Delaware Considers Using Blockchain to Register new Companies and for Other Financial Services
Delaware is planning to use the Blockchain technology to help register companies and to trade shares in registered companies. This was announced by Delaware Governor Jack Markell in the recently concluded Consensus 2016 blockchain conference, where he told the attendees that his state is looking at the blockchain technology to simplify the process of registering companies and trading their shares.
Delaware, though the second smallest state of the United States, punches much above its weight when it comes to company registrations. 65% of all Fortune 500 companies from the US are registered in Delaware, as are more than half of all publicly traded companies in the United States. Therefore, any use of blockchain technology by Delaware would imply that a majority of US companies will be registered using blockchain.
The project is only in the planning stage for now, and it has not yet been decided whether the blockchain used will be the Bitcoin blockchain or not. Currently, the Delaware Governor’s office is working with the state bar association to flesh out how the blockchain technology can be incorporated into the state law. There are concerns about security because any new system needs to be studied at length to make sure that all the use cases are secure and free from any security issues. That is one of the reasons the state is moving slowly. However, the state is definitely moving towards a digital future where blockchain is used to store publicly available information.
The Governor mentioned at the conference that the state is thinking of creating a new type of corporate share called “distributed ledger share”. He said in his speech:
“Distributed ledger shares hold the promise of immediate clearance, immediate settlement, and bring about a dramatic increase in efficiency and speed and an increase in commercial transactions of which Delaware is known.”
The planned system is being made in cooperation with New York law firm Pillsbury Winthorp Shaw Pittman and startup Symbiont, which is focused on smart contracts. In the proposed system, company registration, share trading and shareholder communication would be done using a public ledger or blockchain.
In a public statement, Symbiont CEO Mark Smith said:
Autonomous record-keeping is an important use case for how smart contracts can deliver a more transparent, efficient and level playing field to the public and private sectors.î
Delaware is also proceeding with a pilot program involving Symbiont that will move state archival records onto a blockchain. In this program Symbiont is going to store archival records from the Delaware Public Archives on a blockchain.