mark Smith, CEO of Symbiont, the technology ambassadors to the State of Delaware, said autonomous record keeping is an important use case for the way smart contracts can deliver a more efficient, transparent and level playing field to the public and private sectors. “In a few years’ time, we’ll look back and see this as an historic moment in the adoption of distributed ledger technology,” he said.
Distributed ledger technology in general and smart contracts, in particular, can transform the way business is done in the capital markets and beyond, said Marco Santori, the leader of Pillsbury law’s blockchain technology legal team.
“We are honored to be recognized by the Governor as Delaware’s legal ambassadors to the blockchain industry, and to have a seat at the table helping to craft this framework,” said Santori.
State Initiative’s Key Aspects
Markell emphasized four aspects of the initiative:
• Ensuring that the state’s regulatory environment is enabling the industry as it develops further, rather than immediately enacting regulations regarding licensing of blockchain companies.
• Creating a legal infrastructure for distributed ledger shares in cooperation with the state bar association’s corporation law council. Distributed ledger shares can increase efficiency and speed multifaceted transactions like incorporation services.
• Naming an Ombudsperson, Andrea Tinianow, the State Director of Corporate and International Development, to welcome blockchain companies to Delaware; and
• Committing state government to the use of the technology.
Images from Shutterstock and Delaware State.