Nevada Legislature to play key role in advancing blockchain industry

The passage of Senate Bill 398 during the 2017 Legislative Session proved to be a precursor of many blockchain-related bills up before the current session.

SB 398 allowed blockchain-based electronic records to be legally recognized, and Washoe County was quick to act by issuing blockchain-based marriage certificates beginning last year.

As the blockchain sector continues to grow, its impacts on the private and public sectors are still being defined, and the handful of bills in front of the current legislative session that address blockchain in various ways are an additional bellwether of blockchain's growing importance in the Silver State.

Assemblywoman Jill Tolles, R-Reno, a member of the Nevada Tech Caucus, says blockchain represents an incredible opportunity for Northern Nevada.

“It brings a whole new industry and helps us continue to build and improve on workforce development,” Tolles says. “We have seen some incredible change over the last several years, and part of that is new technologies that bring us new and innovative jobs. This is also very helpful with vocational education because it gives us an opportunity to help train the next generation of workers.

“As to the technology itself, it will have the effect of cutting fees for private transactions as well as speeding those up. For example, a current title transfer can take anywhere from 7-10 business days, but with blockchain, we can speed that up to a matter of minutes.”

Capitalizing on a good start

Tyson Falk, policy analyst for McDonald Carano's government affairs and advocacy group, estimates that more than $250 million has been invested in blockchain technology and blockchain-related businesses in Nevada over the past few years.

“That is remarkable considering there was basically nothing before that,” Falk says. “There is a lot of discussion around the legislature, and the passage of SB 398 last session was a very light touch and a first step. It was more symbolic than anything but it put out a really bright signal to the blockchain ecosystem that Nevada is taking it seriously and we are looking to be a place that's friendly to companies that are in this business.”

Nevada has the natural resources that lend itself to this type of industry, such as cheap power and secure data storage facilities. The bills working their way through the Legislature send a signal to blockchain companies that the state is taking the technology seriously, Falk says. Lawmakers are develop cutting-edge regulations without overburdening businesses with red tape.

“It's a hot topic,” Falk says. “One step is not enough, and we will keep moving forward. As the industry becomes more mature you will start to see more businesses that have niche needs and some tweaking of the laws that we did last session.”

New legislation in Carson City

The bills in front of the 2019 Nevada Legislature that address blockchain in various ways include:

SB 161: this bill establishes temporary regulatory exemptions so companies that are just starting out can determine market viability for their products. Think initial cyrptocurrency coins or tokens, such as the proposed tokens that will allow customers to purchase marijuana at dispensaries rather than having to always use cash.

SB 162: an initial draft of this bill would require all state agencies to accept a blockchain record as replacement for regular records. It has been amended to say that an agency may accept a blockchain record. It's a modernization bill, Falk says. Innovative government agencies that are modernized and have the flexibility to adopt blockchain records, such as Washoe County, can adopt blockchain records rather than having documents certified and notarized.

SB 163: Nevada is No. 2 in the country behind Delaware for business regulatory filings, and SB 163 would allow corporations registered in Nevada to use a blockchain to maintain all their business records and corporate documentation required by the Secretary of State.

SB 164: Clarifies that virtual currencies are an intangible product and not subject to taxation under current code.

Overcoming Nevada's legislative disadvantage

Tolles says that SB 163 could lead to an increase in business filings and tech startup companies in the state. As of this story's writing in mid-May, the bill had passed out of the Assembly Judiciary Committee.

Falk says blockchain-based companies that are considering registering in either Delaware or Nevada could pick the Silver State based upon the fact they would not have to convert business filings to traditional documentation methods.

“It's a signal to businesses, and it also helps us maintain our competitive advantage over other states,” he says.

Collectively, these bills are helping blockchain technology permeate business and record-keeping practices in Nevada. The passage of SB 398 in 2017 opened the floodgates — Falk says Nevada became an overnight leaders in searches for states passing blockchain laws.

However, Nevada only has a legislative session every two years, and blockchain is maturing at light speed. In the interim, other states caught up.

Wyoming, for instance, passed 13 pieces of new legislation that directly address blockchain technology and related business. The Cowboy State is widely recognized as the national leader in blockchain law.

“Because they meet every year, they were able to pass new legislation and leapfrog us,” Falk says. “We have to be bold if we want to remain a leader. This legislation, each bill does one thing, but collectively these bills show the blockchain ecosystem that we are looking for ways to innovate and that we can help companies to look locate here.”