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Fintech To-Dos: Broadband Access, Data Privacy, Digital Currencies

Forecast ’23: The top issues in banking and financial services for the 2023 legislative session.

By NCSL Staff  |  April 21, 2023

As the internet pervades nearly every aspect of consumer life, state and federal lawmakers are addressing the growing interest in using digital currencies, the need for data privacy, and a fundamental reality: Broadband is not equally available to all Americans.

These issues will remain priorities in 2023 legislative sessions, though the effect on digital currency policies of the spectacular collapse in November of FTX, one of the largest cryptocurrency exchanges, is unknown.

Forecast ’23

This story is part of a State Legislatures News special report examining the hot topics and legislative trends that will dominate state lawmakers’ time in 2023.

Forecast home

Hot Topic—Digital Assets

Unlike paper bills and metal coins, digital and virtual currencies are not issued or backed by any government or any central bank. Rather, bitcoin and other digital currencies are used in electronic payment transactions—no coins, paper money or banks are involved. With zero or minimal fees, transactions are fast and unbound by geography and, similar to using cash, they are anonymous.

Like credit cards, tickets and other transactional items, digital currencies are stored in wallet apps installed by users on a computer or mobile device. Every wallet contains encrypted information, called public and private keys, used to send and receive digital currencies. All transactions are recorded in a virtual, publicly viewable ledger called the blockchain, which is maintained by digital currency “miners.” Anyone, anywhere in the world can be a miner, though it requires a willingness 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.

Thirty-seven states considered legislation regarding cryptocurrency, digital or virtual currencies, and other digital assets in the 2022 legislative session. Lawmakers are introducing and advancing bills that would let consumers use cryptocurrencies to pay state taxes; allow financial institutions or special-purpose institutions to hold consumers’ digital currencies; and regulate digital assets under the Uniform Commercial Code.

Hot Topic—Privacy

The internet and new technologies continually raise new questions about consumer privacy, and state lawmakers are addressing the array of policy issues arising from online activities. Legislatures have long been involved in regulating the privacy of certain information—Social Security numbers, student and medical records, etc.—and of specific industry sectors.

However, as an indication that privacy issues have grown in importance in legislatures recently, at least 35 states and the District of Columbia considered nearly 200 bills on the topic this year.

Comprehensive (aka omnibus) consumer privacy legislation was the most common type of bill considered—nearly 70 bills in at 25 least states and the District of Columbia. Comprehensive proposals generally regulate the collection, use and disclosure of personal information by businesses and specify consumer rights for collected data, such as the right to access, correct and delete personal information gathered by businesses. Five states—California, Colorado, Connecticut, Utah and Virginia—have enacted comprehensive consumer privacy laws.

Federal legislation, if enacted, may impact existing state laws and states’ ability to enforce privacy protections.

Other common privacy bills address the collection of data by commercial entities and online services; these include measures related to website privacy or children’s privacy on the internet, direct-to-consumer genetic testing, and internet service provider and information/data broker regulation, among others.

Hot Topic—Broadband

With roughly 9 in 10 American adults using the internet, many consider access to be a necessity. Because internet access is unavailable or inadequate in parts of the country, especially rural areas, state and federal lawmakers aim to deploy broadband—the technologies that allow internet data to be transmitted at high speeds—as universally as possible.

The Biden administration’s Internet for All Initiative, announced in May this year, puts $45 billion toward the goal of providing affordable, reliable, high-speed internet for all Americans by the end of the decade. The initiative will be administered by the Commerce Department’s National Telecommunications and Information Administration via three programs: Broadband Equity, Access and Deployment ($42.5 billion); Enabling Middle Mile Broadband Infrastructure ($1 billion); and State Digital Equity Act ($1.5 billion).

In the 2022 legislative session, at least 35 states, Washington, D.C., and Puerto Rico have pending or enacted legislation addressing broadband in a variety of policy areas: educational institutions, “dig-once” requirements, funding, governance authorities and commissions, infrastructure, municipal-run broadband networks, rural and underserved communities, smart communities, and taxes.

For more, see these NCSL banking and financial services resources:

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