Clinton signs digital signature bill

The White House statement

Saying it would "open up new frontiers of economic opportunity while protecting

the rights of American consumers," President Bill Clinton Friday signed

the Electronic Signatures in Global and National Commerce act, or E-Sign.

The bill, which Congress passed two weeks ago, puts the force of national

law behind electronic signature transactions.

E-Sign will render digital signatures legally equivalent to those signed

on paper, laying "the basic legal foundation for e-commerce," according

to Steve Boyd of the White House press office. The new law will bolster

e-commerce by eliminating companies' fears about the enforceability of online

commerce, according to a statement released by the White House.

Electronic signatures — unique pieces of encrypted code assigned to

individuals to avoid forgery and theft — can be used online in all applications

where paper and ink counterparts would be accepted offline. Uses include

signing financial applications, bills and legal documents. Replacing paper

documents with electronic ones will, according to the White House, greatly

speed online processes, such as mortgage applications, and some purchases,

such as insurance. The statement also noted that digital signatures will

allow companies to replace paper records with electronic ones.

The bill, which passed 426-4 in the House of Representatives and 87-0

in the Senate, requires that consumers give their consent to use electronic

versions of paper forms, and it allows them to opt for offline equivalents.

In addition, businesses and government agencies must disclose to users the

hardware and software required to perform the electronic signing, and the

user must be given the same legal protections online as they would have

offline.

Clinton said the new law was necessary because old laws were "holding

back" e-commerce by relying on ink and paper for legally enforceable documents.

A digitally-encrypted unique private key will be assigned to each user;

it, in turn, can only be decoded by holders of a public key, such as businesses

or government agencies.

Fittingly, after Clinton signed the bill with a quill pen, he also signed

the bill electronically, using a smart card.