State legislatures are increasingly passing legislation recognizing blockchain technology and paving the way for the implementation of new technologies. Washington is no exception and passed Senate Bill 5638 with bipartisan support during the 2018-19 legislative session.

SB 5638 updates the Washington Electronic Authentication Act to include definitions of "distributed ledger technology" and "blockchain" as well as provides legal recognition of electronic signatures and encourages "the development of distributed ledger technology." The primary sponsor of SB 5638, Senator Sharon Brown (R-Kennewick), shared her thoughts on why it was important to pass this bill, the implications for Washington, and potential future legislative action.

Senator Brown believes it is important to address this technology because “[m]any states currently recognize the validity of distributed ledger technology and Washington needs to be among them as a leader in this space. We don’t want to be a period at the end of the sentence–we need to start the conversation. It makes sense that companies will relocate to states that put them in a position to succeed. We develop this technology here and we want to keep these companies here. I sponsored this bill because I wanted to ensure that Washington State will continue to be a leader in distributed ledger technology.” 

"I sponsored this bill because I wanted to ensure that Washington State will continue to be a leader in distributed ledger technology.” - Sen. Brown

The definitions for distributed ledger technology, blockchain, and the recognition of electronic signatures is a step towards creating opportunities for businesses that drive new initiatives. Senator Brown notes that “[t]he impacts of this new law will be huge for Washington, both now and moving forward. By passing my bill this session, Washington sent a message to innovators that we welcome those who want to utilize this technology and, as a state, we will not set up unnecessary regulatory burdens that could impede their progress. Ultimately, this freedom for innovative minds to experiment and create will lead to Washington continuing to be a magnet for inventors, entrepreneurs and visionaries in a number of different fields – from the financial industries to data management to researchers. The state should not be in the business of picking winners and losers, but we should create an environment that is welcoming and establishes an even playing field for all.”

SB 5638 defines the following:

Distributed ledger technology: "Distributed ledger technology means any distributed ledger protocol and supporting infrastructure, including blockchain, using a distributed, decentralized, shared, and replicated ledger."

Blockchain: "Blockchain means a cryptographically secured, chronological, and decentralized consensus ledger or consensus database maintained via Internet, peer-to-peer network, or other similar interaction."

Electronic records and signatures: "An electronic record or electronic signature may not be denied legal effect, validity, or enforceability solely because it is generated, communicated, received, or stored using distributed ledger technology."

“Ultimately, this freedom for innovative minds to experiment and create will lead to Washington continuing to be a magnet for inventors, entrepreneurs and visionaries in a number of different fields – from the financial industries to data management to researchers.” – Sen. Brown

Asked about future challenges the Legislature may face regarding this technology and continuing advancements, Brown responded, “Anytime the Legislature tries to address any technology, there will always be unforeseen issues that will have to be addressed later. I am sure that will be the case with distributed ledger technology as well. As different industries begin to utilize this technology more, and we begin to see what challenges arise from its practical applications, we will have to work with those industries to address their concerns. I, for one, intend to continue to monitor the use of distributed ledger technology and its impact on the state and specific sectors. As issues are identified, I will work with all of those affected to reach solutions and offer new legislation when needed.”