The state of Nevada has become the first U.S. state to implement a ban on blockchain taxes at the local level, in a move that has been celebrated by proponents of the technology and digital currencies.
The new law was approved by Governor Brian Sandoval this week, marking the culmination of a legislative process that began back in March.
As one of the first U.S. states to propose this type of regulation, attention will now turn to the law in practice, with other states, and indeed other countries globally striving to create their own regulatory frameworks for the technology.
The blockchain, which powers digital currencies like bitcoin and ethereum, is a technology that is thought to have the potential to unlock significant savings and efficiency gains across a range of industries.
Financial services is considered one of the most obvious beneficiaries of the technology, which could also help industries as diverse as agriculture, foreign aid, shipping, logistics, energy and even munitions.
At present, the technology and the cryptocurrencies that are derived from it are largely unregulated. However, with governments and lawmakers worldwide already live to the need for some form of legal certainty and clarification, it is expected that there will be a raft of similar measures slated over the coming years.
The Nevada approach has sought to safeguard the independence of the blockchain, one of the key strengths of the technology, which sets it apart from traditional remittance systems, for example.
By outlawing taxes being applied on the products of blockchain technology, state legislators have backed further research and development, in preference to what they say is the unhelpful possibility of taxes being levied on a technology many politicians are yet to fully understand.
The law also goes further in clarifying the legal position of blockchain information, including measures that would allow blockchain data to be submitted in court proceedings as evidence, where applicable.
According to the new act, blockchain records will now be deemed as effective as writing, in terms of assuring the authenticity and validity of information submitted.
“If a law requires a record to be in writing, submission of a blockchain which electronically contains the record satisfies the law.”