The state of California, by some measures among the largest economies in the world, is moving to recognize stock ownership via blockchain technology.
Companies would be allowed to store data, including information about stockholders, on a blockchain, according to California Senate Bill 838.
If approved by committee the full Senate would vote on the measure. The bill was introduced by Senator Robert Hertzberg, a Democrat representing the San Fernando Valley.
Senator Hertzberg first introduced Bill 838 in the state legislature in January to little fanfare. However, public filings show that the measure has picked up attention in recent days.
The State Senate’s Banking and Financial Institutions Committee referred the measure to the Judiciary Committee on April 18 after advancing it with a “do pass” recommendation.
The most recent version of the bill would permit “records administered by or on behalf of the corporation in which the names of all of the corporation’s stockholders of record, the address and number of shares registered in the name of each of those stockholders, and all issuances and transfers of stock of the corporation to be recorded and kept on or by means of blockchain technology or one or more distributed electronic networks.”
In a statement, Hertzberg explained that his reasoning behind the bill is to help his state keep up with evolving financial technology.
“The world around us is changing, and government must adapt with these rapidly evolving times,” he said.
“California needs to continue our legacy of taking on new and developing technologies, especially ones like blockchain, which is being embraced worldwide and presents a strong level of security that is resistant to hacking.”
The state would join Delaware and Wyoming in allowing companies to use the tech for administrative purposes, if the bill is passed.
California’s proposed law includes several stipulations. One of them states that the data must be capable of being “converted into clearly legible paper within a reasonable period of time.”
A second stipulation states that the records can be used to store information stock certificates already contain.
Furthermore, the data would have to be “recorded and kept on or by means of blockchain technology or one or more distributed electronic networks,” according to the legislation.
SB 838 will be presented to the Senate Judiciary Committee in May.