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Iowa may recognize ‘smart contracts’ for cryptocurrency

DES MOINES — Iowa lawmakers are close to giving legal recognition in Iowa to the so-called “smart contracts” used for digital currency, like Bitcoin. Representative Jeff Shipley of Fairfield said a Des Moines-based software company and some Iowa real estate agents are interested in conducting financial transactions using these computer-generated agreements.

“Iowans who are on the cutting edge of, I guess, cryptofinance or the emerging technological implications of this,” Shipley said. “…This bill ensures Iowans have access to world-leading contracting technologies and making sure that Iowa Code reflects the reality of 2021.”

Representative Liz Bennett of Cedar Rapids said other states have passed similar legislation about cryptocurrency or virtual money that is being used to buy things.

“The way a smart contract works is basically like a soda machine,” Bennett said. “You put your coin in — or your Bitcoin. It drops down. It hits a lever. It causes other things to happen within the machine and boop! The arm goes up and gives you your Dr. Pepper. And what’s really important to note is that without any of those mechanical conditions being fulfilled, we’re not able to reach the end of the contract or the point where you get your Dr. Pepper.”

Representative Steven Hansen of Sioux City said it is “cutting edge stuff,” — but he noted there are concerns about fraud and tax avoidance.

“There’s going to come a time when the state treasurer and others are going to raise the red flag on companies like Bitcoin,” Hansen said, “and we’re going to have to step in and start regulating them more aggressively.”

The House had a 15 minute debate of the concepts behind the bill before passing it unanimously. Earlier this month, the Senate approved the proposal without any debate. Senators will have to accept a minor change the House made in the bill before it can be sent to the governor.

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