• Illinois Sen. Robert Peters has introduced the Digital Property Protection Act, which aims to mandate blockchain projects in the state to reverse executed on-chain transactions when ordered by a court.
• The bill would impose civil penalties of between $5,000 and $10,000 per day for noncompliance with court orders to roll back disputed transactions.
• The bill has been met with criticism from crypto industry players and observers who are concerned it could weaken the immutability of blockchains and lead to more attacks against decentralized projects.
Sen. Robert Peters Introduces Digital Property Protection Bill
Illinois Democratic party Sen. Robert J. Peters has introduced a crypto regulation bill that aims to immunize the state’s cryptocurrency investors from hacks and digital asset loss by sacrificing blockchain immutability. According to the digital property protection and law enforcement act, which was quietly introduced on Feb. 9, blockchain projects in the state will now be required to implement transaction rollback measures in their networks to enable the reversal of any transaction when ordered to carry out such unethical operations by a court, even without a private key of the asset.
Penalties for Noncompliance
The bill stipulates that blockchain projects who default will be liable to pay a civil penalty between $5,000 to $10,000 for each day they fail to comply with a court order to roll back a disputed transaction.
Criticism of SB1887
As expected, Sen. Peter’s bill is currently a subject of serious debate on crypto Twitter, with several industry players and observers, including lawyer Drew Hinkes outrightly condemning it.#Illinois Senate Bill SB1887 would drive out #blockchain #node operators, #miners, and #validators, waste judicial resources, and confuse existing law in a quixotic attempt to protect Illinois consumers.—Drew Hinkes (@propelforward) February 19th 2023
Crypto Industry Losses Due To Hacks
Bad actors often capitalize on the fact that blockchain transactions are immutable by defaultto orchestrate attacks on various decentralized projects and steal millions of dollars. In 2022 alone,the crypto industry lost over $3.7 billionto hackers. Despite this introducing bills tomake blockchain databases ‘manually editable’may do more harm than good in the long runin terms of protecting cryptocurrency investorsfrom theft or frauds
While Peters’ intentions might have been noblein wantingto protect innocent investors from digital asset losses due towrongful activitiesby bad actorsa closer examinationof his proposed legislation revealsits impracticalityand potential consequenceson existing blockchainsystems .