Vermont State Enacts Bill to Allow Blockchain Firms

Vermont State Enacts Bill to Allow Blockchain Firms

Vermont recently enacted a bill paving the way for the rise of blockchain-oriented limited liability companies in the state, public records show. 

LegiScan reveled Vermont governor Phil Scott signed an act relating to blockchain business development. 

The provision pertaining to taxation has been removed. But certain sections outline those about the limited liability firms and mandates for a Fintech Summit that should gather all stakeholders to tackle how the state can promote the wider use of blockchain. 

“A digital currency limited liability company shall remit to the State in the form of its digital currency a transaction tax equivalent to $0.01, at the then current exchange rate for the currency with the U.S. dollar, per transaction,” the law said. 

Applicants must “specify whether the decentralized consensus ledger or database utilized or enabled by the BBLLC will be fully decentralized or partially decentralized and whether such ledger or database will be fully or partially public or private, including the extent of participants’ access to information and read and write permissions with respect to protocols,” the newly minted law noted. 

A digital currency limited liability company should adopt mechanisms for innovations and changes in the overall system, use procedures for security breaches or other prohibited actions affecting the system, indicate the manner of participation in the system as well as the extent of involvement, disclose responsibilities of core developers, and adopt guidelines pertaining to hard fork. 

This also calls for a study into the technology’s utilization in insurance and banking which should be done not later than January 15 next year, as well as how state officials can clear the hurdles for creating blockchain entities. 

“The Department of Financial Regulation shall review the potential application of blockchain technology to the provision of insurance and banking and consider areas for potential adoption and any necessary regulatory changes in Vermont,” it added. 

“This bill proposes to implement strategies relating to blockchain, cryptocurrency, and financial technology in order to: promote regulatory efficiency; enable business organizational and governance structures that may expand opportunities in financial technology; and promote education and adoption of financial technology in the public and private sectors,” the text states. 

Earlier reports said Vermont legislators were weighing the promulgation of the measure that referred to virtual currency limited liability entities and that such companies would pay the corresponding taxes in cryptocurrency. 

Blockchain-oriented busineses are described as limited liability firms organized to operate a business that uses this technology for a portion of its business activities. 

The bill, introduced by Senator Alison Clarkson on January 3, pushes for the creation of a new regulatory framework for using the blockchain in businesses. 

The new legislation comes after Vermont backed a bill requiring a due diligence on how blockchain can affect the state’s job market and capability to gain profit. 

The bill, signed by Governor Scott last November, shall include findings and recommendations on the potential opportunities and perils when it comes to developing financial technologies. 

Blockchain can present more opportunities for the state, based on the text attached by the bill’s authors. 

“The existing Vermont legislation on blockchain technology and other aspects of e-finance have given Vermont the potential for leadership in this new era of innovation as well, with the possibility of expanded economic activity in the financial technology sector that would provide opportunities for employment, tax revenues, and other benefits,” they had said.

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