In spring 2016, Gov. Before being granted a license, the state requires applicants to have strict compliance and supervisory policies and procedures in place, including, among other things, anti-money laundering/know-your-customer and cybersecurity programs in place. (Ky. 2019). Inst., Virtual Currency Regulation, available at https://dfi.wa.gov/documents/money-transmitters/virtual- currency-regulation.pdf (last visited Jul. H.B. The proposal delineates when a person is not considered a broker-dealer and posits ways to comply with exemptions. Ann. The proposed statutory amendments includes the addition of definitions for "automated transaction," "digital asset," "digital consumer asset," "digital security," and "open Blockchain token." What is needed is clarity that a crypto broker-exchange is a broker for purposes of the Bankruptcy Code, and that the broker might comprise more than one legal entity. Nevertheless, the House introduced a new bill in January 2019, "requesting the Legislative Management to study the potential benefits of distributed ledger technology and blockchain for state government." 1393, which establishes the Florida Blockchain Task Force within the Department of Financial Services. Notably, Alabama's Securities Commission has emerged as one of the most active agencies to address fraud in the cryptocurrency industry. However, you can still relatively easily get a personal bank account at a local Georgian bank with Willias has been investigating Trump for potential election fraud. The State's Financial Consumer Protection Commission has issued a report noting the State does not require a license or registration for companies dealing with virtual currencies. 3575 (NS) February 15, 2019. Wyoming has emerged as one of the most crypto-friendly jurisdictions in the United States. 7-1-680(26) ("'Virtual currency" means a digital representation of monetary value that does not have legal tender status as recognized by the United States government."). Nevertheless, the other proposals related to blockchain technology include: Similar to many other states, for purposes of sales tax collection, the "[p]roviding a virtual currency that buyers are allowed or required to use to purchase products from the seller" qualifies one as a "marketplace facilitator." Assemb., 1st Reg. However, that bill died in committee. 2018). S.P. S.B. In January, 2019, the Senate introduced a bill that would increase the members of the task force from 9 to 13. Under Alabama Statute 40-23-199.2, the state affirmatively includes the "providing [of] a virtual currency that purchasers are allowed or required to use to purchase products from the marketplace seller" into the definition of a "marketplace facilitator." On February 4, 2019, Senate Bill 786 was introduced as the "Financial Consumer Protection Act of 2019." S.B. Assemb., Reg. Sess. 2019). S.B. S.B. Two bills, House Bill 1634 and Senate Bill 1068, before the Maryland legislature were passed and took effect October 1, 2018 and mandate the state's Financial Consumer Protection Commission to study cryptocurrencies, initial coin offerings, cryptocurrency exchanges, and blockchain technologies. In February, a bill focused on digital assets was approved. The bill has been referred to the Committee on Judiciary. S.B. (Neb. 868, 2016 Gen. The bill was enacted in response to a decision by the Eleventh Judicial Circuit's, Florida v. Espinoza, F14-2023, dismissing a criminal information against Michell Espinoza for money laundering under the rationale that virtual currencies such as Bitcoin are not "money" as defined by the state's Money Laundering Act. The State's Department of Financial Institutions has issued guidance that they "do not consider the control or transmission of virtual currency to fall under the scope of [the State's Money Transmission Act].] 1033 (NS) March 7, 2019. 2588, 2019 Leg., Reg. Sess. Sess., 1st Sess (N.M. 2019). Sess., 1st Reg. The Alabama Monetary Transmission Act, effective August 2017, defines "monetary value" as "[a] medium of exchange, including virtual or fiat currencies, whether or not redeemable in money." 354, Gen. In February 2019, Assembly Bill 1489 was introduced to the California legislature to enact the "Uniform Regulation of Virtual Currency Business Act" which, "would prohibit a person from engaging in virtual currency business activity, or holding itself out as such, unless licensed or registered with the Department of Business Oversight, subject to a variety of exemptions." Florida's Money Transmitter Act does not expressly include the concepts of "virtual currencies" or "monetary value" and the State's Office of Financial Regulation has not given direct guidance as to the applicability of the Act on virtual currency users and issuers, but have suggested that persons who offer cryptocurrency "wallets", buy or sell cryptocurrencies, or exchange cryptocurrency for fiat are not necessarily outside the scope of the activity subject to the State's Money Transmitter Act. The Arizona House passed HB 2601 and 2602, both of which await approval by the State's Senate. The Act prohibits local governments from imposing taxes on the use of blockchain, from requiring any person or entity to obtain a permit to use blockchain technology, or from imposing any other requirement relating to the use of blockchain. (Conn. 2017). Ass., 2nd Reg. S.B. HB 1220 was passed by the House but subsequently indefinitely postponed. The OCFR must report these findings to the General Assembly by December 31, 2019. http://mgaleg.maryland.gov/webmga/frmMain.aspx?stab=01&pid=billpage&tab=subject3&ys=2018rs&id=HB1634. After thousands of computers used to mine cryptocurrency overwhelmed the power grid in Georgias mountainous region of Svaneti at the height of winter, triggering sharp shortages, locals turned to an unusual solution. The state includes virtual currency within its definition of money transmission in its Uniform Money Services Act. Reg. See Idaho Department of Finance, Letter Re: Money Transmissions (Dated July 26, 2016), available at http://www.finance.idaho.gov/MoneyTransmitter/Documents/NAOP/Digital%20Currency/2016-07-26.pdf (last visited 10/02/2017). (N.Y. 2019). Obtaining a financial license that allows you to conduct cryptocurrencies in the country is characterized by a number of (Ky. 2018). However, with respect to the collection of sales and use tax, a bill adopted in March 2019 states that a person is a "marketplace facilitator" if that person provides, "a virtual currency that buyers are allowed or required to use to purchase products from the seller." Ga. Code Ann. View the most recent update here (March 2021). A bill was introduced in January 2019, which would allow "New York state agencies to accept cryptocurrencies as a form of payment." a bill establishing the significance of business records electronically registered on a blockchain self-authenticating. 649 entitled "Internet Business Development & Innovations." H.B. H.B. 2179 to establish a task force on blockchain applications and legislation. H.B. Lawmakers clash over need for new cryptocurrency laws. The proposal is quite comprehensive and intersects with money transmission, securities, and tax law, amongst others. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. That isnt freedom. As you will see from the discussion below, most states have not yet enacted regulations that provides virtual currency operators with any guidance on this question. Notable goals include provisions for: 2019 IL H.B. R. 44.11.408. In other words, if a virtual currency business were to hold a cryptocurrency on behalf of a Hawaiian customer they would be required by the State to maintain an equivalent cash value in trust. (N.Y. 2019). (Va. 2019). 1247, which "requires the state and political subdivisions thereof to accept virtual currency as legal tender." In 2017, Arizona adopted two statutes related specifically to the storage of information on the blockchain. 1159, 100th Gen. Assess the existing blockchain industry in the state. Assemb., Reg. (Vt. 2017). This proposal would affect the collection and remittance of sales tax. 548, 100th Gen. Dep't of Banking, Regulatory Treatment of Virtual Currencies Under the Texas Money Services Act (April 3, 2014). On April 9, 2018, Governor Haslam signed Tennessee Senate Bill S.B. As digital currency, the coins function as digital money that can be bought, sold, transferred, or earned. (Or. 2019 FL S.B. Effective September 1, 2019, "digital currency" is added to the definition of funds for purposes of money laundering. Sess. 2019). 1327, 63rd Leg., Reg. Money transmission includes receiving monetary value (including virtual currency) for transmission. L.B. It is noteworthy that Georgia still does not have a separate law on cryptocurrencies. 1944). It would have required those who buy, sell or exchange cryptocurrency, or offer cryptocurrency "wallets" to obtain a "Money Transmitter license. 1954, 57th Leg., 1st Reg. a public record blockchain study and report. (Tex. A trio of proposed bills has been introduced by the State's House (HB 6253, 6254, 6258) that if passed would amend the State's penal code to include cryptocurrency within its definition of "embezzlement", "money laundering", and as related to criminal acts involving credit cards. Foreigners from more than 90 countries can visit Georgia and stay in the country 365 days a year without a visa. H.B. H.B. (Mo. The state legislature signed SB 443 into law, which is entitled, "An Act Establishing The Connecticut Working Group." (Ill. 2018). WebBlockchain and virtual currency activities take place in a rapidly evolving regulatory landscape. Sess. On January 3, 2019, the North Dakota House introduced H.B. (Neb. Arizona Statute 44-7061 makes signatures, records, and contracts secured through blockchain technology legally valid. H.B. Companies who wish to transmit money for Washington residents in a digital currency form should contact Washington's Department of Financial Institution for a determination of whether licensure is required under the Uniform Money Services Act. The Report recommends the legislature update the State's Money Transmission Act to include virtual currency transmitters. H.B. Explore rules additionally regulations related to cryptocurrency and online current state-by-state. establishing that open blockchain tokens with specified consumptive characteristics are intangible personal property and not subject to a securities exemption; requiring developers and sellers of open blockchain tokens to file notices of intent and fees with the secretary of state; authorizing specified enforcement actions; making specified violations unlawful trade practices; repealing provisions granting open blockchain tokens a securities exemption. (N.Y. 2019). Sess. (Pa. 2019). This is an ideal environment for cryptocurrency entrepreneurs, whose profits will be re-invested in the economy. However, the resolution did not pass. 284, which qualifies persons who provide "a virtual currency that buyers are allowed or required to use to purchase products from the seller" as a "marketplace facilitator. See H.B. 1, 2015) http://www.thetaxadviser.com/issues/2015/jun/salt-jun2015.html#fnref_13. 48-2-32 to allow people to pay taxes and license fees with "any cryptocurrency, including but not limited to Bitcoin, that uses an electronic peer-to-peer system." 64, 86th Leg., Reg. The views set forth herein are the personal views of the author and do not necessarily reflect those of the firm. 2297 would establish "the New Jersey Blockchain Initiative Task Force to study whether State, county, and municipal governments can benefit from a transition to a blockchain-based system for record keeping and service delivery." In February 2019, the Colorado Senate proposed a bill concerning the subtraction from federal taxable income for gains from certain transactions using virtual currency. Finally, other bills that were approved include: Republished with permission. (Iowa 2019). 2019). 1024 (NS) February 13, 2019; 2019 FL H.B. S.B. 695, 105th Leg., 2nd Reg. Massachusetts recently enacted a statute defining those the dissemination virtual currencies on the internet as "marketplace facilitators" subject to sales or use tax collection when engaged in business in commonwealth. H.B. 180, 30th Leg., 1st Sess. (N.Y. 2019). Stat. (Va. 2019). Gen. Ass. Sess. On May 2, 2018, the Washington Department of Financial Institutions proposed rules and amendments to the Uniform Money Services Act, which further incorporates virtual currency into the money transmission regulations. 2019). Sess. These bills were referred to the committee on judiciary in December 2018. Adopted in April 2019, a person or business will be a "marketplace facilitator" for purposes of state sales tax law if that person "provides a virtual currency for a purchaser to use to purchase tangible personal property, a product transferred electronically, or service offered for sale." This guidance suggests a willingness by the state to embrace the use of virtual currencies and blockchain technologies, as made further evident by the Illinois legislature having empaneled a Blockchain Task Force in February 2017 to study how the state could benefit from a transition to a blockchain based system of record keeping any service delivery. 5031, 65th Leg., Reg. 2019 CA S.B. 2019). Sess. 1179, 66th Leg., Reg. In regards to blockchain technology, on April 30, 2019, the state adopted a senate bill, which authorizes corporations to maintain certain records on a "distributed electronic network or database." S.B. 2019 CT S.B. Sess. The office found under the facts presented that the Bitcoins provided to the Bitcoin ATM's customers not to constitute a foreign currency so as to require a foreign transmittal agency license. H.B. Documents that serve as acceptable proof of citizenship in the state of Georgia. H.B. Sess. (Alaska 2017). S.B. Comm'n, 2017 Interim Report (Jan. 2018), available athttp://dls.maryland.gov/pubs/prod/NoPblTabMtg/MdFinProtCmsn/2017-Interim-Report.pdf (last visited 7/16/2019). (Utah 2019). the authorization of "the secretary of state to develop and implement a blockchain filing system." A.B. Money transmission means Definition of Crypto-Assets. Sess. In January 2019, the Oregon House introduced H.B. 180, 30th Leg., 1st Sess. Sess. 2019). 1762, which is "An Act related to the marketplace collection of sales tax." During this same month, the House also introduced a bill that "changes the law regarding the issuance of stock by corporations." Tokens are not a currency but are more similar to shares of a company that have a value and may be traded on an exchange. S.D. 2462) pending in each house would permit corporations to use blockchain technology for certain recordkeeping requirements. 5553, 100th Gen. Ass. The state has amended its Electronic Contributions Act to expressly require the reporting of political contributions made "through a payment gateway," including Bitcoin. In the context of a bill proposing miscellaneous amendments to statutes governing banking, lenders, and financial institutions, virtual currency has been amended to mean "prepaid access." exempted virtual currencies from state property taxes. S.B. 2019); H.B. In January 2019, the Massachusetts Senate introduced S.B. This resolution failed to pass, however another resolution by the house has passed both the House and Senate, which requests the Legislative Management "to study the potential benefit value of Blockchain technology implementation and utilization in state government administration and affairs." S.B. Assemb., Reg. 2019). The National Tax Agency in December 2017 passed an order stating that gains on cryptocurrencies should be categorized as miscellaneous income and will come under tax bracket. S.B. The purpose of this guidance is to explain "when a person or organization engaged in the business of buying, selling and/or facilitating the transfer of cryptocurrency within the state is required to be licensed as a money transmitter under Colorado law." Consequently, you should not convey any confidential information to us until a formal attorney-client relationship has been established. 136, Gen. A.B. (Ariz. 2017). Sess (Me. Sess. With respect to money transmission laws, "[g]enerally, the Uniform Regulation of Virtual-Currency Businesses Act requires persons engaged in certain business activity involving virtual currency to obtain a license from or register with the Department of Business and Industry." 2019). Carlton Fields does not control or guarantee the accuracy or completeness of this outside information, nor is the inclusion of a link to be intended as an endorsement of those outside sites. (Wyo. Sess. (Okla. 2019). Digital currency businesses with money transmitter licenses are required to hold a certain amount of permissible investments and this law makes it clear that virtual currency counts as a permissible investment. Assemb., Reg. Sess. Part of the proposal states: H.B. H.C.R. The Professional Licensing Boards Division of the Secretary of States Office provides administrative support to the 42 licensing boards housed with our agency. The Hawaiian Senate introduced SB 3082 which would adopt a version of the Uniform Law Commission's Regulation of Virtual Currency Businesses Act that excludes the State's capital funds requirement, but the proposed law appears to have stalled within the State's legislature. See State of Was. H.B. A.B. H.B. https://www.mass.gov/regulations/209-CMR-4500-licensing-and-regulation-of-money-services-bThe state's Money Transmitter act. S.B. An act stating that, "on or before October 1, 2019, the Department of Administrative Services shall develop and issue a request for proposals to incorporate blockchain technology to make the administration of a department function more efficient." WebThe law on cryptocurrency transactions must comply with the anti-money laundering law; and measures to protect users investors. H.F. 240, 88th Gen. Utilities and regulators appear willing to work with blockchain companies. In March 2019, the Texas House introduced a bill to establish a Texas blockchain working group. S.B. Adopted in 2018, but not yet effective, A.B. (Or. The bill took effect July 1, 2017. Sess. 23 NYCRR 200. 673, which "directs the Commissioner of Economic and Community Development to establish a working group to develop a master plan for fostering the expansion of the blockchain technology industry in the State and recommend policies and investments to make the State a leader in blockchain technology." The payment platform shall provide the ability to manage and process all business expenditures and allow all transactions to be recorded on an immutable blockchain ledger." Two bills, House Bill 1634 and Senate Bill 1068, before the Maryland legislature were passed and took effect October 1, 2018 and mandate the state's 1045, 66th Leg. North Carolina law also imposes additional insurance requirements on virtual currency transmitters to address "cybersecurity risks." According to the bill, "virtual currency" means "a digital representation of value used as a medium of exchange, unit of account or store of value that does not have legal tender status recognized by the United States. See Illinois Department of Financial and Professional Regulation, Digital Currency Regulatory Guidance, (July 13, 2017), available at http://www.idfpr.com/Forms/DFI/CCD/IDFPR%20-%20Digital%20Currency%20Regulatory%20Guidance.pdf (last visited 10/02/2017). There was an effort among some of the state's lawmakers to codify the state's hands-off approach to virtual currency through a proposed constitutional amendment that would protect the right to own and use digital currencies. Sess. 821 (NS) March 1, 2019. (N.Y. 2018). Georgia has not yet adopted the Revised Uniform Act, and it is unclear whether cryptocurrency would fall under a catch-all definition of intangible property or perhaps under a broad definition of gift cards/certificates. HB 2601 attempts to create a framework under the State's securities laws for crowdfunding sales involving virtual currencies. 2019 CA S.B. In January 2019, the DoBS published guidance clarifying that, generally, virtual currency trading platforms are not money transmitters under state law. 691, and L.B. Sess. With respect to virtual currency, the Act proposes language defining "Control of Virtual Currency" and would also require money transmitters to maintain certain amounts of virtual currency under certain circumstances. L.B. The memo, developed by the Texas Department of Banking, states that Bitcoin and other virtual currencies will not be treated as legal money in Texas. Sess. 229). Print. Sess. Provides limitations to the use of blockchain technology, and. Vt. Stat. Va. Code Ann. Lawmakers clash over need for new cryptocurrency laws. The bill adds the definition of blockchain as an electronic record, transaction, or other data which is (1) uniformly ordered; (2) redundantly maintained or processed by one or more computers or machines to guarantee the consistency or nonrepudiation of the recorded transactions or other data; and (3) validated by the use of cryptography. ", With respect to state sales tax rules, Idaho House Bill 239 proposes that the "providing [of] a virtual currency that buyers are allowed or required to use to purchase products from the seller" can qualify a person as a "marketplace facilitator.". As a result of the false communications, John Doe sent Odabi and his co-conspirators approximately $5.3 million, including approximately $2 million to accounts held in the name of Oh-Dabi Properties, LLC and American Commodity Exchange, Inc., two Georgia-based companies that Odabi operated. Sess. 349, 2019-20 Leg., Reg. the creation and regulation of personal information protection companies. With respect to cryptocurrency, Oregon adopted a bill that, unless authorized by the state treasurer that prohibits: (a) the state government, as defined in ORS 174.111, from accepting payments using cryptocurrency. 70, 65th Leg., Gen. Sess. Another Joint House Resolution would establish a "joint subcommittee to study the emergence and integration of blockchain technology in the economy of the Commonwealth." All three bills have been indefinitely postponed since April 18, 2018. Assemb., 2019 Sess. 4351, 2019 Gen. Countries with Crypto as a Legal Tender Predict next Country / Region "Operation Cryptosweep" has resulted in nearly 70 investigations and 34 pending or completed enforcement actions as of early June 2018. https://www.hometownfocus.us/articles/ state-of-minnesota-joins-other-states-in-cryptocurrency-investment-crackdown/. (Utah 2019). Accordingly, in what is perhaps the most important state regulatory development in this Update, Wyoming enacted a series of regulations that, among other things, exempts "Utility Tokens" from state securities regulation and virtual currencies from state money transmission laws. Despite the lack of guidance, the state has refused to issue money transmitter licenses to virtual currency businesses and requires an agreement if a company deals in virtual currency stating that the company will not use virtual currency to transmit money. (Va. 2019). The financial literacy program aimed at empowering Georgians to optimally manage their finances and build financial success. (Ala. 2017) 8-7A-2(10). However, both Flannery and Loparev said cryptocurrency is worthy of study if the goal is Sess. 1220, 71st Gen. In late 2016, Theo Chino, a well-known Bitcoin entrepreneur filed a petition to the Supreme Court of New York challenging the authority of the state's Department of Financial Services to use the Bitcoin community as guinea pigs to test new banking regulations, arguing that under Article 78 of the State of New York regulations must be preceded by a law enacted by the Legislature. See, e.g., https://www.coindesk.com/sec-chief-clayton-every-ico-ive-seen-security/. (Tenn. 2019).