Bill Text: IL HB2540 | 2019-2020 | 101st General Assembly | Introduced
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Reinserts the provisions of the engrossed bill, and makes the following changes: (1) removes a Section concerning blockchain-based limited liability companies; (2) removes a Section concerning a public record blockchain study and report; and (3) removes specified defined terms. Makes conforming changes.
Spectrum: Moderate Partisan Bill (Democrat 13-2)
Status: (Passed) 2019-08-09 - Public Act . . . . . . . . . 101-0259 [HB2540 Detail]
Download: Illinois-2019-HB2540-Introduced.html
Bill Title: Reinserts the provisions of the engrossed bill, and makes the following changes: (1) removes a Section concerning blockchain-based limited liability companies; (2) removes a Section concerning a public record blockchain study and report; and (3) removes specified defined terms. Makes conforming changes.
Spectrum: Moderate Partisan Bill (Democrat 13-2)
Status: (Passed) 2019-08-09 - Public Act . . . . . . . . . 101-0259 [HB2540 Detail]
Download: Illinois-2019-HB2540-Introduced.html
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1 | AN ACT concerning business.
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2 | Be it enacted by the People of the State of Illinois,
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3 | represented in the General Assembly:
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4 | Section 1. Short title. This Act may be cited as the | ||||||||||||||||||||||||
5 | Blockchain Business Development Act.
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6 | Section 5. Definitions. As used in this Act:
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7 | "Blockchain" means cryptographically secured, | ||||||||||||||||||||||||
8 | chronological, and decentralized consensus ledger or consensus | ||||||||||||||||||||||||
9 | database maintained via Internet, peer-to-peer network, or | ||||||||||||||||||||||||
10 | other interaction.
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11 | "Blockchain technology" means computer software or | ||||||||||||||||||||||||
12 | hardware or collections of computer software or hardware, or | ||||||||||||||||||||||||
13 | both, that utilize or enable a blockchain.
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14 | "Department" means the Department of Financial and | ||||||||||||||||||||||||
15 | Professional Regulation.
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16 | "Participant" means: (1) each person that has a partial or | ||||||||||||||||||||||||
17 | complete copy of the decentralized consensus ledger or database | ||||||||||||||||||||||||
18 | utilized by the blockchain technology, or otherwise | ||||||||||||||||||||||||
19 | participates in the validation processes of such ledger or | ||||||||||||||||||||||||
20 | database; (2) each person in control of any digital asset | ||||||||||||||||||||||||
21 | native to the blockchain technology; and (3) each person that | ||||||||||||||||||||||||
22 | makes a material contribution to the protocols.
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23 | "Personal information" means data capable of being |
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1 | associated with a particular natural person, including gender | ||||||
2 | identification, birth information, marital status, citizenship | ||||||
3 | and nationality, biometric records, government identification | ||||||
4 | designations, and personal, educational, and financial | ||||||
5 | histories.
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6 | "Personal information protection company" means a business | ||||||
7 | that is organized for the primary purpose of providing personal | ||||||
8 | information protection services to individual consumers.
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9 | "Personal information protection services" means | ||||||
10 | receiving, holding, and managing the disclosure or use of | ||||||
11 | personal information concerning an individual consumer: (1) | ||||||
12 | pursuant to a written agreement in which the person receiving | ||||||
13 | the individual consumer's information agrees to serve as a | ||||||
14 | personal information protection company, and which specifies | ||||||
15 | the types of personal information to be held and the scope of | ||||||
16 | services to be provided on behalf of the consumer; and (2) in | ||||||
17 | the best interests and for the protection and benefit of the | ||||||
18 | consumer.
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19 | "Protocols" means the designated regulatory model of the | ||||||
20 | software that governs the rules, operations, and communication | ||||||
21 | between nodes on the network utilized by the participants.
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22 | "Virtual currency" means a digital representation of value | ||||||
23 | that: (1) is used as a medium of exchange, unit of account, or | ||||||
24 | store of value; and (2) is not legal tender, whether or not | ||||||
25 | denominated in legal tender.
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1 | Section 10. Qualified personal information protection | ||||||
2 | company.
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3 | (a) A personal information protection company shall | ||||||
4 | qualify to conduct its business under the terms of this Act and | ||||||
5 | applicable rules adopted by the Department of Financial and | ||||||
6 | Professional Regulation.
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7 | (b) A person shall not engage in business as a personal | ||||||
8 | information protection company in this State without first | ||||||
9 | obtaining authorization from the Department.
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10 | (c) A personal information protection company shall:
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11 | (1) be organized or authorized to do business under the | ||||||
12 | laws of this State;
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13 | (2) maintain a place of business in this State;
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14 | (3) appoint a registered agent to accept service of | ||||||
15 | process and to otherwise act on its behalf in this State; | ||||||
16 | provided that, whenever the registered agent cannot with | ||||||
17 | reasonable diligence be found at the Illinois registered | ||||||
18 | office of the company, the Secretary of State shall be an | ||||||
19 | agent of the company upon whom any process, notice, or | ||||||
20 | demand may be served;
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21 | (4) annually hold at least one meeting of its governing | ||||||
22 | body in this State, at which meeting one or more members of | ||||||
23 | the body are physically present; and
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24 | (5) develop, implement, and maintain a comprehensive | ||||||
25 | information security program that contains administrative, | ||||||
26 | technical, and physical safeguards sufficient to protect |
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1 | personal information, and which may include the use of | ||||||
2 | blockchain technology in some or all of its business | ||||||
3 | activities.
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4 | (d) A personal information protection company that accepts | ||||||
5 | personal information based upon to a written agreement to | ||||||
6 | provide personal information protection services has a | ||||||
7 | fiduciary responsibility to the consumer when providing | ||||||
8 | personal protection services.
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9 | Section 15. Personal information protection company name; | ||||||
10 | conduct of business.
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11 | (a) A personal information protection company shall file | ||||||
12 | with the Department the name it proposes to use in connection | ||||||
13 | with its business, which the Department shall not approve if it | ||||||
14 | determines that the name may be misleading, likely to confuse | ||||||
15 | the public, or deceptively similar to any other business name | ||||||
16 | in use in this State.
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17 | (b) A personal information protection company may:
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18 | (1) operate through remote interaction with the | ||||||
19 | individuals entrusting personal information to the | ||||||
20 | company, and there shall be no requirement of Illinois | ||||||
21 | residency or other contact for any such individual to | ||||||
22 | establish such a relationship with the company; and
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23 | (2) subject to applicable fiduciary duties, the terms | ||||||
24 | of any agreement with the individual involved, and any | ||||||
25 | applicable statutory or regulatory provision:
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1 | (A) provide elements of personal information to | ||||||
2 | third parties with which the individual seeks to have a | ||||||
3 | transaction, a service relationship, or other | ||||||
4 | particular purpose interaction;
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5 | (B) provide certification or validation concerning | ||||||
6 | personal information; and
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7 | (C) receive compensation for acting in these | ||||||
8 | capacities.
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9 | (c) An authorization to provide personal information may be | ||||||
10 | either particular or general, provided it meets the terms of | ||||||
11 | any agreement with the individual involved and any rules | ||||||
12 | adopted by the Department.
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13 | Section 20. Assessment of fees; authority of the Department | ||||||
14 | regarding personal information protection companies; | ||||||
15 | implementation report.
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16 | (a) The Department of Financial and Professional | ||||||
17 | Regulation shall assess the following fees for a personal | ||||||
18 | information protection company:
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19 | (1) an initial registration fee of $1,000, consisting a | ||||||
20 | licensing fee of $500 and an investigation fee of $500;
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21 | (2) an annual renewal fee of $500; and
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22 | (3) a change in address fee of $100.
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23 | (b) The Department shall have the authority to bill a | ||||||
24 | personal information protection company for examination time | ||||||
25 | at its standard rate.
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1 | (c) In addition to other powers conferred under this Act, | ||||||
2 | the Department shall have the authority to review records, | ||||||
3 | conduct examinations, and require annual audits of a personal | ||||||
4 | information protection company.
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5 | (d) The Department may prescribe by rule the timing and | ||||||
6 | manner of reports by a personal information protection company | ||||||
7 | to the Department.
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8 | (e) The Department may adopt rules to govern other aspects | ||||||
9 | of the business of a personal information protection company, | ||||||
10 | including its protection and safeguarding of personal | ||||||
11 | information and its interaction with third parties with respect | ||||||
12 | to personal information it holds.
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13 | (f) Within 2 years after the effective date of this Act, | ||||||
14 | the Department shall submit to the Governor and General | ||||||
15 | Assembly a progress report that addresses:
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16 | (1) the implementation of the provisions concerning | ||||||
17 | the regulation of personal information protection | ||||||
18 | companies under this Act; and
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19 | (2) the status of any rulemaking pursuant to its | ||||||
20 | authority under this Section.
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21 | Section 25. Blockchain-based limited liability company.
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22 | (a) For the purposes of this Section, "company" means a | ||||||
23 | blockchain-based limited liability company.
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24 | (b) A limited liability company organized under the Limited | ||||||
25 | Liability Company Act for the purpose of operating a business |
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1 | that utilizes blockchain technology for a material portion of | ||||||
2 | its business activities may elect to be a blockchain-based | ||||||
3 | limited liability company (BBLLC) by:
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4 | (1) specifying in its articles of organization that it | ||||||
5 | elects to be such a company (BBLLC); and
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6 | (2) meeting the requirements of subsections (c) and | ||||||
7 | (d).
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8 | (c) Notwithstanding any provision of law to the contrary, a | ||||||
9 | blockchain-based limited liability company established under | ||||||
10 | this Section may provide for its governance, in whole or in | ||||||
11 | part, through blockchain technology. The operating agreement | ||||||
12 | for the company shall:
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13 | (1) provide a summary description of the mission or | ||||||
14 | purpose of the company;
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15 | (2) specify whether the decentralized consensus ledger | ||||||
16 | or database utilized or enabled by the company will be | ||||||
17 | fully decentralized or partially decentralized and whether | ||||||
18 | such ledger or database will be fully or partially public | ||||||
19 | or private, including the extent of participants' access to | ||||||
20 | information and read and write permissions with respect to | ||||||
21 | protocols;
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22 | (3) adopt voting procedures, which may include smart | ||||||
23 | contracts carried out on the blockchain technology, to | ||||||
24 | address:
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25 | (A) proposals from managers, members, or other | ||||||
26 | groups of participants in the company for upgrades or |
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1 | modifications to software systems or protocols, or | ||||||
2 | both;
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3 | (B) other proposed changes to the company | ||||||
4 | operating agreement; or
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5 | (C) any other matter of governance or activities | ||||||
6 | within the purpose of the company;
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7 | (4) adopt protocols to respond to system security | ||||||
8 | breaches or other unauthorized actions that affect the | ||||||
9 | integrity of the blockchain technology utilized by the | ||||||
10 | company;
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11 | (5) provide how a person becomes a member of the | ||||||
12 | company with an interest, which may be denominated in the | ||||||
13 | form of units, shares of capital stock, or other forms of | ||||||
14 | ownership or profit interests; and
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15 | (6) specify the rights and obligations of each group of | ||||||
16 | participants within the company, including which | ||||||
17 | participants shall be entitled to the rights and | ||||||
18 | obligations of members and managers.
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19 | (d) A member or manager of a blockchain-based limited | ||||||
20 | liability company may interact with the company in multiple | ||||||
21 | roles, including as a member, manager, developer, node, miner, | ||||||
22 | or other participant in the company, or as a trader and holder | ||||||
23 | of the currency in its own account and for the account of | ||||||
24 | others, provided such member or manager complies with any | ||||||
25 | applicable fiduciary duties. The activities of a member or | ||||||
26 | manager who interacts with the company through multiple roles |
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1 | are not deemed to take place in this State solely because the | ||||||
2 | company is organized in this State.
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3 | (e) A blockchain-based limited liability company may adopt | ||||||
4 | any reasonable algorithmic means for accomplishing the | ||||||
5 | consensus process for validating records, as well as | ||||||
6 | requirements, processes, and procedures for conducting | ||||||
7 | operations, or making organizational decisions on the | ||||||
8 | blockchain technology used by the company.
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9 | (f) A blockchain-based limited liability company may, in | ||||||
10 | accordance with any procedure specified under subsection (c), | ||||||
11 | modify the consensus process, requirements, processes, and | ||||||
12 | procedures, or substitute a new consensus process, | ||||||
13 | requirements, processes, or procedures that comply with the | ||||||
14 | requirements of law and the governance provisions of the | ||||||
15 | company.
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16 | (g) Except as expressly provided otherwise, this Section | ||||||
17 | does not exempt a blockchain-based limited liability company | ||||||
18 | from any other judicial, statutory, or regulatory provision of | ||||||
19 | Illinois law or federal law, including State and federal | ||||||
20 | securities laws. Except to the extent inconsistent with the | ||||||
21 | provisions of this Section, the provisions of the Limited | ||||||
22 | Liability Company Act govern.
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23 | Section 30. Public record blockchain study; report.
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24 | (a) On or before January 1, 2021, the Secretary of State | ||||||
25 | shall:
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1 | (1) evaluate blockchain technology for the systematic | ||||||
2 | and efficient management of public records;
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3 | (2) recommend legislation, including uniform laws, | ||||||
4 | necessary to support the possible use of blockchain | ||||||
5 | technology for the recording of land records and for other | ||||||
6 | public records; and
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7 | (3) submit its findings and recommendations to | ||||||
8 | Governor and the General Assembly.
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9 | (b) This Section is repealed January 1, 2022.
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10 | Section 35. Blockchain insurance and banking study.
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11 | (a) The Department of Financial and Professional | ||||||
12 | Regulation shall review the potential application of | ||||||
13 | blockchain technology to the provision of insurance and | ||||||
14 | banking, and consider areas for potential adoption and any | ||||||
15 | necessary regulatory changes in Illinois.
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16 | (b) On or before January 1, 2021, the Department shall | ||||||
17 | submit a report of its findings and recommendations to the | ||||||
18 | Governor and General Assembly.
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19 | (c) This Section is repealed January 1, 2022.
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20 | Section 40. Blockchain and financial technology promotion. | ||||||
21 | The Department of Commerce and Economic Opportunity shall | ||||||
22 | incorporate into one or more of its economic development | ||||||
23 | marketing and business support programs, events, and | ||||||
24 | activities the following topics:
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1 | (1) opportunities to promote blockchain technology and | ||||||
2 | financial technology-related economic development in the | ||||||
3 | private sector, including in the areas of banking, | ||||||
4 | insurance, retail and service businesses, and | ||||||
5 | cryptocurrency;
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6 | (2) legal and regulatory mechanisms that enable and | ||||||
7 | promote the adoption of blockchain technology and | ||||||
8 | financial technology in this State; and
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9 | (3) educational and workforce training opportunities | ||||||
10 | in blockchain technology, financial technology, and | ||||||
11 | related areas.
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