New California Law on Blockchain Technology
California recently passed Senate Bill No. 838 (the “Bill”), which will allow private and social purpose corporations incorporated in-state to use blockchain technology to issue stock and keep corporate records via blockchain technology. Blockchain is the technology behind cryptocurrencies like Bitcoin and Ethereum that have garnered recent excitement from investors and consternation from regulators. The bill defines “blockchain technology” as a “mathematically secured, chronological, and decentralized consensus ledger or database.”
One noteworthy limitation is that the Bill only applies to corporations that do not already have outstanding securities listed on specified exchanges, like the New York Stock Exchange or the NASDAQ Global Market (among others). This will prevent most large corporations from utilizing the Bill and therefore the Bill will serve as a test run for blockchain technology in the corporate sphere. In the interim, Faruqi and Faruqi attorneys will continue to monitor this space to ensure that investors remain protected.
About Faruqi & Faruqi, LLP
Faruqi & Faruqi focuses on complex civil litigation, including securities, shareholder derivative actions, merger litigation, antitrust, employment law, wage and hour, and consumer class actions. The firm is headquartered in New York, and maintains offices in Delaware, Pennsylvania, California, and Georgia.
Since its founding in 1995, Faruqi & Faruqi has served as lead or co-lead counsel in numerous high-profile cases which ultimately provided significant recoveries to investors, consumers and employees.
To contact the author of this blog or the offices of Faruqi & Faruqi, please call us at (877) 476-7797.
About Dillon Hagius
Dillon Hagius’s practice is focused on securities litigation. Dillon is an associate in the firm’s New York office.