United States: State Regulations On Virtual Currency And Blockchain Technologies

Last Updated: November 10 2017
Article by Justin S. Wales and Matthew E. Kohen

INTRODUCTION:

As of this inaugural publication, there exists no uniformity with respect to how businesses that deal in virtual currencies (also known as "cryptocurrencies") such as Bitcoin are treated among the states. For these proprietors, often the first question asked when deciding whether to operate within a state is whether existing state money transmitter rules apply to the sale or exchange of virtual currencies. 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.

Some states have issued guidance, opinion letters, or other information from their financial regulatory agencies regarding whether virtual currencies are "money" under existing state rules, while others have enacted piecemeal legislation amending existing definitions to either specifically include or exclude digital currencies from the definition. To use a pun those in the blockchain space should understand, there is a complete lack of consensus as to whether they do or not.

The few states that have attempted to enact such comprehensive regulations, including New York's much maligned "BitLicense" scheme, has resulted in a retreat by the industry from either perceived overregulation or attempts by the state to treat virtual currency operators identically with traditional money transmitters that are better equipped to deal with a restrictive, and in their case cost prohibitive, regulatory framework.

The authors of this article are hopeful that over the next several years states will begin to craft regulation that balances the dual needs of protecting consumers from businesses operating in the fledgling industry while also promoting continued innovation by not saddling virtual currency businesses with regulatory burdens that make it financially impractical to operate. One attempt to craft such legislation has been proposed by the Uniform Law Commission, which in July 2017 introduced a model Regulation of Virtual Currency Businesses Act. The model legislation has not yet been adopted by any state, and has been subject to both criticism and praise by the industry, but is instructive of the types of considerations legislatures need to address when attempting to regulate the industry, including common sense definitions of "virtual currency" and what type of activity or economic thresholds should be implemented for "virtual currency business activity" so as to not drive away innovation from the state or punish personal or low-stakes use of the technology.

This article attempts to outline the range of regulations or guidance provided by the states with regard to virtual currency regulations or blockchain specific technologies. Because the law is rapidly developing we will try to update it quarterly to address new regulations or case law impacting the industry.

ALABAMA

The Alabama Monetary Transmission Act, approved by Governor Kay Ivey in May 2017, defines "monetary value" as "[a] medium of exchange, including virtual or fiat currencies, whether or not redeemable in money." H.B. 215, 2017 Leg., Reg. Sess. (Ala. 2017) § 8-7A-2(8). The act requires that every person engaging in the business of monetary transmissions obtain a license from the state. Money transmission includes receiving monetary value (including virtual currency) for transmission. H.B. 215, 2017 Leg., Reg. Sess. (Ala. 2017) § 8-7A-2(10). The act exempts banks, bank holding companies, securities-clearing firms, payment and settlement processors, broker-dealers, and government entities.

ALASKA

There are no blockchain or virtual currency specific regulations enacted under Alaskan law. House Bill 180 was introduced in March 2017 but, as of September 2017, appears to be stalled in the state legislature's Labor and Commerce Committee. The bill would regulate money transmission and currency exchange businesses, as well as transmitting value that substitutes for money. H.B. 180, 30th Leg., 1st Sess. (Alaska 2017). The bill's definition of virtual currency covers "digital units of exchange that have a centralized repository" as well as "decentralized, distributive, open-source, math-based, peer-to-peer virtual currency with no central administrating authority and no central monitoring or oversight." If passed, it would also amend the Alaska Uniform Money Services Act to expressly include dealing in virtual currency within its definition of money transmission. H.B. 180, 30th Leg., 1st Sess. (Alaska 2017).

ARIZONA

In 2017, Arizona adopted two statutes related specifically to the storage of information on the blockchain. Arizona Statute § 44-7061 makes signatures, records, and contracts secured through blockchain technology legally valid. "A contract relating to a transaction may not be denied legal effect, validity or enforceability solely because that contract contains a smart contract term." H.B. 2417, 53d Leg., 1st Reg. Sess. (Ariz. 2017).

Arizona Statute § 13-3122 makes it unlawful to require people to use or be subject to electronic firearm tracking technology (including distributed ledger or blockchain technology). H.B. 2216, 53d Leg., 1st Reg. Sess. (Ariz. 2017).

ARKANSAS

There are no blockchain or virtual currency specific regulations enacted or pending in Arkansas at the time of publication.

CALIFORNIA

In August 2017 the state re-introduced Assembly Bill 1123 which proposes to create a Digital Currency Business Enrollment Program that would require all companies that store, transmit, exchange, or issue digital currencies to qualify as a "digital currency business" and pay a non-refundable $5,000 fee to participate in the program." The bill's most recent incarnation scraps a previous, and much criticized, prior proposal by the state's legislature to create a licensure requirement for digital currency businesses similar to New York's BitLicense.

In June, 2016 the California legislature enacted Cal. Stat. § 320.6, which make it unlawful to sell or exchange raffle ticket for any kind of cryptocurrency.

COLORADO

There are no blockchain or virtual currency specific regulations enacted or pending in Colorado at the time of publication.

CONNECTICUT

House Bill 7141 becomes law on October 1, 2017 and requires that anybody engaged in a financial services industry be licensed by the state. "Each licensee that engages in the business of money transmission in this state by receiving, transmitting, storing or maintaining custody or control of virtual currency on behalf of another person shall at all times hold virtual currency of the same type and amount owed or obligated to such other person." The bill defines virtual currency as "any type of digital unit that is used as a medium of exchange or a form of digitally stored value or that is incorporated into payment system technology." H.B. 7141, 2017 Leg., 2017 Jan. Reg. Sess. Gen. Assemb. (Conn. 2017).

DELAWARE

In July 2017 Delaware enacted Senate Bill 69, a groundbreaking piece of legislation that provides statutory authority for Delaware corporations to use networks of electronic databases (including blockchain) to create and maintain corporate records. The law expressly permits corporations to trade corporate stock on the blockchain so long as the stock ledgers serves three functions: (1) to enable the corporation to prepare the list of stockholders, (2) to record information, and (3) to record transfers of stock. S.B. 69, 149th Leg., 1st Reg. Sess. (Del. 2017).

FLORIDA

Governor Rick Scott signed House Bill 1379 in June 2017. The bill is viewed by many as a legislative response to a criminal 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 bill expands the Florida Money Laundering Act, Fla. Stat. § 896.101 to expressly prohibit the laundering of virtual currency, which the bill defines as "a medium of exchange in electronic or digital format that is not a coin or currency of the United States or any other country." H.B. 1379, 119th Reg. Sess. (Fla. 2017). The bill took effect July 1, 2017.

GEORGIA

In spring 2016, Gov. Nathan Deal signed a bill into law amending Title 7 of the Official Code of Georgia Annotated. The bill authorizes the state's Department of Banking and Finance "to enact rules and regulations that apply solely to persons engaged in money transmission or the sale of payment instruments involving virtual currency," including rules to "[f]oster the growth of businesses engaged in money transmission or the sale of payment instruments involving virtual currency in Georgia and spur state economic development." Ga. Code Ann. § 7-1-690(b)(1). In addition, the code's banking and finance section now includes "virtual currency" as a defined term. Ga. Code Ann. § 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."). Georgia also requires that all money transmitters obtain a license to conduct any activity involving virtual currency.

HAWAII

House Bill 1481 is awaiting a vote before the Hawaiian Senate after being approved by the House. The bill would establish a working group "consisting of representation from the public and private sectors to examine, educate, and promote best practices for enabling blockchain technology to benefit local industries, residents, and the State of Hawaii." H.B. 1481, 29th Leg., Reg. Sess. (Haw. 2017).

In March 2017, the Hawaiian Senate introduced Senate Bill 949 which seeks to clarify that decentralized virtual currency activities are not subject to the state's Money Transmitters Act and establishes a Decentralized Virtual Currency Working Group within the state's Department of Commerce and Consumer affairs to study whether virtual currencies should be regulated under the act.

IDAHO

Though no laws are currently in place or pending in Idaho, the state's Department of Finance issued several "Money Transmitter No-Action and Opinion Letters" addressing problems related to virtual currency and the state's money transmission laws. The latest letter was posted July 26, 2016. In it, the Department wrote "[a]n exchanger that sells its own inventory of virtual currency is generally not considered a virtual currency transmitter under the Idaho Money Transmitters Act." However, "an exchanger that holds customer funds while arranging a satisfactory buy/sell order with a third party, and transmits virtual currency...between buyer and seller, will typically be considered a virtual currency transmitter." 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).

ILLINOIS

Though no laws are currently in place or pending in Illinois, the state's Department of Financial and Professional Regulation issued guidance regarding application of the state's Transmitters of Money Act to those dealing in virtual currencies. Under the Department's guidance, digital currencies are not "money" under the Transmitters of Money Act and therefore "[a] person or entity engaged in the transmission of solely digital currencies, as defined, would not be required to obtain a TOMA license." 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-%20 Digital%20Currency%20Regulatory%20Guidance.pdf (last visited 10/02/2017).

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.

INDIANA

There are no blockchain or virtual currency specific regulations enacted or pending in Indiana at the time of publication.

IOWA

There are no blockchain or virtual currency specific regulations enacted or pending in Iowa at the time of publication.

KANSAS

Although there are no blockchain or virtual currency specific regulations enacted or pending in Kansas at the time of publication the Office of the State Bank Commissioner issued guidance clarifying the applicability of the Kansas Money Transmitter Act (KMTA) to people or businesses using or transmitting virtual currency. The guidance lays out the Office's policy "regarding the regulatory treatment of virtual currencies pursuant to the statutory definitions of the KMTA." See Kansas Office of the State Bank Commissioner, Guidance Document MT 2014-01, Regulatory Treatment of Virtual Currencies Under the Kansas Money Transmitter Act, (June 6, 2014), available at http://www.osbckansas.org/ mt/guidance/mt2014_01_virtual_currency.pdf (last visited 10/02/2014).

The Office states that, because "no cryptocurrency is currently authorized or adopted by any governmental entity as part of its currency, it is clear that cryptocurrency is not considered 'money' for the purposes of the KMTA." See Kansas Office of the State Bank Commissioner, Guidance Document MT 2014-01, Regulatory Treatment of Virtual Currencies Under the Kansas Money Transmitter Act, (June 6, 2014), available at http://www.osbckansas.org/mt/guidance/mt2014_01_ virtual_currency.pdf (last visited 10/02/2014). A person or business engaged solely in transmitting virtual currency, therefore, would not have to obtain a license to do so.

KENTUCKY

There are no blockchain or virtual currency specific regulations enacted or pending in Kentucky at the time of publication.

LOUISIANA

There are no blockchain or virtual currency specific regulations enacted or pending in Louisiana at the time of publication.

MAINE

There are no blockchain or virtual currency specific regulations enacted or pending in Maine at the time of publication.

MARYLAND

There are no blockchain or virtual currency specific regulations enacted or pending in Maryland at the time of publication. The Department of Labor, Licensing and Regulation issued a warning to consumers about the potential dangers of virtual currency that suggests that, because Maryland does not regulate virtual currencies, "[a]n administrator or exchanger that accepts and transmits a convertible virtual currency or buys or sells convertible virtual currency for any reason is a money transmitter under federal regulations and therefore should be registered as a money services business." See Office of the Commissioner of Financial Regulation, Virtual Currencies: Risks for Buying, Selling, Transacting, and Investing - Advisory Notice 14-01, (April 24, 2014), available at http://www.dllr.state.md.us/finance/advisories/ advisoryvirtual.pdf (last visited 10/02/2017).

MASSACHUSETTS

There are no blockchain or virtual currency specific regulations enacted or pending in Massachusetts at the time of publication, but the Office of Consumer Affairs and Business Regulation opined in a 2014 Opinion Letter that Bitcoin ATMs are not "Financial Institutions" as defined by Chapter 167B of the Massachusetts General Laws. The office further 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. The office notes at the end of their opinion that they will continue to monitor the development of virtual payment systems like Bitcoin and may regulate such digital currencies in the future, but have not provided any additional guidance since issuing the letter.

MICHIGAN

There are no blockchain or virtual currency specific regulations enacted or pending in Michigan at the time of publication. The Michigan Department of Treasury issued guidance defining virtual currency and explaining how sales tax applies when virtual currency is used.

"The General Sales Tax Act and the Use Tax Act impose tax at a rate of 6% on the value of consideration given in exchange for tangible personal property." Tax Policy Division of the Michigan Dept. of Treasury, Treasury Update, Vol. 1, Issue 1 (November 2015), available at http://www.michigan.gov/documents/treasury/Tax-Policy-November2015-Newsletter_504036_7.pdf (last visited 10/02/2017). If that consideration is not given in U.S. dollars, "the taxpayer must convert the value of the consideration to USD as of the date and at the time of the transaction; this requirement includes convertible virtual currency exchanged for taxable property. Therefore, a taxpayer accepting virtual currency in a retail sale transaction must convert the value of the virtual currency to USD as of the day and the exact time of the transaction." See Tax Policy Division of the Michigan Dept. of Treasury, Treasury Update, Vol. 1, Issue 1 (November 2015), available at http://www.michigan.gov/documents/ treasury/Tax-Policy-November2015-Newsletter_504036_7.pdf (last visited 10/02/2017). Because virtual currency itself is not tangible property for purposes of the General Sales Tax Act and the Use Tax Act, virtual currency purchases are not subject to sales tax.

MINNESOTA

There are no blockchain or virtual currency specific regulations enacted or pending in Minnesota at the time of publication.

MISSISSIPPI

There are no blockchain or virtual currency specific regulations enacted or pending in Mississippi at the time of publication.

MISSOURI

There are no blockchain or virtual currency specific regulations enacted or pending in Missouri at the time of publication.

In a letter ruling, the Missouri Department of Revenue determined that an ATM provider "is not required to collect and remit sales or use tax upon transfer of Bitcoins through [their] ATM," because sales and use taxes are imposed solely on items of tangible personal property. See Missouri Department of Revenue, LR 7411, Collection of Sales Tax on Bitcoin Transfers Through an Automated Teller Machine (ATM), (September 12, 2014), available at http://dor.mo.gov/ rulings/show/7411 (last visited 10/02/2017). Further, in a cease and desist order issued by the Office of the Secretary of State in June 2014, the Commissioner of Securities determined that offering and/or selling shares of stock in Bitcoin constituted "transacting business as an agent" in the state of Missouri. See State of Missouri, Office of Secretary of State, In the Matter of Virtual Mining, Corp., Case No. AP-14-09, ORDER TO CEASE AND DESIST AND SHOW CAUSE WHY RESTITUTION, CIVIL PENALTIES, AND COSTS SHOULD NOT BE IMPOSED, (June 2, 2014), available at https://www.sos.mo.gov/cmsimages/securities/orders/AP-14-09.pdf (last visited 10/02/2017).

MONTANA

Montana is notable as being the only state to not have enacted a money transmission statute. There are no blockchain or virtual currency specific regulations enacted or pending in Montana at the time of publication, although the state amended its Electronic Contributions Act to expressly require the reporting of political contributions made "through a payment gateway," including Bitcoin. See Mont. Admin. R. § 44.11.408.

Despite a lack of regulatory guidance related to blockchain or virtual currencies, Montana is the first government to take a financial stake in a Bitcoin mining operation when it granted Project Spokane, LLC, a data center that provides blockchain security services for the Bitcoin network, a grant of $416,000. See US State of Montana Invests Directly in a Bitcoin Mining Operation, Trustnodes, (Jun. 13, 2017), available at http:// www.trustnodes.com/2017/06/13/us-state-montana-invests-directly-bitcoin-mining-operation.

NEBRASKA

There are no blockchain or virtual currency specific regulations enacted or pending in Nebraska at the time of publication. In an administrative release, however, the Nebraska Department of Revenue found that the term "currency" does not include Bitcoin or other virtual currency. See Jennifer Jensen, et al, Sales and Use Taxes in a Digital Economy, The Tax Adviser, (Jun. 1, 2015) http://www.thetaxadviser.com/ issues/2015/jun/salt-jun2015.html#fnref_13. The guidance did not explain whether sales of virtual currencies are taxable.

NEVADA

Nevada became the first state to ban local governments from taxing blockchain use when it enacted Senate Bill No. 398 in June 2017. The bill defines 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. N.R.S. SB 398 § 1. Under the bill, local governments are prevented from taxing blockchain use. Additionally, the bill states that, "if a law requires a record to be in writing, submission of a blockchain which electronically contains the record satisfies the law" – meaning that data from a blockchain can be introduced in legal proceedings in Nevada courts. N.R.S. SB 398 § 1.

NEW HAMPSHIRE

New Hampshire has amended its Money Transmitter statute (NH St. § 399-G:3) to exempt "persons who engage in the business of selling or issuing payment instruments or stored value solely in the form of convertible virtual currency or receive convertible virtual currency for transactions to another location" from the state's money transmission regulation. See H.B. 436, 2017 Leg.,165th Sess. (N.H. 2017). The law took effect August 1, 2017.

NEW JERSEY

There are no blockchain or virtual currency specific regulations enacted in New Jersey at the time of publication, however there is a pending bill titled the Uniform Fiduciary Access to Digital Assets Act that would expressly authorize an estate's executor under certain circumstances to manage the digital assets, including virtual currencies, of a decedent. 2016 NJ A.B. 3433 (NS).

New Jersey has also issued guidance that it would conform to the federal tax treatment of virtual currency, meaning that virtual currency would be treated as intangible property and subject to sales tax. See Technical Advisory Memorandum, N.J. Division of Taxation, Convertible Virtual Currency (TAM– 2015–1(R)) (July 28, 2015).

NEW MEXICO

There are no blockchain or virtual currency specific regulations enacted or pending in New Mexico at the time of publication. It should be noted, however, that for years New Mexico had been one of only a few states to not have enacted a money transmitter statute. Effective January 1, New Mexico now requires money transmitters to obtain a license before transmitting money, although the statutes application to virtual currency exchangers is uncertain. N. M. S. A. 1978, § 58-32-201.

NEW YORK

The New York State Department of Financial Services established a comprehensive regulatory framework for virtual currency businesses called "BitLicense" that requires operations related to transactions involving any form of virtual currency to obtain a license from the state. 23 NYCRR 200. 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. 23 NYCRR 200.

Since its enactment in 2015, the regulatory scheme has been the subject of much criticism and has resulted in an exodus of businesses fleeing the state because of the costs and regulatory hurdles associated with the BitLicense. In late 2016, Theo Chin, 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. Information about the pending case, including briefings by the parties, can be found at https://www.article78againstnydfs.com/raw.php.

NORTH CAROLINA

North Carolina has expanded its Money Transmitters Act to cover activities related to Bitcoin and other virtual currencies. 2017 North Carolina Laws S.L. 2017-102 (H.B. 229). The law defines virtual currency traders as money transmitters and requires they obtain a license. 2017 North Carolina Laws S.L. 2017-102 (H.B. 229). The law provides several exemptions, however, including for virtual currency miners as well as for software companies implementing blockchain services such as smart contract platforms, smart property, multi-signature software and non-custodial and non-hosted wallets. 2017 North Carolina Laws S.L. 2017-102 (H.B. 229). The law also imposes additional insurance requirements on virtual currency transmitters to address "cybersecurity risks." 2017 North Carolina Laws S.L. 2017-102 (H.B. 229).

NORTH DAKOTA

There are no blockchain or virtual currency specific regulations enacted in North Dakota at the time of publication. A bill advocating a study to determine whether a bitcoin license should be required for virtual currency transmitters was introduced but failed to pass a vote.

OHIO

Ohio has no clear regulatory framework for virtual currencies, but it has amended the state's Liquor Control Law to impose an unusual ban on the use of virtual currencies for the purchase of alcohol. See Janet H. Cho, Cleveland Heights Merchants Banking on Bitcoin to Draw Global Spotlight; Skeptics Warn of Risks (April 24, 2014), available at http://www.cleveland.com/business/index.ssf/2014/04/cleveland_heights_merchants_banking_on_
bitcoin_boulevard_to_draw_global_spotlight.html
(last visited 10/03/2017).

OKLAHOMA

Oklahoma took a clear stance on its treatment of Bitcoin with an official comment to a statute that states that Bitcoin transferees are not afforded the same protections as those afforded to the transferees of money. Okla. Stat. Ann. § 1-9¬332. The Oklahoma legislature also determined that a seller who accepts bitcoin does not take the cryptocurrency free of an existing security interest. Okla. Stat. Ann. § 1-9-332.

OREGON

Oregon has no clearly defined position or regulations regarding the blockchain and virtual currency industry. However, an international Bitcoin exchange, CEX.IO, named Oregon as one of the states it was unable to work with because it required additional money transmitter licenses for Bitcoin companies. See PYMTS, Bitcoin Regulation Roundup Regulator Divide and "Life on Bitcoin," (May 29, 2015), available at http://www.pymnts.com/in-depth/2015/ bitcoin-regulation-roundup-regulator-divide-and-life-on-bitcoin/ (last visited 10/03/2017).

PENNSYLVANIA

Pennsylvania had signaled interest in amending its money transmitter laws to include virtual currencies within the state's definition of "money", but the effort has reportedly stalled. There are no blockchain or virtual currency specific regulations pending or enacted in Pennsylvania at the time of publication.

RHODE ISLAND

There are no blockchain or virtual currency specific regulations enacted in Rhode Island at the time of publication.

SOUTH CAROLINA

There are no blockchain or virtual currency specific regulations enacted or pending in South Carolina at the time of publication. It should be noted, however, that for years South Carolina had been one of only a few states to not have enacted a money transmitter statute. Effective June 9, 2017, South Carolina now requires money transmitters to obtain a license before transmitting money, although the statutes application to virtual currency exchangers is uncertain. A266 2016 Gen. Assemb., 121st Sess. (S.C. 2016).

SOUTH DAKOTA

There are no blockchain or virtual currency specific regulations enacted or pending in South Dakota at the time of publication.

TENNESSEE

There are no blockchain or virtual currency specific regulations enacted or pending in Tennessee at the time of publication, however the state has issued guidance clarifying that it does not consider virtual currency to be money under its Money Transmitter Act and therefore, no license is required. Memo, Tenn. Dep't of Fin. Inst., Regulatory Treatment of Virtual Currencies under the Tennessee Money Transmitter Act (Dec. 16, 2015).

TEXAS

Texas was the first state to release an official position on bitcoin with Memorandum 1037 clarifying that no money transmitter's license is required to sell Bitcoin. Memo, Tx. Dep't of Banking, Regulatory Treatment of Virtual Currencies Under the Texas Money Services Act (April 3, 2014). 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. Memo, Tx. Dep't of Banking, Regulatory Treatment of Virtual Currencies Under the Texas Money Services Act (April 3, 2014).

There is 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. H.J.R 89, 85th Leg., Reg. Sess. (Tx. 2017). If passed, the amendment would alter Article 1 of the Texas constitution to include the right to use any "mutually agreed upon medium of exchange." H.J.R 89, 85th Leg., Reg. Sess. (Tx. 2017).

UTAH

In 2015, Utah enacted a bill that allows its residents to pay taxes with virtual currencies. H.C.R. 6, 2015 Leg., Gen. Sess. (Utah 2015). This bill encourages widespread use of the virtual currency and makes provisions for the council to examine whether the state could minimize risks if Bitcoin or other virtual currencies become a new norm of payment. H.C.R. 6, 2015 Leg., Gen. Sess. (Utah 2015).

VERMONT

Vermont applies its money transmission laws to virtual currency. On May 1, 2017 Vermont amended its money transmitter law to allow companies to hold virtual currency as a permissible investment. H.B. 182, 2017 Gen. Assemb., Reg. Sess. (Vt. 2017). 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.

The state also enacted a bill that recognizes blockchain data in the court system. H.B. 868, 2016 Gen. Assemb., Reg. Sess. (Vt. 2016). This law makes a fact or record verified through blockchain technology "authentic" for use in court proceedings. H.B. 868, 2016 Gen. Assemb., Reg. Sess. (Vt. 2016). The state has also enacted a bill that mandates a study on how blockchain technology will affect the state's job market and ability to generate revenue. S.B. 135, 2017 Leg., Reg. Sess. (Vt. 2017). The results of the study are due November 30, 2017. S.B. 135, 2017 Leg., Reg. Sess. (Vt. 2017).

VIRGINIA

The Virginia Bureau of Financial Institutions requires companies that deal in virtual currencies to obtain a money transmission license. VA Code Ann. § 6.2-1900.

WASHINGTON

Along with New York, Washington has emerged as one of the most heavily regulated states for the virtual currency industry. The state includes virtual currency within its definition of money transmission in its Uniform Money Services Act. H.B. 1327, 63rd Leg., Reg. Sess. (Wash. 2013). In July 2017, the state adopted more stringent regulations of virtual currency, passing Senate Bill 5031. S.B. 5031, 65th Leg., Reg. Sess. (Wash. 2017). The bill places virtual currency exchange operators under the state's money transmitter rules and requires them to comply with the same licensing requirements as traditional money transmitters. The state's regulatory scheme has been the subject of much criticism from within the virtual currency industry and has caused a number of popular exchanges, including Poloniex, Bitstamp, Kraken, and Bitfinex to leave the state over the costs associated with complying with the Washington's licensing requirements.

WEST VIRGINIA

There are no blockchain or virtual currency specific regulations enacted in West Virginia at the time of publication. A bill has been introduced by lawmakers that is expected to pass that will amend the state's existing anti-money laundering statute to expressly include cryptocurrencies like Bitcoin in its definition. H.B. 2585, 2017 Leg., Reg. Sess. (W. Va. 2017).

WISCONSIN

There are no blockchain or virtual currency specific regulations enacted or pending in Wisconsin at the time of publication. 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. See State of Wis. Dep't of Fin. Inst., Sellers of Checks, available at https://www.wdfi.org/fi/ lfs/soc/ (last visited 10/02/2017). The state has also made it clear that the purchases of taxable goods or services made with virtual currencies are subject to state sales tax, just like any other purchase, but that the virtual currency itself is not subject to sales tax because they are not tangible personal property. See 1-14 Wisconsin Department of Revenue, Sales and Use Tax Report, at 5 (2014).

WYOMING

The Wyoming Division of Banking communicated a regulatory policy of including virtual currency providers, as well as entities that offer hosted Bitcoin wallet services, among those required to obtain a money transmission license. Under the state's existing money transmitter rules, this requires regulated business to maintain "permissive investments" in fiat currency in an amount equal to the aggregate face value of all the virtual currency held on behalf of its customers. Because under the current law digital currencies are not defined as "permissive investments", a number of large virtual currency providers, including Coinbase, have ceased operations in Wyoming. A bill was introduced to amend the state's Money Transmitter Act to define digital currencies as permissive investments in 2016, but the bill failed.

Originally published by Thomson Reuter's "Payment Systems and Electronic Fund Transfers Guide".

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Emails

From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.