Ohio is hoping to redefine itself as being at the vanguard of 21st century technology. But for the past few weeks, there was a problem: 19th century-style politics causing chaos in the state capitol. Now with a new House Speaker, there’s hope the Buckeye State will return to pushing a blockchain-welcoming agenda.
Three weeks ago, State Senator Matt Dolan (R-Chagrin Falls) introduced SB 300, otherwise known as “Revise Electronic Transactions Act/blockchain/smart contracts,” to the Ohio state senate. The bill has a very simple but important task: update the state’s electronic signature laws to include letting smart contracts on blockchains serve as legally binding contracts.
Doing so would put Ohio up there with Arizona as one of the most blockchain-friendly states to do business in the United States.
“We can’t be behind,” said Sen. Dolan to Modern Consensus just after the bill was introduced. “We can’t wait for 40 other states to do it… By that time, any economic generation from being the first to embrace use of this technology is gone.”
However, the state’s lower chamber was barely functioning when the bill was introduced. Back in April, Speaker of the House Cliff Rosenberger resigned after it was reported he was under FBI investigation for taking gifts from businesses to pay for trips and housing. The Ohio House of Representatives spent several weeks without a leader and the legislature’s business ground to a halt.
“The atmosphere in Columbus is one of confusion and uncertainty,” Dolan said at the time. “It’s cast a pall over all of us, that we’re dysfunctional.”
That pall was lifted somewhat last week when Ryan Smith was selected as speaker after 11 ballots. With that out of the way, Ohio can get back to doing business. Nonetheless, it may be a while before SB 300 gets to a vote. It was assigned to the Insurance and Financial Institutions Committee.
“Now that the House has elected a Speaker, we expect the backlog of bills to clear to some extent,” said Alex Thomas, assistant director of Roetzel Consulting Solutions and a member of that legal firm’s government relations team. “However, Dolan’s bill hasn’t had a hearing in the Ohio senate yet, so it will be some time before it gets over to the House for hearings.”
“I would hope that we are able to move this legislation this calendar year,” said Dolan.
For Ohio, this piece of legislation is more than just about updating electronic signatures on contracts, according to Falon Donohue, CEO of VentureOhio, a nonprofit firm dedicated to spurring startups in the state.
“What Sen. Dolan’s message is and what our message is as well is that Ohio is open for business,” Donohue said.
The state’s share of venture capital funding is low compared to Silicon Valley or Silicon Alley. For example, in 2016, Ohio took in $255 million in VC funding, or about 0.4 percent of the nation’s total, according to data compiled by PricewaterhouseCoopers and CB Insights.
Organizations like Donohue’s are trying to raise Ohio’s profile and hope that by embracing blockchain and crypto before most other states, tech companies and venture funding will follow.
“JobsOhio, the Columbus Chamber [of Commerce] and a few others hosted a panel [four weeks ago] on this topic and what are ways that the public and private sector can get work together to encourage the formation of blockchain companies and attract more blockchain and cryptocurrency companies here,” said Donohue. “I love what they’re doing in Arizona with the ‘sandbox’ and it would be great to see something like that form in Ohio as well.”
One company that would benefit from Dolan’s legislation is SafeChain, a Columbus-based software company applying blockchain technology to the real estate closing process. It launched one product, SafeWire, that uses blockchain technology to verify the identity of parties for when funds are wired in a closing.
However, SafeChain is looking to use blockchain tech for some of the most crucial parts of property transactions, such as the conveyance of title. They’re starting to build out that infrastructure from their home turf, Franklin County, the state’s most populous and where the capital happens to be.
SafeWire has been building a database of distressed properties sold by the county auditor. Those homes usually have their titles cleaned up, making it easier to put into a ledger without liens chained to it.
But if a transaction takes place, documents must still be printed out, signed, and then taken physically to the county offices in order for it to be recorded.
Allowing it to be done using smart contracts—as SB 300 does—would revolutionize the real estate business. Transfers of property could occur with the buyer and seller merely entering their encrypted keys, with the sale and recording of it occurring simultaneously on the ledger.
“We don’t think it should be two separate process,” SafeChain CEO Tony Franco told Modern Consensus. “We don’t think there should be a race to the courthouses and I think that could be dramatically improved.”
“It requires a legislative change,” Franco added. “This is why the bill is so interesting.”
He is optimistic that the statehouse will get SB 300 passed, though he anticipates it to occur sometime in 2019. “In Ohio, we have a great public-private partnership,” he said.
Donohue echoes Franco’s view. “Ohio is a very collaborative state that has a great relationship between the private and public sector,” she said.