Blockchain technology is all the rage, and progressive state governments around the country are in a race to be at the forefront of the coming revolution. I am proud to say that my home state of Arizona was one of the first states to pass legislation explicitly and favorably addressing blockchain technology, and that we continue to be a leading state in that space. However, Arizona is not the only state making noise, as several other states have been getting in on the action by proposing legislation and regulation of their own. This is the first of many articles I will post in an attempt to chronicle the proposal and passage of legislation governing blockchain technology.
Most recently, the Maryland legislature is working to pass House Bill 1634 and Senate Bill 1038, which together would constitute the “Maryland Financial Consumer Protection Act of 2018.” Among other things, the Act would mandate that the Maryland Financial Consumer Protection Bureau shall study “cryptocurrencies, initial coin offerings, cryptocurrency exchanges, and other blockchain technologies[,]” and then include recommendations in its 2018 report to the Governor regarding whether and how the state should regulate “cryptocurrencies, initial coin offerings, and cryptocurrency exchanges.”
It is unclear whether this inclusion in the Act should be interpreted as reflecting a friendly attitude toward blockchain technology, or whether it is a harbinger of future regulations to come that may stifle blockchain adoption and development in the state. However, a look at Maryland’s history suggests it may be the latter. According to Coindesk.com, Maryland has generally steered clear of blockchain tech, and the last official commentary to come out of a state agency was in 2014 when the Maryland Office of the Commissioner of Financial Regulation issued a warning to Bitcoin investors regarding the risks of the unregulated cryptocurrency. Since then, there have been several highly publicized incidents of fraud connected to initial coin offerings, and the volatility of cryptocurrency was put on full display as the price of Bitcoin surge to historic highs in December of 2017 before promptly crashing back down to earth a month later. It seems likely that the already dubious attitude of Maryland state agencies toward blockchain have only been exacerbated by this recent activity. When viewed in that context, I think that the language of these bills, which require analysis of blockchain to further the purpose of consumer protection, are more likely to lead to a restrictive regulatory regime than the implementation of blockchain tech in government processes.
But who knows!? Government attitudes can change, and entrenched bureaucracies can be revamped by the infusion of new blood. For example, tech entrepreneur and former Obama administration technology adviser Alec Ross is running for governor in Maryland, and he is an unapologetic proponent of blockchain technology who believes that Maryland should foster innovation and enhance state government institutions by integrating blockchain tech. I should note that I am not very familiar with Alec Ross or Maryland state politics, and therefore am in no position to opine on his candidacy for office. However, it is always interesting to take note of how state governments — and their potential future leaders — are talking about blockchain.
Disclaimer: This blog is not legal advice and is only for general, non-specific informational purposes. It is not intended to cover all the issues related to the topic discussed. If you have a legal matter, the specific facts that apply to you may require legal knowledge not addressed by this blog. If you need legal advice, consult with a lawyer.