Proposed Washington Legislation
Washington Provenance-Backed Securities Act
A proposed legislative framework for building transparent, auditable, and investor-protective infrastructure around provenance-backed intangible economic value.
Legislative Status
The Washington Provenance-Backed Securities Act is proposed legislation. The published text represents a policy framework prepared for legislative consideration and discussion.
Why propose a Washington PBS Act?
Modern economic activity increasingly depends on intangible inputs: intellectual property, expertise, data, research, algorithms, creative work, processes, and other forms of knowledge.
The proposed Act begins from the policy question of whether Washington's legal and financial infrastructure should evolve alongside that changing economy.
The proposal is not simply about introducing another digital financial product. Its broader purpose is to explore whether documented provenance and independently measurable performance can support more transparent economic rights around intangible contributions.
Spirit of the Proposal
Recognition before redistribution
The philosophical premise behind the proposed Act is simple: when economic value can be credibly traced to documented contribution, economic systems should be capable of recognizing that contribution.
The intent is not to assign value merely because participation occurred. Provenance establishes evidence of contribution. Performance provides evidence of outcomes. Markets and lawful regulatory structures determine how resulting economic interests may be valued and transferred.
If you create the value, the economic system should be capable of recognizing the contribution that created it.
What is the Act intended to accomplish?
1. Establish Definitions
Provide a statutory vocabulary for provenance-backed securities, provenance ledgers, performance oracles, exchanges, and related concepts.
2. Protect Investors
Establish disclosure, anti-fraud, suitability, registration, and other safeguards appropriate to a proposed new market structure.
3. Require Auditability
Place provenance records, valuation methodology, performance information, and market conduct within an auditable regulatory framework.
4. Permit Controlled Experimentation
Establish a regulatory sandbox concept so novel PBS implementations can be studied under defined safeguards.
5. Develop Evidence
Enable policymakers and regulators to evaluate real-world results rather than requiring policy decisions to rest solely on theoretical assumptions.
6. Build Ownership Infrastructure
Explore legal and market infrastructure capable of supporting economic rights connected to documented intangible contributions.
Regulatory Philosophy
Innovation does not eliminate investor protection
The proposed Act is designed around the premise that new financial architecture should not require abandoning fundamental protections concerning disclosure, fraud, conflicts of interest, suitability, market integrity, or regulatory oversight.
Provenance and performance measurement are proposed as additional transparency mechanisms, not substitutes for lawful securities regulation where securities laws apply.
What would the proposed Act establish?
General provisions and definitions
The proposed legislation establishes terminology and defines the legal concepts necessary to discuss PBS consistently.
Regulatory oversight
The proposal establishes regulatory responsibilities for overseeing PBS issuers, exchanges, performance oracles, registrations, examinations, and enforcement.
Registration and disclosure requirements
Issuers and market participants would operate subject to defined registration, provenance documentation, valuation methodology, disclosure, and risk requirements.
Anti-fraud protections
The proposed framework prohibits falsified provenance, manipulated performance information, deceptive practices, and related misconduct.
Regulatory sandbox
Controlled testing is proposed so regulators can observe PBS systems before broader deployment and use empirical findings to inform future policy.
How does the Act relate to MPS?
The Meritocratic Provenance System (MPS) is the broader contribution and provenance framework.
PBS represents a proposed financial implementation of portions of that framework. The Washington Act addresses the legal and regulatory infrastructure that would be required if such financial instruments were offered or exchanged.
What technical architecture supports the proposal?
LAYER 1
Provenance Ledger
Records creation, contribution, ownership, and related provenance information.
LAYER 2
Performance Oracle
Connects assets with independently observable performance information.
LAYER 3
Exchange Protocol
Provides proposed infrastructure for listing, pricing, transferring, settling, reporting, and auditing transactions.
Agricultural Proof of Concept
Why SeedBid™?
SeedBid™ serves as the proposed agricultural implementation of PBS/MPS. The use case connects agricultural genetic provenance, contribution history, ownership information, and real-world performance data.
Its purpose within the broader policy framework is to demonstrate how the same underlying provenance architecture can be studied in a concrete domain rather than only as an abstract financial concept.
Why Washington?
The proposal identifies Washington's technology economy, agricultural sector, research institutions, and existing securities regulatory framework as reasons to evaluate PBS legislation at the state level.
The intended policy question is not whether Washington should promote technology at the expense of regulation. It is whether Washington can establish a framework in which technological experimentation and investor protection develop together.
What role has Washington DFI played?
ScarabCloud engaged the Washington State Department of Financial Institutions during development of the PBS/MPS proposal.
DFI advised that the architecture described in the submitted materials extends well beyond the laws administered by DFI and could raise legal issues including property rights and intellectual property. DFI also advised that securities-law requirements would apply where an implementation involves the offer or sale of securities.
DFI did not endorse PBS/MPS or the proposed legislation and did not provide legal or financial advice.
What is the human purpose behind the Act?
The proposal responds to a broader transition in which knowledge, expertise, data, research, creative work, and other intangible contributions increasingly participate in economic production.
As artificial intelligence and automation expand, one policy challenge is whether the economic infrastructure surrounding contribution can remain visible, accountable, and auditable.
The spirit of the proposed Act is that technology should increase society's capacity to recognize contribution rather than make contribution increasingly invisible.
Clarity of Intent
What the proposal is not
Not an exemption from investor protection
The proposal does not assume that technological novelty removes existing obligations concerning fraud, disclosure, registration, or market integrity.
Not a claim that every contribution has equal value
The framework distinguishes documented contribution from measurable performance and economic valuation.
Not merely cryptocurrency policy
The central policy subject is provenance-backed intangible economic value, regardless of the particular technology used