House File 799 - Introduced HOUSE FILE 799 BY COMMITTEE ON INFORMATION TECHNOLOGY (SUCCESSOR TO HSB 212) A BILL FOR An Act relating to electronic transactions by permitting the 1 use of distributed ledger technology and smart contracts. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 2479HV (2) 89 jda/rn

H.F. 799 Section 1. Section 554D.103, subsections 4, 7, and 8, Code 1 2021, are amended to read as follows: 2 4. “Contract” means the total legal obligation resulting 3 from the parties’ agreement as affected by this chapter and 4 other applicable law. “Contract” includes any contract secured 5 through distributed ledger technology and a smart contract. 6 7. “Electronic record” means a record created, generated, 7 sent, communicated, received, or stored by electronic means. 8 “Electronic record” includes any record secured through 9 distributed ledger technology. 10 8. “Electronic signature” means an electronic sound, symbol, 11 or process attached to or logically associated with a record 12 and executed or adopted by a person with the intent to sign the 13 record. “Electronic signature” includes a signature that is 14 secured through distributed ledger technology. 15 Sec. 2. Section 554D.103, Code 2021, is amended by adding 16 the following new subsections: 17 NEW SUBSECTION . 4A. “Distributed ledger technology” means 18 an electronic record of transactions or other data to which all 19 of the following apply: 20 a. The electronic record is uniformly ordered. 21 b. The electronic record is redundantly maintained or 22 processed by one or more computers or machines to guarantee the 23 consistency or nonrepudiation of the recorded transactions or 24 other data. 25 NEW SUBSECTION . 14A. “Smart contract” means an event-driven 26 program or computerized transaction protocol that runs on a 27 distributed, decentralized, shared, and replicated ledger 28 that executes the terms of a contract. For purposes of this 29 subsection, “executes the terms of a contract” includes taking 30 custody over and instructing the transfer of assets. 31 Sec. 3. NEW SECTION . 554D.106A Use of distributed ledger 32 technology. 33 A person who, in engaging in or affecting interstate or 34 foreign commerce, uses distributed ledger technology to secure 35 -1- LSB 2479HV (2) 89 jda/rn 1/ 3

H.F. 799 information that the person owns or has the right to use 1 retains the same rights of ownership or use with respect to 2 such information as before the person secured the information 3 using distributed ledger technology. This section does not 4 apply to the use of distributed ledger technology to secure 5 information in connection with a transaction to the extent that 6 the terms of the transaction expressly provide for the transfer 7 of rights of ownership or use with respect to such information. 8 Sec. 4. Section 554D.108, subsection 2, Code 2021, is 9 amended to read as follows: 10 2. A contract shall not be denied legal effect or 11 enforceability solely because an electronic record was used in 12 its formation or because the contract is a smart contract or 13 contains a smart contract provision . 14 EXPLANATION 15 The inclusion of this explanation does not constitute agreement with 16 the explanation’s substance by the members of the general assembly. 17 Code chapter 554D, the uniform electronic transactions Act, 18 facilitates the use of electronic transactions in commerce by 19 giving legal recognition to electronic records, signatures, and 20 contracts. This bill modifies the Code chapter by permitting 21 the use of distributed ledger technology and smart contracts in 22 electronic transactions. 23 The bill defines “distributed ledger technology” as an 24 electronic record of transactions or other data that is 25 uniformly ordered, redundantly maintained or processed by one 26 or more computers or machines to guarantee the consistency or 27 nonrepudiation of the recorded transactions or other data. The 28 bill defines “smart contract” as an event-driven program or 29 computerized transaction protocol that runs on a distributed, 30 decentralized, shared, and replicated ledger that executes the 31 terms of a contract. 32 The bill adds contracts secured through distributed ledger 33 technology and smart contracts to the definition of “contract”. 34 The bill adds the concept of security through distributed 35 -2- LSB 2479HV (2) 89 jda/rn 2/ 3

H.F. 799 ledger technology to the definitions of “electronic record” and 1 “electronic signature”. 2 The bill provides that a person who, in engaging in or 3 affecting interstate or foreign commerce, uses distributed 4 ledger technology to secure information that the person owns 5 or has the right to use retains the same rights of ownership 6 or use with respect to such information as before the person 7 secured the information using distributed ledger technology, 8 unless in connection with a transaction with terms that 9 expressly provide for the transfer of rights of ownership or 10 use with respect to such information. 11 The bill provides that a contract shall not be denied legal 12 effect or enforceability solely because the contract is a smart 13 contract or contains a smart contract provision. 14 -3- LSB 2479HV (2) 89 jda/rn 3/ 3