Cryptocurrency 2014-2016 Legislation

Heather Morton 7/5/2018
Digital or virtual currencies are a medium of exchange but are not regular money.
 
Unlike dollar bills and coins, cryptocurrencies are not issued or backed by the U.S. government or any other government or central bank. The lack of a physical token to count and hold may confuse some. Rather, Bitcoin and other crytopcurrencies are a form of digital currency used in electronic payment transactions—no coins, paper money or banks are involved; there are zero to minimal transaction fees; transactions are fast and not bound by geography; and, similar to using cash, transactions are anonymous.
 
Digital currencies are stored in digital wallets, which are software or apps installed by users on their computer or mobile device. Each digital wallet contains encrypted information, called public and private keys, that is used to send and receive the digital currency.
 
All digital currency transactions are recorded in a virtual public ledger called the “blockchain,” which is maintained by digital currency “miners.” These miners can be anyone, anywhere in the world, who is willing to invest in the specialized computer hardware needed to rapidly process complex computations. Miners are awarded digital currency, like Bitcoin, Ripple, Dogecoin, and Litecoin, in exchange for verifying each transaction and adding it to the blockchain.

 

Cryptocurrency 2016 Legislation
State: Bill Number: Bill Summary:
Alaska H.B. 271

Relates to a money services business; relates to transmitting value that substitutes for money; relates to licensing requirements and registration through the Nationwide Multistate Licensing System and Registry; relates to surety bonding requirements; authorizes certain licensees to contract to use subdelegates for reloading funds onto stored-value cards; relates to record retention, reporting requirements, and enforcement provisions; relates to exemptions; relates to money services Internet activities; and relates to definitions regarding the transmitting value, currency, and money transmission business activities.

Alaska S.B. 152

Relates to a money services business; relates to transmitting value that substitutes for money; relates to licensing requirements and registration through the Nationwide Multistate Licensing System and Registry; relates to surety bonding requirements; authorizes certain licensees to contract to use subdelegates for reloading funds onto stored-value cards; relates to record retention, reporting requirements, and enforcement provisions; relates to exemptions; relates to money services Internet activities; and relates to definitions regarding the transmitting value, currency, and money transmission business activities.

California

A.B. 1326

Passed Assembly 6/3/15

This bill, until Jan. 1, 2022, enacts the Digital Currency Business Enrollment Program, to be administrated by the commissioner of Business Oversight, who would be granted authority to make rules and regulations for this purpose. The bill prescribes various definitions in this regard and defines digital currency as a digital representation of value that can be digitally traded and is used to facilitate the sale, purchase, and exchange of goods, services, or other digital representations of value, except as specified. The bill defines digital currency business as offering or providing the service of storing, transmitting, exchanging, or issuing digital currency, subject to various exceptions. The bill defines a person to include an individual or other business entities, however organized. The bill prohibits a person from engaging in the digital currency business without enrolling in the program and prohibits the conduct of digital currency business through an unenrolled agent. The bill requires a person seeking enrollment to pay a nonrefundable fee of up to $5,000, not to exceed the reasonable costs of enrolling a person in the program, and requires the person to provide the commissioner specified personal and business information in a form and manner prescribed by the commissioner. The bill also requires the person to provide fingerprints and authorizes the commissioner to deliver the fingerprints to law enforcement agencies. The bill requires the commission to permit enrollment in the program unless it appears to the commissioner that the person, or related parties, are not of good character. The bill prohibits a person from directly or indirectly acquiring control of an enrollee in the program without approval by the commissioner and prescribes a process and a fee for applying for approval. The bill requires an application to acquire control of an enrollee to be under oath. The bill requires an enrollee to pay an annual fee of $2,500 to maintain enrollment in the program. The bill requires that all moneys received by the commissioner in connection with its provisions to be placed in the Digital Currency Business Enrollment Program Account, which would be created in the State Corporations Fund, to be available, upon appropriation by the Legislature, to the commissioner for expenditure for the purposes of the program. The bill prohibits an enrollee in the program from advertising products, services, and activities without a statement regarding the program and that a government agency has not reviewed the safety or soundness of the business or digital currencies. The bill requires an enrollee to maintain advertising and marketing materials and prohibits the materials from making false, misleading, or deceptive representations or omissions. The bill requires an enrollee to make a variety of specified disclosures in English and in any other language spoken by a majority of the enrollee’s customers prior to entering into an initial transaction for, or on behalf of, a customer, when opening an account for a new customer, and prior to each transaction. The bill also requires an enrollee to provide a customer a receipt containing specified information when accepting digital currency or money. The bill requires that the English version of the receipt govern disputes over its terms and provides that discrepancies between the English version and a translation be construed against the enrollee, as specified. The bill prescribes a fine of $100 for each violation of the provisions relating to receipts. The bill authorizes the commissioner to require an enrollee and its agents to submit surveys, investigations, and questionnaires for the purpose of gathering information and to ascertain detailed facts about the enrollee’s business model, capitalization and net worth, and cybersecurity, among other things. The bill requires an enrollee and its officers, agents, and employees to make the enrollee’s accounts, books, correspondence, and other records available upon request and to facilitate the commissioner’s fact-gathering. The bill provides that these materials are not public records and shall be held in confidence. The bill requires an enrollee to provide an audit report containing specified information and prepared pursuant to prescribed standards and an annual report, the content of which would be determined by the commissioner. The bill provides that these reports are not public records and shall be held in confidence. The bill prescribes fines and penalties for the failure to make reports or include required information, which would include disenrollment for repeated failures. The bill requires the commissioner to prepare and makes available to the public an annual report on the state of the digital currency business industry by compiling the information received pursuant to these provisions. The bill grants the commissioner the authority to issue cease and desist orders when, in the commissioner’s opinion, an unenrolled person is engaging in the digital currency business or violating provisions of the program. The bill provides for a hearing after an order is served and a request for hearing is filed in writing within 30 days of service. If a request for a hearing is not filed within this time, the order would be deemed final and would not be subject to any judicial review. The bill authorizes the commissioner to bring actions to enjoin acts or practices in violation of its provisions and to enforce its provisions. The bill authorizes a superior court, upon proper showing, to appoint a receiver, monitor, conservator, or other designated fiduciary or officer of the court for a defendant or the defendant’s assets. The bill authorizes the commissioner to include in civil actions claims for ancillary relief, including restitution and disgorgement, on behalf of a person injured, as well as attorney’s fees and costs, and civil penalties of up to $25,000. The bill provides a limitations period in this regard of four years after an act constituting a violation occurred. The bill authorizes the commissioner to disenroll an enrollee if, after notice and an opportunity for hearing, the commissioner makes specified findings. The bill authorizes the commissioner to refer evidence regarding violations of the bill’s provisions to the attorney general, the Financial Crimes Enforcement Network of the U.S. Department of the Treasury, or the district attorney of the county in which the violation occurred, who would be authorized, with or without this type of a reference, to institute appropriate proceedings.

Georgia

H.B. 811

Signed by governor 4/26/16, Act 450

Extensively amends Title 7 of the Official Code of Georgia Annotated, relating to banking and finance, so as to update, modernize, and streamline numerous Code sections to provide for efficient regulation of banks, trust companies, credit unions, merchant acquirer limited purpose banks, and the mortgage lending industry; to update and eliminate certain provisions to comply with federal law; to update certain provisions to comply with federal court decisions; to revise powers and duties of the Department of Banking and Finance; to delete all appearances of and references to the term "building and loan associations"; defines virtual currency.

New Hampshire

H.B. 356

Signed by governor 6/6/16, Chapter 205

This bill establishes a commission to study the regulation of the cryptocurrency industry.

New Hampshire

H.B. 552

In expedient to legislate 1/27/16

This bill requires the state treasurer, in consultation with the commissioner of the department of revenue administration and the commissioner of the department of administrative services, to develop an implementation plan for the state to accept bitcoin as payment for taxes and fees.

New Jersey A.B. 2097

This bill, the “Digital Currency Jobs Creation Act,” establishes a regulatory framework for digital currency businesses to operate in New Jersey and creates certain incentives for digital currency businesses to locate in the state.

North Carolina

H.B. 289

Signed by governor 6/30/16, Chapter 81

S.B. 680

Enacts the North Carolina Money Transmitters Act as requested by the office of the North Carolina commissioner of Banks, includes virtual currency.

Pennsylvania

H.B. 850

Signed by governor 11/3/16, Act 129

Amends the Money Transmission Business Licensing Law; provides for definitions, licenses, certain exemptions, financial statements, security, agents and subagents, hearings and appeals, injunctions, rules and regulations and examinations by the secretary of Banking and other matters, includes virtual currency.

Rhode Island

H.B. 7840

Withdrawn by sponsor 3/28/16

Provides that electronic money transfers include transactions of virtual currency and amends the provisions on notices in connection with the voluntary restructuring of solvent insurers to eliminate the requirement of first class mail.

Virginia H.B. 687

Provides for the acceptance of contributions to a candidate, campaign committee, or political committee in the form of digital currency. The bill provides that such contributions shall be valued by the market value of the digital currency at the time the contribution is received and requires that any increase in the value of the digital currency while in the committee's designated depository be reported as interest on a campaign finance report. The bill also requires the treasurer for any campaign or political committee to sell any digital currency contributed to it and deposit the proceeds from the sale into the designated depository before the funds may be expended. The bill defines "digital currency" as money represented by digital information that is stored, spent, and transferred electronically as part of a financial transaction. All provisions governing the acceptance and reporting of contributions apply to contributions in the form of digital currency.

West Virginia

H.B. 4575

To Senate for concurrence 3/12/16

Relates to laundering and concealment of proceeds from criminal activity; defines terms; creates felony crime of conducting financial transactions involving proceeds of criminal activity; creates felony crime of transporting, transmitting, or transferring monetary instruments or property involving proceeds of criminal activity; provides for penalties; provides for presumptions when law enforcement or persons acting at the direction of law enforcement are involved with proceeds of criminal activity. Includes cryptocurrency.

Wyoming H.B. 26

Relates to the Wyoming Money Transmitter Act; amends definitions to include digital currency as a permissive investment.

Wyoming H.B. 62

Relates to the Wyoming Money Transmitter Act; amends definitions to exclude the transmission of monetary value and digital currency from the Wyoming Money Transmitter Act licensure requirements.

 

 

Cryptocurrency 2015 Legislation
State: Bil Number: Bill Summary:
California

A.B. 1326

Passed Assembly 6/3/15

This bill enacts the Virtual Currency Act. The bill prohibits a person from engaging in any virtual currency business, as defined, in this state unless the person is licensed by the commissioner of Business Oversight or is exempt from the licensure requirement, as provided. The bill requires applicants for licensure, including an applicant for licensure and approval to acquire control of a licensee, to pay the commissioner a specified nonrefundable application fee and complete an application form required to include, among other things, information about the applicant, previous virtual currency services provided by the applicant, a sample form of receipt for transactions involving the business of virtual currency, and specified financial statements. The bill makes these licenses subject to annual renewal and requires a renewal fee paid to the commissioner in a specified amount. The bill requires licensees to annually pay the commissioner a specified amount for each licensee branch office. The bill requires applicants and licensees to pay the commissioner a specified hourly amount for the commissioner’s examination costs, as provided. The bill also requires the commissioner to levy an assessment each fiscal year, on a pro rata basis, on licensees in an amount sufficient to meet the commissioner’s expenses in administering these provisions and to provide a reasonable reserve for contingencies. This bill requires each licensee to maintain at all times such capital as the commissioner determines, subject to specified factors, is sufficient to ensure the safety and soundness of the licensee, its ongoing operations, and maintain consumer protection. The bill requires each licensee to maintain a bond or trust account in U.S. dollars for the benefit of its consumers in the form and amount as specified by the commissioner. This bill authorizes the commissioner to examine the business and any branch office of any licensee to ascertain whether the business is being conducted in a lawful manner and all virtual currency is properly accounted for. The bill requires a licensee to file a report with the commissioner within a specified period of time after the licensee knows about the occurrence of certain events relating to the virtual currency business and those persons connected to that business, and to also maintain records as required by the commissioner for a specified period of time. With regard to enforcement, among other things, this bill, if it appears that a licensee is violating or failing to comply with these provisions or conducting business in an unsafe or injurious manner, authorizes the commissioner to order the licensee to comply or discontinue those practices. The bill also authorizes the commissioner to issue an order suspending or revoking a license, or placing a licensee in receivership, if after notice and an opportunity for a hearing, the commissioner makes a specified finding. The bill provides that every order, decision, or other official act of the commissioner is subject to review. This bill authorizes the commissioner to impose a civil penalty for a violation of these provisions. Within a specified period after the fiscal year, the bill requires a licensee to file with the commissioner a specified audit report. Within a specified period after the end of each calendar quarter, the bill requires a licensee to file with the commissioner a report containing financial statements verified by two of the licensee’s principal officers. By a specified date, the bill requires each licensee to file an annual report with the commissioner providing information regarding the licensee’s business and operations within the state, as specified. The bill also requires each licensee to make other special reports to the commissioner. The bill requires these reports to be kept confidential. The bill requires the commissioner to prepare a report for publication on his or her Internet Web site summarizing the information from those reports and enforcement action information. This bill requires a licensee to provide a specified consumer protection disclosure and receipt to its consumers. This bill authorizes a virtual currency licensee in good standing that plans to engage in activities permitted under the Money Transmission Act to request that the commissioner convert his or her license into a license under the Money Transmission Act, as specified. This bill authorizes a person or entity conducting virtual currency business with less than $1 million in outstanding obligations, as defined, and whose business model, as determined by the commissioner, represents low or no risk to consumers to pay a $500 application fee to the commissioner and, if approved, receive a provisional license to conduct virtual currency business. The bill authorizes the commissioner to request reports and documents, to examine the provisional licensee, and gather information regarding the business and operations of provisional licensees. The bill requires reports and documents concerning the business and operations of provisional licensees to be kept confidential. This bill requires a licensee, under the Money Transmission Act, to report to the commissioner its plan to engage in any virtual currency business and request permission to engage in that business subject to specified requirements and conditions, as determined by the commissioner. This bill makes these aforementioned provisions, including the Virtual Currency Act, operative on July 1, 2016. This bill deletes an existing law, the General Corporation Law, prohibiting a corporation, social purpose corporation, association, or individual from issuing or putting in circulation, as money, anything but the lawful money of the United States.
Connecticut

H.B. 6800

Signed by governor 6/19/15, Public Act 53

This act: 1. allows Connecticut-licensed mortgage correspondent lenders to act as mortgage servicers without obtaining a mortgage servicer license from the banking commissioner, under certain circumstances; 2. changes the fidelity bond and error and omissions coverage requirements for mortgage servicers; 3. voids a contract or other agreement involving interest, consideration, or charges that violates the laws governing small loans, and makes other changes regarding violations of these laws; 4. requires an applicant for a money transmitter license to indicate whether the business will transmit virtual currency (such as Bitcoin), allows the commissioner to deny such a license if the proposed business model poses an undue risk of financial loss to consumers, and allows him to place additional requirements on such a license including requiring different surety bond amounts than for other money transmitters; and 5. prohibits credit reporting agencies from charging certain people (including identity theft victims) fees related to credit freezes.

Connecticut

H.B. 6802

Failed Joint Favorable deadline 3/12/15

Expands the Money Transmission Act to include virtual currencies.

Illinois H.B. 3989

Amends the Transmitters of Money Act. Deletes provision that a person who engages in conduct requiring a license under the Act and fails to obtain a license from the director is guilty of a Class 3 felony. Amends the Criminal Code of 2012. In the statute concerning money laundering, provides that the laundering of property of a value exceeding $1,000,000 is a Class X felony. Creates the offense of engaging in monetary transactions in criminally derived property and the offense of unlawful money transmitting business. Defines offenses and establishes penalties. Includes digital currencies in the statutory provisions. Amends the Code of Criminal Procedure of 1963. Provides that two or more acts or transactions involving money laundering, engaging in monetary transactions in criminally derived property, unlawful money transmitting business, online sale of stolen property, online theft by deception, electronic fencing, or workers' compensation fraud, may be charged as a single offense in a single count of the same indictment, information, or complaint, if the acts or transactions by one or more defendants are in furtherance of a single intention and design or if the property, labor, or services obtained are of the same person or are of several persons having a common interest in the property, labor, or services. Amends the Unified Code of Corrections to make conforming changes.

New Hampshire H.B. 356

This bill exempts persons using private virtual currencies for internet commerce from the licensing requirements for money transmitters. This bill also defines virtual currency.

New Hampshire H.B. 552

This bill requires the state treasurer, in consultation with the commissioner of the Department of Revenue Administration and the commissioner of the Department of Administrative Services, to develop an implementation plan for the state to accept bitcoin as payment for taxes and fees.

New Hampshire

H.B. 666

Signed by governor 7/13/15, Chapter 258

This bill makes certain changes to the regulation of money transmitters, includes virtual currency.

New Jersey A.B. 4478

Creates the “Digital Currency Jobs Creation Act.”

North Carolina

H.B. 289

Passed House 5/12/15

S.B. 680

Enacts the North Carolina Money Transmitters Act as requested by the office of the North Carolina Commissioner of Banks, includes virtual currency.

Oregon

S.B. 277

Signed by governor 5/20/15, Chapter 118

Authorizes the director of the Department of Consumer and Business Services to license or register, or to renew licenses or registrations for, certain financial services businesses under agreement with the Nationwide Multistate Licensing System. Permits the director to conform practices, procedures and information the Department of Consumer and Business Services uses to license and register, or to renew licenses or registrations for, certain financial services businesses. Permits the director to require license and registration applicants to provide information to the Nationwide Multistate Licensing System and to waive some statutory requirements for licensing and registration by rule. Defines money means a medium of exchange that: (a) The United States or a foreign government authorizes or adopts; or (b) Represents value that substitutes for currency but that does not benefit from government regulation requiring acceptance of the medium of exchange as legal tender.

Pennsylvania H.B. 850

Amends the act of Sept. 2, 1965 (P.L.490, No.249), referred to as the Money Transmission Business Licensing Law; provides for title of act, for definitions, for license required and for exemptions; repeals provisions relating to partial exemption; provides for qualifications for a license, for application for license, for fee, financial statement and security, for investigation issuance of license, for term of license, for renewal of licenses and for authority of the Department of Bank; includes virtual currency.

Tennessee

H.B. 701

Substituted 4/20/15

S.B. 674

Signed by governor 4/30/15, Public Chapter 379

Allows a candidate and political campaign committee to accept digital currency as a contribution; requires an increase in the value of the digital currency to be reported as interest on statements filed with the registry of election finance; requires a candidate to sell the digital currency and deposit proceeds before spending the funds.

Utah

H.C.R. 6

Enacting clause struck 3/12/15

This resolution: encourages the expanded use of Bitcoin in the state; proposes the creation of the Council on Payment Options for State Services to study whether and how the state could accept Bitcoin as a valid form of payment; proposes that certain persons be a part of the council; encourages the council to study certain issues; and encourages the council to share its findings.

Vermont

S.B. 138

Signed by governor 6/3/15, Act 51

Directs the attorney general, Department of Financial Regulation, and secretary of state to report to the General Assembly on opportunities and risks of creating a presumption of validity for electronic facts and records that employ blockchain technology.

 

 

 

Cryptocurrency 2014 Legislation
State: Bill Number: Bill Summary:
California

A.B. 129

Signed by governor 6/28/14, Chapter 74

Existing law prohibits a corporation, flexible purpose corporation, association, or individual from issuing or putting in circulation, as money, anything but the lawful money of the United States. This bill repeals this provision.

Illinois H.B. 5772

Amends the Transmitters of Money Act. Deletes provision that a person who engages in conduct requiring a license under the Act and fails to obtain a license from the director is guilty of a Class 3 felony. Amends the Criminal Code of 2012. In the statute concerning money laundering, provides that the laundering of property of a value exceeding $1,000,000 is a Class X felony. Creates the offense of engaging in monetary transactions in criminally derived property and the offense of unlawful money transmitting business. Defines offenses and establishes penalties. Amends the Code of Criminal Procedure of 1963. Provides that two or more acts or transactions involving money laundering, engaging in monetary transactions in criminally derived property, unlawful money transmitting business, online sale of stolen property, online theft by deception, electronic fencing, or workers' compensation fraud, may be charged as a single offense in a single count of the same indictment, information, or complaint, if the acts or transactions by one or more defendants are in furtherance of a single intention and design or if the property, labor, or services obtained are of the same person or are of several persons having a common interest in the property, labor, or services. Amends the Unified Code of Corrections to make conforming changes.

Illinois H.B. 5886

Amends the Transmitters of Money Act. Provides that virtual currency does not have legal tender status. Defines "virtual currency" as a medium of exchange that operates like currency in some environments, but does not have all the attributes of real currency.

 

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Heather Morton is a program principal in Fiscal Affairs. She covers financial services, alcohol production and sales, and medical malpractice issues for NCSL.

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