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7 LONG TITLE
8 General Description:
9 This bill creates a judicial cause of action and an agency action for the reversal of
10 certain transactions occurring on a blockchain.
11 Highlighted Provisions:
12 This bill:
13 ▸ defines terms;
14 ▸ creates a cause of action for fraudulent transactions that have been committed on a
15 blockchain that has specific technology implemented to allow reversal of
16 transactions;
17 ▸ creates an administrative agency action for fraudulent transactions that have been
18 committed on a blockchain that has specific technology implemented to allow
19 reversal of transactions; and
20 ▸ authorizes the Attorney General's Office to operate a node on a blockchain that
21 allows the Attorney General's Office to reverse a fraudulent transaction on a
22 blockchain.
23 Money Appropriated in this Bill:
24 None
25 Other Special Clauses:
26 None
27 Utah Code Sections Affected:
28 ENACTS:
29 13-63-101, Utah Code Annotated 1953
30 13-63-201, Utah Code Annotated 1953
31 13-63-202, Utah Code Annotated 1953
32 67-5-39, Utah Code Annotated 1953
33 78B-3-112, Utah Code Annotated 1953
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35 Be it enacted by the Legislature of the state of Utah:
36 Section 1. Section 13-63-101 is enacted to read:
37 13-63-101.
38 As used in this chapter:
39 (1) "Blockchain" means the same as that term is defined in Section 78B-3-112.
40 (2) "Claimant" means a person that brings a claim under this chapter.
41 (3) "Division" means the Division of Consumer Protection created in Section 13-2-1.
42 (4) "Fraudulent transaction" means the same as that term is defined in Section
43 78B-3-112.
44 (5) "Reversible blockchain" means the same as that term is defined in Section
45 78B-3-112.
46 (6) "Sheriff node" means the same as that term is defined in Section 78B-3-112.
47 (7) "Transaction" means the same as that term is defined in Section 78B-3-112.
48 Section 2. Section 13-63-201 is enacted to read:
49 13-63-201. Prohibited practices -- Claim for fraudulent transaction.
50 (1) A claimant may bring a claim to the division for a fraudulent transaction that occurs
51 on a reversible blockchain.
52 (2) To bring a claim for a fraudulent transaction under this section, a claimant must
53 show that:
54 (a) the transaction occurred on a reversible blockchain;
55 (b) the transaction was a fraudulent transaction;
56 (c) the claimant entered into the transaction with reasonable reliance on another
57 person's:
58 (i) fraudulent representation;
59 (ii) omission of material fact; or
60 (iii) use of a false or stolen identity; and
61 (d) the claimant was damaged as a result of such reliance.
62 Section 3. Section 13-63-202 is enacted to read:
63 13-63-202. Enforcement.
64 (1) After the receipt of a claim brought under this chapter, the division shall conduct an
65 adjudicative proceeding, in accordance with Title 63G, Chapter 4, Administrative Procedures
66 Act, to enforce the provisions of this chapter.
67 (2) The division shall make rules, in accordance with Title 63G, Chapter 3, Utah
68 Administrative Rulemaking Act, to carry out the adjudicative proceeding described in
69 Subsection (1).
70 (3) The exclusive remedy for a claim brought under this chapter is the reversal of the
71 fraudulent transaction by the Office of the Attorney General.
72 (4) Upon a finding of a fraudulent transaction after an adjudicative proceeding
73 conducted in accordance with Subsection (1), the department shall issue an order to the Office
74 of the Attorney General to reverse the fraudulent transaction by operation of the sheriff node on
75 a reversible blockchain.
76 (5) The remedy provided in this chapter is in addition to all other causes of actions,
77 remedies, duties, prohibitions, and penalties provided by law.
78 Section 4. Section 67-5-39 is enacted to read:
79 67-5-39. Sheriff Node Program.
80 (1) As used in this section:
81 (a) "Blockchain" means the same as that term is defined in Section 78B-3-112.
82 (b) "Division" means the Division of Consumer Protection created in Section 13-2-1.
83 (c) "Reversible blockchain" means the same as that term is defined in Section
84 78B-3-112.
85 (d) "Sheriff node" means the same as that term is defined in Section 78B-3-112.
86 (e) "Transaction" means the same as that term is defined in Section 78B-3-112.
87 (2) (a) There is created a program known as the "Sheriff Node Program" within the
88 Office of the Attorney General to operate a sheriff node on a reversible blockchain.
89 (b) The attorney general shall administer the program with funds available for this
90 purpose.
91 (3) The attorney general shall operate the program only to reverse a transaction on a
92 reversible blockchain upon receipt of:
93 (a) a court order issued under Section 78B-3-112;
94 (b) an award issued in a valid and binding arbitration; or
95 (c) an administrative order from the division, issued in accordance with Section
96 13-63-202.
97 (4) The attorney general may make rules in accordance with Title 63G, Chapter 3, Utah
98 Administrative Rulemaking Act, to carry out the program.
99 Section 5. Section 78B-3-112 is enacted to read:
100 78B-3-112. Action for fraudulent transaction on a reversible blockchain.
101 (1) As used in this section:
102 (a) "Blockchain" means a digital ledger of transactions:
103 (i) that is distributed across multiple nodes;
104 (ii) that is mathematically verified; and
105 (iii) where the validity of transactions is maintained by consensus of nodes.
106 (b) "Blockchain administrator" means a person that is responsible for maintaining and
107 overseeing a blockchain.
108 (c) "Division" means the Division of Consumer Protection created in Section 13-2-1.
109 (d) "Fraudulent transaction" means a transaction that a person undertakes with the
110 intent to deceive another person, including a transaction that involves:
111 (i) false representation;
112 (ii) omissions of material fact; or
113 (iii) the use of a false or stolen identity.
114 (e) "Node" means a computer connected to a blockchain.
115 (f) "Proof of identity" means government-issued identification that contains the
116 following information:
117 (i) a person's name;
118 (ii) an individual's date of birth;
119 (iii) a person's address, which is:
120 (A) for an individual, a residential or business street address;
121 (B) for an individual who does not have a residential or business street address, a Post
122 Office box number or the residential or business street address of next of kin or of another
123 contact individual; or
124 (C) for a person other than an individual, the principal place of business; and
125 (iv) an identification number, which is:
126 (A) for a United States person, a taxpayer identification number; or
127 (B) for a non-United States person, a taxpayer identification number, passport number
128 and country of issuance, alien identification card number, or the number and country of
129 issuance of any other government-issued document evidencing nationality or residence and
130 bearing a photograph or similar safeguard.
131 (g) "Reversible blockchain" means a blockchain that:
132 (i) requires the blockchain's users to:
133 (A) provide proof of identity to the blockchain administrator;
134 (B) acknowledge and agree that all transactions occurring on the blockchain are subject
135 to reversal by a sheriff node; and
136 (C) agree to be subject to jurisdiction of a court in Utah; and
137 (ii) requires the blockchain administrator to:
138 (A) verify a user's identity by checking the user's proof of identity against
139 government-issued identification databases; and
140 (B) maintain records of a user's proof of identity for a minimum of five years.
141 (h) "Sheriff node" means a computer that:
142 (i) is connected to a reversible blockchain;
143 (ii) is administered by the Office of the Attorney General; and
144 (iii) allows the Office of the Attorney General to reverse a fraudulent transaction upon
145 receipt of:
146 (A) a court order issued under this section;
147 (B) an award issued in a valid and binding arbitration; or
148 (C) an administrative order from the division, issued in accordance with Section
149 13-63-202.
150 (i) "Transaction" means the transfer of digital assets, rights, privileges, or obligations
151 from one person to another that occurs on a blockchain.
152 (j) (i) "User" means a person that interacts with a blockchain.
153 (ii) "User" includes a person that is:
154 (A) sending or receiving transactions;
155 (B) accessing data stored on the blockchain;
156 (C) participating in consensus or governance mechanisms;
157 (D) running a node on the blockchain;
158 (E) interacting with smart contracts or decentralized applications; or
159 (F) holding or managing digital assets.
160 (2) A plaintiff may bring a cause of action against a person to reverse a transaction on a
161 blockchain if:
162 (a) the transaction occurred on a reversible blockchain;
163 (b) the transaction was a fraudulent transaction;
164 (c) the plaintiff entered into the transaction with reasonable reliance on the person's:
165 (i) fraudulent representation;
166 (ii) omission of material fact; or
167 (iii) use of a false or stolen identity; and
168 (d) the plaintiff was injured as a result of that reasonable reliance.
169 (3) Upon a finding of a fraudulent transaction, the court shall issue an order to the
170 Office of the Attorney General to reverse the fraudulent transaction in accordance with Section
171 67-5-39.