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L awmaker, the governor and business men of Vermont hope that a new law will make Vermont a benchmark for blockchain technology and companies that want to use it
The law, which came into force in July, creates a new type of business entity, "a limited liability company based in blockchain", to entrepreneurs and companies that want to prioritize and create customized governance structures on misu for technology.
Gov. Phil Scott and the lawmakers who worked to pass the blockchain law in the last legislative session gathered in the South Burlington town hall on Wednesday afternoon to promote legislation during a signing ceremony.
Scott said the law could help create new jobs and stimulate economic innovation to encourage companies to experiment with the rapidly growing technology that has already seen applications in the retail, real estate and agricultural sectors, for to name a few.
"This will help consolidate Vermont's position as a leader of innovation and demonstrate our willingness to try new ideas" Scott told reporters on Tuesday
Blockchain is better known as the technology behind cryptocurrencies as Bitcoin. But more generally it is a decentralized system of record keeping, one that is increasingly used by companies all over the world.
Through the system, transactions and data are recorded in a chain of "blocks" through a network of computers and many computers distributed to verify that the data to be recorded are unchanged.
The distributed "register" of transactions is often public and protected using cryptography. Because of its decentralized nature, experts say that information on these registers is difficult – if not impossible – to modify or modify, unlike records stored in a single database.
Scott and lawmakers have compared the new blockchain law to the many laws that the state has approved to promote captive insurance industry.
Captive insurers, also known as "prisoners", are small insurance companies set up and owned by large corporations. "Starting this year, more than 1,100 of them are based in Vermont.
Leading the way to companies using blockchains to install in Vermont, politicians hope the state can see success on a scale similar to the prisoner industry.  "I think it has the potential to be huge for the state if we allow these business entities to integrate here, while not They are really possible in other states, "said Jill Rickard, Director of Policy at the Vermont Finance Department. "We are the first engine in this sector and have the possibility of being a huge innovation."
This year's blockchain law is not the first in Vermont.
In 2016, Vermont passed a law that made eligible blockchain records in court and a municipality has already made use of the technology.
In January, Propy Inc., a blockbuster startup based in Palo Alto, Calif., Worked with the South Burlington City office on a pilot program to register property transactions with blockchain.
This year, South Burlington became the first local government in the country to use the blockchain to register a title deed.
In addition to allowing companies to incorporate themselves as blockchain-based LLCs, the law was enacted this year instructs the Financial Regulatory Department to review the possible applications of the blockchain in the insurance and banking sectors and to consider other regulatory changes that the state should make in relation to technology.
The law also creates another new type of business entity called a personal information protection company. The goal of these companies is to protect consumer data, rather than sell or share them, as do many large websites and social media companies.
"In short, the structure [personal information protection company] offers opportunities for companies seeking to come down from the consumer side regarding data privacy," said David Thelander, a lawyer at Gravel & Law Firm. Shea, who helped design the blockchain legislation.
Thelander said that since the new law came into force, his law firm registered two companies such as LLC based on blockchain and received interest from many others.
Other states, including Wyoming and Arizona, have recently passed laws to carve out a legal framework for blockchain technology.
"The race is definitely under way," said Thelander. "And we want to maintain Vermont's first reputation as a conservative and responsible environment for new technologies, embracing and creating a positive ecosystem for the development of new technologies such as blockchain."