Digital Signatures are now officially recognized in four states as the
legal equivalent of handwritten signatures for the purposes of online
transactions. The new laws allows unique electronic codes to serve as the
legal equivalent to signatures on paper, making it possible to enter into
legally binding contracts over the Internet. The four states - Texas,
Washington, Utah, and Minnesota - have all passed legislation to official
licensed Certificate Authorities.
To do this, the states provide licenses to Certificate Authorities to
issue and monitor Digital Signatures. As of yet VeriSign, Charles Schwab, and E*Trade Group have
been the only Certificate Authorities to pass the audit procedures and
announce intention to provide the legally recognized digital signatures.
This is the first time that state law has backed digital certificate
technology, and this legislation is expected to encourage even more
widespread legal recognition of digital signatures as the online replacement
for handwritten signatures.
The California law, which takes effect January 1, allows brokerage firms
to open accounts online without waiting for signed paper contracts by mail,
and gives legal status to digitally signed documents for transactions
between California-based brokerages and anyone in the United States.
A representative from Schwab stated that when digital signatures and
encryption become more widely used and accepted, brokerages and their
clients can save time and money by eliminating paper registration,
transaction confirmations, and account statements. "It's ridiculous for an
all-electronic brokerage… to hold its customers hostage to paper," said a
representative from E*Trade Group. Both companies’ stock value rose sharply
after the bill was passed.
For more on the bill, visit http://www.news.com/News/Item/0,4,39862,00.html
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