Earlier this month, SB 220, the Ohio law that amended Ohio’s version of the Uniform Electronic Transaction Act (UETA) became effective. The amendment to the UETA confirms that records, contracts, and signatures that are secured through blockchain technology, i.e., a technology that creates an unalterable electronic ledger, will be considered an electronic recording holding the same legal legitimacy as its printed counterpart.[1] As a result, records, contracts, and electronic signatures secured through blockchain technology cannot be denied legal effect or enforceability solely because it is in electronic form.[2]

By expressly stating that the UETA applies to electronic records and signatures secured through blockchain technology, the Ohio legislature has reaffirmed that the law is adapting to modern trends of efficient Internet-based transacting. This change not only reduces paper waste, but decreases burdens associated with paper transacting, such as printing, scanning, mailing, and filing.

Nevertheless, lenders should be particularly cautions when adopting electronic records transactional systems. The UETA does not apply to certain transactions governed by Ohio’s version of the Uniform Commercial Code (UCC), including the issuance of promissory notes. The UETA does however apply to “transferrable records,” or any electronic record that would be considered a note under the …