House File 2443 - Reprinted HOUSE FILE 2443 BY COMMITTEE ON JUDICIARY (SUCCESSOR TO HSB 679) (As Amended and Passed by the House February 24, 2022 ) A BILL FOR An Act relating to contract enforceability regarding smart 1 contracts and distributed ledger technology. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 HF 2443 (2) 89 es/rn/md

H.F. 2443 Section 1. Section 554D.103, subsections 4, 8, and 9, Code 1 2022, 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 8. “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 9. “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, subsections 5 and 16, Code 2022, 16 are amended by striking the subsections. 17 Sec. 3. Section 554D.108, subsection 2, Code 2022, is 18 amended to read as follows: 19 2. A contract shall not be denied legal effect or 20 enforceability solely because an electronic record was used in 21 its formation or because the contract is a smart contract or 22 contains a smart contract provision . 23 Sec. 4. NEW SECTION . 554E.1 Definitions. 24 As used in this chapter, unless the context otherwise 25 requires: 26 1. “Account” means the same as defined in section 554.9102. 27 2. “Chattel paper” means the same as defined in section 28 554.9102. 29 3. “Contract” means the same as defined in section 554D.103. 30 4. “Controllable account” means an account evidenced by a 31 controllable electronic record that provides that the account 32 debtor undertakes to pay a person that under the uniform 33 commercial code has control of the controllable electronic 34 record. 35 -1- HF 2443 (2) 89 es/rn/md 1/ 5

H.F. 2443 5. “Controllable electronic record” means an electronic 1 record that can be subjected to control under any applicable 2 article of the uniform commercial code. “Controllable 3 electronic record” does not include a deposit account, 4 electronic copy of a record evidencing chattel paper, 5 electronic chattel paper, electronic document of title, money, 6 investment property, or a transferable record. 7 6. “Controllable payment intangible” means a payment 8 intangible evidenced by a controllable electronic record that 9 provides that the account debtor undertakes to pay a person 10 that under any applicable article of the uniform commercial 11 code has control of the controllable electronic record. 12 7. “Deposit account” means the same as defined in section 13 554.9102. 14 8. “Digital asset” means any electronic record that 15 represents or evidences economic value or economic, 16 proprietary, or access rights or is used as a medium of 17 exchange, unit of account, method of payment, or store of 18 value. “Digital asset” does not include a deposit account, 19 electronic record evidencing chattel paper, electronic chattel 20 paper, controllable account, controllable payment intangible, 21 money, electronic document of title, investment property, or 22 a transferable record. 23 9. “Distributed ledger technology” means an electronic 24 ledger or other record of transactions or other data to which 25 all of the following apply: 26 a. The electronic ledger is uniformly ordered. 27 b. The electronic ledger is redundantly maintained or 28 processed by more than one computer or machine to guarantee the 29 consistency or nonrepudiation of the recorded transactions or 30 other data. 31 10. “Electronic” means the same as defined in section 32 554D.103. 33 11. “Electronic chattel paper” means the same as defined in 34 section 554.9102. 35 -2- HF 2443 (2) 89 es/rn/md 2/ 5

H.F. 2443 12. “Electronic document of title” means the same as defined 1 in section 554.1201. 2 13. “Electronic record” means the same as defined in section 3 554D.103. 4 14. “Electronic services system” means the county land 5 record information system, or electronic services system, 6 created under the agreement entered into under chapter 28E 7 between the counties and the Iowa county recorders association 8 as required by 2005 Iowa Acts, ch. 179, §101, as amended by 9 2021 Iowa Acts, ch. 126, §2. 10 15. “Investment property” means the same as defined in 11 section 554.9102. 12 16. “Money” means the same as defined in section 554.1201. 13 17. “Payment intangible” means the same as defined in 14 section 554.9102. 15 18. “Record” means the same as defined in section 554D.103. 16 19. “Smart contract” means an electronic record that is an 17 event-driven program or computerized transaction protocol that 18 runs on a distributed, decentralized, shared, and replicated 19 ledger that executes the term of a contract, including but not 20 limited to, taking custody over and instructing the transfer 21 of assets. 22 20. “Transaction” means a sale, trade, exchange, transfer, 23 payment, or conversion of a digital asset or any other property 24 or any other action or set of actions occurring between two or 25 more persons relating to the conduct of business, commercial, 26 or governmental affairs. 27 21. “Transferable record” means the same as transferable 28 record defined in the federal Electronic Signatures in Global 29 and National Commerce Act, 15 U.S.C. §7021(a)(1), and as 30 defined in the Uniform Electronic Transactions Act, section 31 554D.118, subsection 1. 32 Sec. 5. NEW SECTION . 554E.2 Classification of digital 33 assets. 34 Digital assets are intangible personal property. 35 -3- HF 2443 (2) 89 es/rn/md 3/ 5

H.F. 2443 Sec. 6. NEW SECTION . 554E.3 Legal effect of distributed 1 ledger technology and smart contract. 2 1. A record, signature, or contract shall not be denied 3 legal effect or enforceability solely because it is created, 4 generated, sent, signed, adopted, communicated, received, 5 recorded, or stored by means of distributed ledger technology 6 or a smart contract. 7 2. A contract shall not be denied legal effect or 8 enforceability solely because of any of the following: 9 a. The contract contains a smart contract term. 10 b. An electronic record, distributed ledger technology, or a 11 smart contract was used in the formation of the contract. 12 3. Notwithstanding any other law to the contrary, a person 13 using distributed ledger technology in the course of engaging 14 in or affecting intrastate commerce, interstate commerce, or 15 foreign commerce to secure information that the person owns 16 or has the right to use retains the same rights of ownership 17 or use with respect to such information as before the person 18 secured the information using distributed ledger technology. 19 This subsection does not apply to the use of distributed 20 ledger technology to secure information in connection with a 21 transaction to the extent that the terms of the transaction 22 expressly provide for the transfer of rights of ownership or 23 use with respect to such information. 24 Sec. 7. NEW SECTION . 554E.4 Conveyance of real estate 25 interest evidenced by electronic record. 26 Any transaction subject to this chapter that is intended to 27 be evidenced by an instrument affecting real estate as defined 28 in section 558.1 and is intended to provide constructive notice 29 pursuant to section 558.11, or by any instrument that is 30 otherwise required by law to be recorded by the office of the 31 county recorder, shall be evidenced by a document that complies 32 with the provisions of chapter 558, in a format suitable 33 for recording and conforming with the document standards as 34 established by the electronic services system. 35 -4- HF 2443 (2) 89 es/rn/md 4/ 5

H.F. 2443 Sec. 8. REPEAL. Section 554D.106A, Code 2022, is repealed. 1 -5- HF 2443 (2) 89 es/rn/md 5/ 5