Ohio’s First Step Towards Blockchain Adoption – Fin Tech

Distributed ledger technology (DLT) has revolutionized
transaction of data, assets, and value, including the proliferation
of cryptocurrencies and other digital assets. In order to leverage
this emerging and revolutionary technology, state governments
across the United States are looking to clarify how DLT use cases,
specifically blockchains and their various sub-use cases, are
treated under state law. With the adoption of HB 177.05, Ohio has
joined the fray.

Distributed Ledger Technologies

Transactions recorded on blockchains are immutable and can be
made without a centralized authority. This allows people and
entities—both public and private—to enhance efficiency,
security, and transparency in their operations and recordkeeping.
Exciting use cases include property transfers, legal contract
execution, patent protection, and document validation.

DLT Adoption in State Government

The Delaware Blockchain Initiative
(the DBI) made Delaware an early leader in blockchain adoption. The
DBI was designed to encourage public and private entities to adopt
DLT, specifically blockchains. Then-Governor Jack Markell noted: “smart contracts offer a powerful
and innovative way to streamline cumbersome back office procedures,
and manage and reduce risk.” Since 2016, many states have
followed Delaware’s lead by creating their own initiatives,
while other states have been resistant to adopt such an affirmative
posture.

Ohio HB 177.05

Before HB 177.05 was enacted, Ohio had no grant of authority
permitting public entities to leverage DLT. No longer. HB 177.05,
which enacts section 9.16 of the Ohio Revised Code, granting Ohio
“governmental entities” permission to “utilize
distributed ledger technology,” including “blockchain
technology.”

The bill is broad; authorizing any governmental entity to use
DLT so long as the use remains “in the exercise of [the
entity’s] authority.” The term “governmental
entity” is likewise broad, defined as the “State”
and “political subdivisions” as defined in Section
2744.01 of the Ohio Code. Together, those definitions include any
instrumentality of the State of Ohio, as well as any
“municipal corporation, township, county school district, or
other body corporate and politic responsible for governmental
activities in a geographic area smaller than that of the
state.”

How DLTs will be incorporated into Ohio government programs
remains to be seen, but HB 177.05 is a turning point.

Entrepreneurs and service providers aiming to provide solutions
to Ohio public entities now have the greenlight to do so.

As always, Dinsmore attorneys are appraising the impact of this
new legislation, and remain available for counsel in matters
pertaining to DLT and blockchains.

*Tanner Dowdy is a summer associate at Dinsmore & Shohl,
LLP, and is not licensed to practice law.

www.dinslaw.com

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