Blockchain Legal Terminology & Definitions

tags: Law
Sources:

Introduction

Legal defintions serve as the leading guide to stability and direction for actors engaged in the realm of blockchain. In the fast evolving field of blockchain, people inside and outside of the blockchain community struggle to explain and arrive at a central way to define and explain various terms. The purpose of the different blockchain-centric legal definitions is to allow citizens and other relevant actors to understand the different terms in a closely related manner.

The purpose of this project is to serve as a collaborative platform to gather the sundry of ideas from the blockchain community to assist law makers in their pursuit to bring stability for blockchain and the law. In the last three years, several States continue to push forward legislation that define blockchain related terms. The sudden growth of this legislation is promising, but it must be done with caution and careful advoacy from those willing and able to provide expertise.

This document serves as a non-exhaustive resource that should be continually updated as more legislation is created and discovered. ___

Mind Maps

Digital Asset

# **Digital Asset**

## Connecticut ([SB 353; 2022](https://search.cga.state.ct.us/r/adv/))

- "a representation of economic,
proprietary or access rights 
that is stored in a <u>computer readable format</u>, 
including, but not limited to, 
digital consumer assets, digital securities 
and virtual currencies;"


## Idaho ([HB 465; 2022](https://legislature.idaho.gov/wp-content/uploads/sessioninfo/2022/legislation/H0465.pdf))

- "a representation of economic, 
proprietary, or access rights 
that is stored in a computer-readable format
and includes <u>an open blockchain token</u>, 
digital commodity, digital security, 
virtual currency, and any other 
controllable electronic record.""


## Hawaii ([HB 591; 2022](https://www.capitol.hawaii.gov/measure_indiv.aspx?billtype=HB&billnumber=591&year=2022))

- "an electronic record. 
“Digital asset” <u>does not include</u> 
an underlying asset or 
liability to which an 
electronic record refers, 
unless the asset or liability 
is itself an electronic record.""

## Georgia ([HB 1342 2022 ](https://www.legis.ga.gov/legislation/62089))
- "a type of virtual currency that utilizes 
blockchain technology and can be 
digitally traded between users 
and converted or exchanged for legal tender.""

## Illinois ([SB 217; 2021](https://www.ilga.gov/legislation/102/SB/10200SB0217ham001.htm))
- "a representation of economic, 
proprietary, or access rights 
that is stored in a <u>computer readable format.</u>"

## Kentucky ([SB17; 2022](https://hackmd.io/Eat2gnYqT56HQStI63JCNg?view))
- a representation of economic, proprietary, or access rights that is:
Stored in a computer readable format; and
Either: 
a. A digital consumer asset;
b. A digital security; 
or c. Virtual currency;

## Massachusetts ([SB 1033; 2021](https://malegislature.gov/Bills/192/S1033))
- an electronic record in which
an individual has a right or interest. 
The term does not include an underlying asset
or liability unless the asset
or liability is itself an electronic record.

## New Jersey ([SB1267; 2022](https://www.njleg.state.nj.us/bill-search/2022/A1975))
- a representation of economic, 
proprietary or access rights 
that is stored in a [computer] machine 
readable format, has a transaction
history that is recorded in
a distributed,digital ledger 
or digital data structure 
in which consensus is achieved 
through a mathematically verifiable process,
and includes digital consumer assets [, digital securities] and virtual currency.

Private Key

# **Private Key**

## Idaho ([HB 583](https://legislature.idaho.gov/sessioninfo/2022/legislation/H0583/)), Kentucky ([SB17](https://apps.legislature.ky.gov/SessionRecord/22RS/SB17/SB17.pdf)), et al.
- "a unique element of 
cryptographic data or any substantially similar analogue that is:
a) Held by a person;
b) Paired with a unique, 
publicly available element of cryptographic data; and
Associated with an algorithm
that is necessary to carry out
an encryption or decryption required to execute a transaction."

## New York ([HB A08820; 2022](https://nyassembly.gov/leg/?default_fld=&leg_video=&bn=A08820&term=2021&Summary=Y&Text=Y))
- "the unique identifier of a wallet, 
or any substantially similar analogue, 
that is paired with a publicly 
available identifier and associated 
with an algorithm that is necessary
to carry out an encryption
or decryption required to execute a transaction.""

State Legislation

Arizona

(HB 2204)

“Virtual currency” functions as: i) A medium of exchange; ii) A unit of account; or iii) A store of value.

(HB1944)

i) Negotiating the terms of a contract; ii) Automatically verifying the contract; and iii) Executing the terms of a contract. ___

Connecticut

(SB 353)

(HB 1724)

(SB 217)

Kentucky

(SB340)

(HB724)

(SB17)

Michigan

(SB 888)

Nebraska

(LB 649)

New Hampshire

(HB 1502)

New Jersey

(SB1267)

South Carolina

(H3495)

United States Legislation

“Lummis-Gillibrand Responsible Financial Innovation Act”

“(1) DEPOSITORY INSTITUTION.—The term ‘depository institution’ has the meaning given the term in section 19(b)(1) of the Federal Reserve Act (12 U.S.C. 461(b)(1)).

(2) DIGITAL ASSET.—The term ‘digital asset’— “(A) means a natively electronic asset that— “(i) confers economic, proprietary, or access rights or powers; and “(ii) is recorded using cryptographically secured distributed ledger technology, or any similar analogue; and “(B) includes: “(i) virtual currency and ancillary assets, consistent with section 2( c)(2)(F) of the Commodity Exchange Act; “(ii) payment stablecoins, consistent with section 403 of the Legal Certainty for Bank Products Act of 2000 (7 U.S.C. 27a); and “(iii) other securities and commodities, subject to subparagraph (A).

“(3) DIGITAL ASSET INTERMEDIARY.—The term ‘digital asset intermediary’— “(A) means a person who holds a license, registration, or other similar authorization, as specified by this chapter, the Commodity Exchange Act (7 U.S.C. 1 et seq.), the Securities Act of 1933 (15 U.S.C. 77a et seq.), the Corporation of Foreign Bondholders Act, 1933 (15 U.S.C. 77bb et seq.), the Trust Indenture Act of 1939 (15 U.S.C. 77aaa et seq.), the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.), the Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa et seq.), the Investment Company Act of 1940 (15 U.S.C. 80a–1 et seq.), the Investment Advisers Act of 1940 (15 U.S.C. 80b–1), and the Omnibus Small Business Capital Formation Act of 1980 (15 U.S.C. 80c), that may conduct market activities relating in digital assets, or a person who is required by law to hold such a license, registration or other similar authorization; and “(B) includes a person who holds a license, registration, or other similar authorization under State or Federal law that issues a payment stablecoin, or person who is required by law to hold such a license, registration or other similar authorization; and “( C) does not include a depository institution.

“(4) DISTRIBUTED LEDGER TECHNOLOGY.—The term ‘distributed ledger technology’ means technology that enables the operation and use of a ledger that— “(A) is shared across a set of distributed nodes that participate in a network and store a complete or partial replica of the ledger; “(B) is synchronized between the nodes; “( C) has data appended to the ledger by following the specified consensus mechanism of the ledger; “(D) may be accessible to anyone or restricted to a subset of participants; and “(E) may require participants to have authorization to perform certain actions or require no authorization. “(5) PAYMENT STABLECOIN.—The term ‘payment stablecoin’ means a digital asset that is— “(A) redeemable, on demand, on a one-to-one basis for instruments denominated in6 United States dollars and defined as legal tender under section 5103 or for instruments defined as legal tender under the laws of a foreign country (excluding digital assets defined as legal tender under the laws of a foreign country); “(B) issued by a business entity; “( C) accompanied by a statement from the issuer that the asset is redeemable as specified in subparagraph (A) from the issuer or another identified person; “(D) backed by 1 or more financial assets (excluding other digital assets), consistent with subparagraph (A); and “(E) intended to be used as a medium of exchange. “(6) PERSON WHO PROVIDES DIGITAL ASSET SERVICES.—The term ‘person who provides digital asset services’ means— “(A) a digital asset intermediary; “(B) a financial institution, as defined in section 1a of the Commodity Exchange Act (7 U.S.C. 1a); and “( C) any other person conducting digital asset activities pursuant to a Federal or State charter, license, registration, or other similar authorization, or a person who is required by law to hold such a license, registration or other similar authorization.

“(7) SECURITY.—The term ‘security’ has the meaning given the term in section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)).

“(8) SMART CONTRACT.—The term ‘smart contract’— “(A) means— “(i) computer code deployed to a distributed ledger technology network that executes an instruction based on the occurrence or nonoccurrence of specified conditions; or “(ii) any similar analogue; and “(B) may include taking possession or control of a digital asset and transferring the asset or issuing executable instructions for these actions.

“(9) SOURCE CODE VERSION.—The term ‘source code version’— “(A) means the source code version comprising a digital asset; and 35 “(B) does not include software used to manage or facilitate transactions in a digital 36 asset.

“(10) VIRTUAL CURRENCY.—The term ‘virtual currency’—

“(A) means a digital asset that— “(i) is used primarily as a medium of exchange, unit of account, store of value, or any combination of such functions; “(ii) is not legal tender, as described in section 5103; and “(iii) does not derive value from or is backed by an underlying financial asset (except other digital assets); and “(B) includes a digital asset, consistent with subparagraph (A) that is accompanied by a statement from the issuer that a denominated or pegged value will be maintained and be available upon redemption from the issuer or other identified person, based solely on a smart contract.”. (b) Technical and Conforming Amendment.—The table of contents for subtitle VI of title 31, United States Code, is amended by adding at the end the following: “98.Digital assets 9801”