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ARIZONA STATE SENATE
Fifty-Sixth Legislature, First Regular Session
AMENDED
disbursements; applicability; definition
Purpose
Adds distributed ledger technology transfers that meet prescribed requirements to the permissible forms of deposit into an escrow account.
Background
An escrow agent is any person engaged in the business of accepting escrows. Most real estate transactions use escrow accounts to hold funds relating to the transaction. At the time of closing, escrow agents disburse monies to various entities such as mortgage brokers, realtors and sellers. An escrow agent may only disburse money out of an escrow account if deposits are previously made that are at least equal to the disbursements and the deposits relate directly to the transaction for which the money is being disbursed. Deposits must be in a specified format, including: 1) wire transfers; 2) checks, money orders, cashier's checks, certified checks or teller's checks; and 3) credit transfers though the automated clearing house (A.R.S. § 6-801).
Blockchain technology is a type of distributed ledger technology that uses a distributed, decentralized, shared and replicated ledger, which may be public or private, permissioned or permissionless, or driven by tokenized crypto economics or tokenless. The data on the ledger is protected with cryptography, is immutable and auditable and provides an uncensored truth (A.R.S. § 44-7061).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Adds, to the permissible forms of deposit into an escrow account, distributed ledger technology transfers within or among a secure network of federally insured depository institutions where disbursements are recorded on a ledger and securely deposited in an escrow agent's depository account.
2. Requires a depository institution to settle distributed ledger technology transfers by using an established national clearing house network and prohibits transfers from being settled or backed by a digital currency of the U.S. Government.
3. Requires a distributed ledger technology transfer to be fully settled, irrevocably credited and transferred in U.S. dollars.
4. Requires a distributed ledger technology transfer, whether tokenized or tokenless, to maintain price stability by backing the value of the transferred digital asset to U.S. dollars that is redeemable on a one-to-one basis.
5. Defines distributed ledger technology as a decentralized, shared and immutable ledger, which must be tamper resistant and protected with cryptography to preserve the data and may be public or private, permissioned or permissionless, or driven by tokenized crypto economics or tokenless.
6. Makes technical changes.
7. Becomes effective on the general effective date.
Amendments Adopted by Committee of the Whole
1. Adds the requirement, for distributed technology transfers into an escrow account, that the transfer must occur within or among a secure network of federally insured depository institutions.
3. Redefines distributed ledger technology as tamper resistant, rather than tamperproof.
Senate Action
FIN 2/13/23 DP 4-3-0
Prepared by Senate Research
March 6, 2023
MG/ZS/sr