The state of Delaware has passed amendments to state law that make explicit the right to trade stocks on a blockchain, according to multiple sources familiar with the matter.
Crammed in at the last minute before the state House went into recess, the measures were part of a broader series of amendments that legally recognized any number of records being stored on a blockchain.
While details regarding the vote are still emerging, the director of the Global Delaware state initiative, Andrea Tinianow, described the news in an email to CoinDesk:
“Now, you have something to [write] about!!! History being made.”
One source indicated that the bill passed with near unanimity, with a single vote against. The vote is widely considered to be the final obstacle to state adoption, following the passage of the bill in the Senate earlier this month.
Chair of the corporate law section of the Delaware bar association, Matthew O’Toole, told CoinDesk he expects the state’s governor, John Carney, to sign the bill into law by the end of July, with an effective date of 1st August.
In an email to CoinDesk, O’Toole said the vote “keeps Delaware at the forefront of corporate law and in the lead in terms of enabling the use of ‘distributed ledger shares’.”
“We look forward to helping Delaware corporations enjoy the benefits of this innovative new amalgamation of law and technology.”
The amendments to legislature in the state of Delaware, where there are more companies incorporated than there are residents, could have far flung implications to the way companies are listed in the future.
Developed under the close guidance of blockchain lawyer Marco Santori of Cooley LLP and Caitlin Long of blockchain startup Symbiont, the bill is expected to pave the way for potentially large-scale issuance of stock on a blockchain.
By trading stock on a blockchain or similar distributed ledgers, middlemen who profit along the several steps that currently exist between buyers and sellers of stocks could be cut out of the process, resulting in significantly faster settlement times.
The bill was introduced last year by the previous governor, Jack Markell, following requests made by multiple companies for the legislation – which was already lenient to blockchain stocks – to make explicit the legality of such issuances, according to CoinDesk sources.
“This is big for Delaware,” Symbiont’s Long told CoinDesk, further explaining the potential benefits of the amendments:
“The bill solidifies its leadership in corporate registry services by enabling end-to-end digitization for administration of securities. Banks are eager to use the automated filing procedures it enables for liens on collateral.”
Delaware Legislative Hall image via Shutterstock