Originally published on October 17, 2017.
Updated on April 19, 2019.

Introduction:

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. This uncertainty is made all the more complicated by potentially contradictory guidance from the Federal government. For example, in March 2018 the Financial Crimes Enforcement Network (FinCEN) published a letter stating that token issuers were money transmitters required to follow federal money transmitter requirements. The letter came just two days after a U.S. District Court in New York accepted the understanding of the Commodity Futures Trading Commission (CFTC) that cryptocurrencies were commodities, a ruling that on its face appears to take the exchange of cryptocurrencies for fiat currency outside of the definition of money transmission under previous FinCEN and now questionable past guidance. See, e.g., Application of the Definition of Money Transmitter to Brokers and Dealers in Currency and other Commodities, FIN-2008-G008, Sept. 10, 2008.

The few states that have attempted to enact comprehensive regulations, including New York's much maligned "BitLicense" scheme, has resulted in an exodus of blockchain and virtual currency businesses from states attempting to treat all virtual currency operators identically with traditional money transmitters that are better equipped to deal with an overly restrictive regulatory framework. There is a proposal pending within the NY State Assembly to replace the BitLicense with a more innovation-friendly framework, and indeed, many states are attempting to enact crypto-friendly regulations in an attempt to entice entrepreneurs to move to their state. 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. Wyoming's law, at least with regard to its take on the application of state securities regulation, likely offers only theoretical comfort to those wishing to issue "Utility Tokens" through an Initial Coin Offering since Federal Securities Law (and the SEC's recent informal announcement that all tokens may, in fact, be securities), takes precedent over state law.

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 had provisions adopted by a few states, including Hawaii and has been supported by the American Bar Association, but has not been fully implemented by any state. The model legislation is subject to criticism, but is instructive of the types of considerations legislatures need to address when attempting to regulate the industry and provides a suggestive common sense definitions of "virtual currency" and the types of activities or economic thresholds that could 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, effective August 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.

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." H.B. 470, 2018 Leg., Reg. Sess. (Ala. 2018) § 40-23-199.2. Per the Alabama Department of Revenue, "marketplace facilitators with Alabama marketplace sales in excess of $250,000 [are required] to collect tax on sales made by or on behalf of its third-party sellers or to comply with reporting and customer notification requirements." [Source]

Notably, Alabama's Securities Commission has emerged as one of the most active agencies to address fraud in the cryptocurrency industry. [Source]

Alaska

There are no blockchain or virtual currency specific regulations enacted under Alaskan law. The State's Division of Banking and Services has issued guidance that it is not authorized under State law to regulate virtual currencies and only transactions involving fiat currencies are subject to the state's Money Transmitter law.

House Bill 180 was introduced in March 2017 but appears to be stalled in the state legislature. If enacted, HB180 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). The bill's latest update in the legislature was its referral to Alaska's Judiciary Committee in January 2018.

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 § 11-269.22 prohibits any county from prohibiting individuals from "running a node on blockchain technology" in a residence, as defined as "providing computing power to validate or encrypt transactions in blockchain technology." 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).

The Arizona House passed HB 2601 and 2602, both of which await approval by the State's Senate. HB 2601 attempts to create a framework under the State's securities laws for crowdfunding sales involving virtual currencies. S.B. 2601, 53d Leg., 2nd Reg. Sess. (Ariz. 2018). HB 2602 would prohibit localities from restricting cryptocurrency mining in residences. Another proposed regulation would add income "derived from the exchange of virtual currency for other currency" to the computation of Arizona adjusted gross income for the purposes of the income tax. S.B. 1145, 53d Leg., 2nd Reg. Sess. (Ariz. 2018).

In February 2019, H.B. 2702 was proposed to bring the providing of "a virtual currency that buyers are allowed or required to use to purchase products from the seller" into the definition of "marketplace facilitator." This amended definition relates to "Transaction Privilege and Affiliated Excise Taxes" within the state's taxation regime. 2019 AZ H.B. 2702 (NS)

Arkansas

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

California

California's Money Transmitter Act does not address virtual currencies and the state has not provided official guidance on the applicability of its MTL statute to cryptocurrencies. In September 2018, the Governor approved a legislature backed initiative to create a "blockchain working group" that will be tasked with researching blockchain's benefits, risks, and legal implications.

In September 2018, the State's legislature passed Assembly Bill 2658 which, once enacted, would introduce legal definitions of "blockchain technology" and "smart contract." The effect of these definitions would be to legalize and facilitate record keeping using distributed ledgers.

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

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." Penalties for violating this proposed bill could be as high as $50,000 for each day of violation. [Source]

During this same month, California also introduced Assembly Bill 147, in which 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." 2019 CA A.B. 147 (NS)

Colorado

The State's legislature attempted to enact a handful of conflicting bills that would provide guidance as to the applicability of Colorado's Money Transmitter Act to virtual currency users and issuers. HB 1220 was passed by the House but subsequently indefinitely postponed. It would have required those who buy, sell or exchange cryptocurrency, or offer cryptocurrency "wallets" to obtain a "Money Transmitter license. H.B. 1220, 71st Gen. Ass., 2nd Reg. Sess. (Co. 2018). The conflicting HB 1426 and SB277, would have exempted virtual currencies from the Money Transmitter Act but was rejected by the State Senate.

The Office of the Colorado Secretary of State has proposed a rule in favor of allowing political campaign contributions in cryptocurrency. Working Draft of Proposed Rules, 8 CCR 1505-6 (proposed May 16, 2018).

On September 20, 2018, Colorado's Division of Banking released Interim Regulatory Guidance entitled, "Cryptocurrency and the Colorado Money Transmitters Act." 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." [Source]

In February 2019, the Colorado Senate proposed a bill concerning the subtraction from federal taxable income for gains from certain transactions using virtual currency. 2019 CO S.B. 140 (NS)

On March 6, 2019, Colorado enacted the "Colorado Digital Token Act." Per the state, "[t]he bill provides limited exemptions from the securities registration and securities broker-dealer and salesperson licensing requirements for persons dealing in digital tokens. "Digital token" is defined as a digital unit with specified characteristics, secured through a decentralized ledger or database, exchangeable for goods or services, and capable of being traded or transferred between persons without an intermediary or custodian of value." [Source]

With respect to other blockchain applications, Colorado has proposed bills to study the technology in agricultural operations and, the state also proposed a grant of authority to the Colorado Water Institute to study potential applications. See 2019 CO H.B. 1247 (NS) March 15, 2019; 2019 CO S.B. 184 (NS) March 5, 2019.

Connecticut

House Bill 7141 became 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. Ass. (Conn. 2017).

House Bill 5490 was signed into law on June 14, 2018. It adds a definition for "virtual currency" and purports to bring virtual currencies under the purview of Connecticut money transmission laws. H.B. 5490, 2018 Leg., 2018 Feb. Sess. Gen. Ass. (Conn. 2018) [Source].

The state legislature signed SB 443 into law, which is entitled, "An Act Establishing The Connecticut Working Group." The goal of this bill is to "(1) Identify the economic growth and development opportunities presented by blockchain technology; (2) assess the existing blockchain industry in the state; (3) review workforce needs and academic programs required to build blockchain expertise across all relevant industries; and (4) make legislative recommendations that will help promote innovation and economic growth by reducing barriers to and expediting the expansion of the state's blockchain industry."

The Connecticut House introduced a bill to "(1) make shared appreciation agreements subject to the same licensing and regulatory compliance requirements as residential mortgage loans, and (2) permit a start-up company engaged in the activity of a money transmission to provide a statement of condition as part of licensure application in lieu of certain financial statements." Such statement must describe "the type of money transmission business that will be conducted by the applicant in this state and whether such money transmission will include the transmission of monetary value in the form of virtual currency." 2019 CT H.B. 6995 (NS)

Other notable blockchain-focused proposals from Connecticut's legislature include:

• An act prohibiting the use of noncompete agreements in the blockchain technology industry. 2019 CT S.B. 1033 (NS) March 7, 2019
• 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." 2019 CT S.B. 1032 (NS) March 7, 2019
• An act "to study the use of blockchain technology in managing elector information." 2019 CT H.B. 5417 (NS) January 16, 2019
• An act "to authorize the use of smart contracts in commerce in the state." 2019 CT H.B. 7310 (NS) March 7, 2019

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. Section 224 of the Delaware Corporate Code states, "Any records administered by or on behalf of the corporation in the regular course of its business, including its stock ledger, books of account, and minute books, may be kept on, or by means of, or be in the form of, any information storage device, method, or 1 or more electronic networks or databases (including 1 or more distributed electronic networks or databases) ..." (emphasis added). Other bills related to the use of blockchain technology related to trusts, domestic LLCs, and limited partnerships were signed by the governor in July 2018. S.B. 194, S.B. 183.

Florida

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.

In June 2018, it was announced that the State would appoint a Crypto Czar that would be tasked with enforcing applicable state regulations in order to protect investors from malicious actors.

Governor Rick Scott signed House Bill 1379 in June 2017. 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 bill, which took effect on July 1, 2017, 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.

However, in February 2019, the Third District Court of Appeal's reversed the trial court's decision in Florida v. Espinoza, and "decided that selling bitcoin requires a Florida money service business license, overruling the trial court's order that dismissed criminal charges against Mitchell Espinoza who was alleged to be operating an unlicensed money service business by selling bitcoin." The appellate court held that bitcoin is a "payment instrument," thereby bringing sale of bitcoin within the ambit of Florida's money transmission laws. [Source]

With respect to proposed legislation, the providing of a virtual currency that buyers are allowed or required to use to purchase products from the seller can qualify as person as a "marketplace facilitator" under a state statute governing "taxation of marketplace sales. 2019 FL S.B. 1112 (NS) February 15, 2019.

Additionally, Senate Bill 1024 and House Bill 735 both seek to establish Florida Blockchain Working Groups for the Agency for State Technology and Department of Management Services, respectively. Both of these proposals have a master plan that seeks to:

1. Identify the economic growth and development opportunities presented by blockchain technology.
2. Assess the existing blockchain industry in the state.
3. Identify innovative and successful blockchain applications currently used by industry and other governments to determine viability for state applications.
4. Review workforce needs and academic programs required to build blockchain technology expertise across all relevant industries.
5. Make recommendations to the Governor and the Legislature that will promote innovation and economic growth by reducing barriers to and expedite the expansion of the state's blockchain industry."

2019 FL S.B. 1024 (NS) February 13, 2019; 2019 FL H.B. 735 (NS) March 5, 2019.

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.

The Georgia Senate proposed a bill revising Ga. Code Ann. § 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." S.B. 464, 154th Gen. Ass. Reg. Sess. (Ga. 2017). This bill never got a committee hearing before the Georgia Senate adjourned for its recess, but could be reintroduced during the next legislative session.

With respect to a proposed sports betting act, virtual currency is deemed a cash equivalent. 2019 GA H.B. 570 (NS) March 7, 2019.

Hawaii

The Hawaiian legislature has tried to pass legislation that both includes (SB 949) and excludes (SB 2853 and 3082) virtual currencies from its Money Transmitter Act. While these proposed regulations have been enacted, the State's Division of Financial Institutions has issued public guidance on the applicability of State MTL to cryptocurrency transactions, stating generally that "cryptocurrency transactions" require a money transmission license.

The States' Money Transmitter Act is uniquely burdensome in that it requires licensees to hold "in trust permissible investments having an aggregate market value of not less than the aggregate amount of its outstanding transmission obligations." 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. This requirement has proven financially untenable for virtual currency operators, including Coinbase, who have suspended service to Hawaii. [Source]; [Source].

With respect to money transmission laws, in January 2019, the Hawaiian Senate introduced a bill to extend "the money transmitters act to expressly apply to persons engaged in the transmission of virtual currency" and require "licensees dealing with virtual currency to provide a warning to customers prior to entering into an agreement with the customers." 2019 HI S.B. 1364 (NS) January 24, 2019.

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. Another separate proposal titled H.B. 2257, also seeking to adopt a version of the Virtual Currency Business Act was introduced in 2018 but has not yet passed the House. 29th Leg. Reg. Sess. (Haw. 2018). 29th Leg. Reg. Sess. (Haw. 2018). In January 2019, Hawaii introduced a bill to adopt "the Uniform Regulation of Virtual-Currencies Businesses Act and the Uniform Supplemental Commercial Law for the Uniform Regulation of Virtual-Currency Businesses Act." 2019 HI S.B. 250 (NS) January 18, 2019.

With respect to telecommunications and technology development, the Hawaiian House introduced a bill "to enter into a public-private partnership to plan, build, and manage key strategic broadband infrastructure that benefits the State, including a cable landing station in Kakaako, on the island of Oahu, and to encourage cloud-based companies to take advantage of this infrastructure." The bill continues, "This hub would integrate a robust global communications network with connectivity to data centers, content repositories, and hedge computing for the development of next-generation applications such as artificial intelligence, machine learning, augmented reality, big data analytics, smart communities, blockchain, and real-time predictive systems." 2019 HI H.B. 821 (NS) March 1, 2019.

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), [Source].

In January 2018, the Idaho Senate introduced a bill that would amend the Idaho Unclaimed Property Act to explicitly include virtual currency as property. 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."

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."

Illinois

Though no laws are currently in place 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, virtual 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) [Source].

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. Illinois launched the Illinois Blockchain Initiative to determine the applicability of blockchain technology. Utilities and regulators appear willing to work with blockchain companies.

In February 2018, the Illinois House introduced the Blockchain Technology Act. H.B. 5553, 100th Gen. Ass. 2nd Reg. Sess. (Ill. 2018). 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. H.B. 5553, 100th Gen. Ass. 2nd Reg. Sess. (Ill. 2018). On January 8, 2019, the House adjourned "session sine die" with respect to this bill. [Source]

The Illinois House also introduced HB 2540 to create the Blockchain Business Development Act. Notable goals include provisions for:

• the creation and regulation of personal information protection companies.
• the creation and regulation of blockchain-based limited liability companies as businesses that utilize blockchain technology for a material portion of their business activities.
• a public record blockchain study and report.
• a blockchain insurance and banking study and report. Requires the Department of Commerce and Economic Opportunity to incorporate into one or more of its economic development marketing and business support programs, events, and activities topics concerning blockchain technology and financial technology.

2019 IL H.B. 2540 (NS) February 13, 2019

Illinois has also proposed the Blockchain Technology Act, which:

• Provides for the permitted uses of blockchain technology in transactions and proceedings,
• Provides limitations to the use of blockchain technology, and,
• Prohibits units of local government from implementing specified restrictions on the use of blockchain technology.

2019 IL H.B. 3575 (NS) February 15, 2019.

Indiana

The State's Money Transmitter Act does not expressly include the concepts of "virtual currencies" or "monetary value" and no guidance on the matter has been provided by the State.

With respect to sales tax administration, "a marketplace facilitator is required to collect and remit state sales and use taxes as a retail merchant when it facilitates a retail sale for a marketplace seller on the marketplace facilitator's marketplace." Per House Bill 1352, the providing of a virtual currency that buyers are allowed or required to use to purchase products from the seller qualifies a person as a "marketplace facilitator.

Additionally, the Senate introduced a resolution, "urging the Legislative Council to assign to an appropriate study committee the task of considering the enactment of the Uniform Regulation of Virtual Currency Businesses Act or other virtual currency regulation in the State of Indiana." 2019 IN S.R. 9 (NS) January 3, 2019

Iowa

Currently, the State's Money Services Act requires a license for the transmission of "monetary value," however the State's Division of Banking has not published guidelines on whether virtual currencies transmissions are subject to the Act. With that said, the House introduced a bill "providing for exemptions for virtual currency from certain security and money transmission regulations." 2019 IA H.F. 240 (NS) February 6, 2019.

Regarding Iowa tax law, the House introduced a bill that "exempts virtual currencies from individual, corporate, franchise, sales and use, and inheritance taxes. The bill [also] strikes a reference to "virtual currency" ... relating to the responsibility of a "marketplace facilitator" to collect sales tax when purchasers of tangible personal property, services, or digital products use virtual currency." 2019 IA H.F. 255 (NS) February 6, 2019.

Kansas

Although there are no blockchain or virtual currency specific regulations enacted 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 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) [Source].

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), [Source]. A person or business engaged solely in transmitting virtual currency, therefore, would not have to obtain a license to do so.

Kansas H.B. 2352 proposes "changes to nexus for the sales and use tax law; requiring tax collection by marketplace facilitators; imposing sales tax on digital products. If a person provides "a virtual currency that buyers are allowed or required to use to purchase products from the internet retailer," then that person can be deemed a "marketplace facilitator" under Kansas state tax law.

Kentucky

The State's Money Transmitter Act does not explicitly include the concept of "virtual currencies" but does require a license for the transmission of "monetary value." The State's has not published guidelines on whether virtual currencies transmissions are subject to the Act.

The Kentucky House of Representatives enacted a bill that amends Kentucky's Unclaimed Property Act to explicitly include virtual currency as property. 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."

The Kentucky House also proposed H.B. 354 that a person that "[p]rovides a virtual currency that purchasers are allowed or required to use to purchase tangible personal property, digital property, or services" can qualify as a "marketplace facilitator" for state tax law purposes. 2019 KY H.B. 354 (NS) February 13, 2019.

With respect to blockchain, the Kentucky House introduced a resolution, H.R. 171, to "[u]rge the Kentucky Cabinet for Economic Development to work with state and federal officials and study the issue of blockchain technology. 2019 KY H.R. 171 (NS) March 1, 2019.

Louisiana

There are no blockchain or virtual currency specific regulations enacted or pending in Louisiana at the time of publication. The State has issued public guidance on the applicability of the State's Money Transmitter Act to cryptocurrency transactions, stating that a person identified as an "exchanger" under FinCEN's interpretation is the only party who may be subject to licensure as a money transmitter in the State. FinCEN has characterized sellers of decentralized virtual currencies in exchange for another virtual currency or fiat currency, among others, as "exchangers." [Source]

Maine

The State's Money Transmitter Act does not explicitly include the concept of "virtual currencies" or "monetary value" and the State Office of Consumer Credit Protection has not published any guidance.

In February 2019, the Maine House introduced as resolution, H.R. 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." 2019 ME H.R. 673 (NS) February 19, 2019.

Maryland

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. These bills—together called the Financial Consumer Protection Act of 2018—require the Commission to make recommendations for State actions to regulate cryptocurrencies in its 2018 report to the Governor and the General Assembly. The bill also requires the "a study to assess whether the commissioner has enough statutory authority to regulate "Fintech" firms or technology-driven nonbank companies who compete with traditional methods in the delivery of financial services. OCFR [Office of the Commissioner of Financial Regulation] must identify any gaps in the regulation of Fintech firms, including any specific types of companies that are not subject to regulation under State law." The OCFR must report these findings to the General Assembly by December 31, 2019. [Source]

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. The Report recommends the legislature update the State's Money Transmission Act to include virtual currency transmitters. [Source].

Maryland's Department of Labor, Licensing and Regulation has 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), [Source].

On February 4, 2019, Senate Bill 786 was introduced as the "Financial Consumer Protection Act of 2019." 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.

With respect to Maryland state tax law, the Maryland house introduced H.B. 1301 which requires certain virtual currency person or businesses who qualify as "marketplace facilitators" to collect "the sales and use tax on certain sales by a marketplace seller to a buyer in the state under certain circumstances." If a person provides "a virtual currency that buyers are allowed or required to use to purchase products from the marketplace seller," then that person can be deemed a "marketplace facilitator." 2019 MD H.B. 1301 (NS) February 14, 2019.

Massachusetts

Massachusetts' regulations on money servicers do not mention virtual currencies and the State's Division of Banks has not published guidance on whether money servicers require a license under. [Source]. However, in replies to inquiries by virtual currency businesses, the Division noted that "Massachusetts does not presently have a domestic money transmission statute" and noted only "foreign transmittal agencies" require a license from the State. [Source]; [Source].

Massachusetts recently enacted a statute defining those the dissemination virtual currencies on the internet as "market place facilitators" subject to sales or use tax collection when engaged in business in commonwealth. 830 CMRH 1.7(b) (1). Previously, 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 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.

In January 2019, the Massachusetts Senate introduced S.B. 1762, which is "An Act related to the marketplace collection of sales tax." Accordingly, if a person or business provides "a virtual currency that buyers are allowed or required to use to purchase products from the vendor," then they can qualify as a "marketplace facilitator" for sales tax purposes.

The Massachusetts Senate has also proposed a bill to "a special commission is hereby established for the purposes of making an investigation and study relative to the emerging technologies of blockchain and cryptocurrencies. Specifically, the special commission shall examine the following:

1. The feasibility of using blockchain technology for government records or delivery of services;
2. The validity and admissibility of blockchain records in court proceedings;
3. The advisability of allowing corporate records to be kept using blockchain technology, including any security requirements necessary to ensure the accuracy of such records;
4. The advisability of using blockchain technology to protect voter records and election results;
5. The feasibility of creating statewide registries using blockchain for such topics as firearms, marijuana or opiates;
6. The advisability of government agencies accepting payment in cryptocurrencies;
7. The advisability of taxing cryptocurrency transactions as part of the sales tax;
8. The advisability of allowing cryptocurrencies as a form of payment for cannabis retail stores;
9. The feasibility of regulating the intense energy consumption associated with cryptocurrencies; and
10. Any other related topic which the commission may choose to examine in relation to blockchain or cryptocurrencies.

2019 MA S.B. 200 (NS) January 9, 2019.

Michigan

The State's Money Transmitter act does not explicitly include the concept of "virtual currencies," however it does include the undefined concept of "monetary value." The State has not issued further guidance on the matter.

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. These bills were referred to the committee on judiciary in December 2018.

The Michigan Department of Treasury issued guidance defining virtual currency and explaining how sales tax applies when virtual currency is used.

See Tax Policy Division of the Michigan Dept. of Treasury, Treasury Update, Vol. 1, Issue 1 (November 2015) [Source].

On January 29, 2019, Michigan's House introduced two bills (H.B. 4103 and 4106) which propose amending the Michigan Penal Code for crimes involving credit cards and crimes involving forgery and counterfeiting, respectively. The proposed amendment build in definitions for cryptocurrency and altering a record by use of distributed ledger technology. 2019 MI H.B. 4103 (NS); 2019 MI H.B. 4106 (NS)

Minnesota

The State's Money Transmitter laws do not explicitly include "virtual currencies" or "monetary value" and the Minnesota Commerce Department has not published guidance on virtual currency regulations.

In February 2017, the Minnesota House of Representatives introduced a bill that would amend the Minnesota Unclaimed Property Act to explicitly include virtual currency as property. 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." H.B. 1608, 1st Reg. Sess., 90th Leg. Sess. (Minn. 2017). However, this bill died in committee. [Source]

The Minnesota Commerce Department is joining an international crackdown on fraudulent initial coin offerings ("ICOs") and cryptocurrency scams. The effort is being coordinated by the North American Securities Administrators Association ("NASAA"), which represents state and local securities regulators. "Operation Cryptosweep" has resulted in nearly 70 investigations and 34 pending or completed enforcement actions as of early June 2018. [Source].

In March 2019, the Minnesota legislature introduced House File, H.F. 2208, which builds "virtual currency" into the definitions of the state's "unclaimed property" laws. 2019 MN H.F. 2208 (NS) March 7, 2019

Mississippi

The State's Money Transmitter laws do not explicitly include "virtual currencies," but does include the concept of "monetary value" as a medium of exchange. The State requires a license for the transmission of monetary value, but the Mississippi Department of Banking and Consumer Finance has not published guidance as to its applicability on virtual currencies.

Missouri

The State's consumer credit laws do not explicitly include "virtual currencies" or "monetary value" and the State's Division of Finance has not published guidance on virtual currency regulations.

A bill filed in the Missouri House of Representatives would make it illegal to use blockchain to store firearm owner data in the state. See H.R. 1256, 99th Gen. Assemb., 2d Reg. Sess. (Mo. 2017). However, the bill died in March 2018. [Source]

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) [Source]. 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) [Source].

In February 2019, the Missouri House introduced H.B. 1159, which "establishes regulations for financial institutions providing services for digital assets." The proposed statutory amendments includes the addition of definitions for "automated transaction," "digital asset," "digital consumer asset," "digital security," and "open Blockchain token." 2019 MO H.B. 1159 (NS) February 28, 2019. During this same month, the House also introduced a bill that "changes the law regarding the issuance of stock by corporations." The proposed statutory changes include ownership representation via use of a blockchain, certificate tokens, network signatures. 2019 MO H.B. 1109 (NS) February 27, 2019.

In March 2019, the Missouri House introduced H.B. 1247, which "requires the state and political subdivisions thereof to accept virtual currency as legal tender." 2019 MO H.B. 1247 (NS) March 1, 2019

A variety of tax bills are also proposing that the "providing a virtual currency that purchasers are allowed or required to use to purchase products from the marketplace seller" qualifies a person or business as a "marketplace facilitator" for state tax collection and remittance purposes. See, e.g., 2019 MO H.B. 1207 (NS) February 28, 2019; 2019 MO H.B. 548 (NS) January 14, 2019; 2019 MO H.B. 479 (NS) January 9, 2019.

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. SeeUS State of Montana Invests Directly in a Bitcoin Mining Operation, Trustnodes, (Jun. 13, 2017) [Source].

Montana's House introduced two separate bills, H.B. 584 and H.B. 630, seeking to exempt virtual currencies from securities laws and property taxation, respectively. The former addresses the definition of a "utility token" and its "consumptive purpose," which means to, "provide or receive goods, services, or content including access to goods, services, or content." 2019 MT H.B. 584 (NS) February 26, 2019; 2019 MT H.B. 630 (NS) February 27, 2019.

Nebraska

The State's Money Transmitter laws do not explicitly include "virtual currencies," but does include the concept of "monetary value" as a medium of exchange. The State requires a license for the transmission of monetary value, but the Nebraska Department of Banking and Finance has not published guidance as to its applicability on virtual currencies.

The Nebraska Legislature introduced three bills—L.B. 695, L.B. 691, and L.B. 694—focusing on blockchain and cryptocurrency in January 2018. If passed, L.B. 691 will amend the state's money-laundering statutes to account for cryptocurrencies. L.B. 691, 105th Leg. 2nd Reg. Sess. (Neb. 2018). L.B. 694 will prohibit local governments from taxing or otherwise regulating the use of distributive ledger technology. L.B. 694, 105th Leg. 2nd Reg. Sess. (Neb. 2018). L.B. 695 would allow the technology to be used for notarization. L.B. 695, 105th Leg. 2nd Reg. Sess. (Neb. 2018). All three bills have been indefinitely postponed since April 18, 2018. Furthermore, L.B. 987, entitled "Adopt the Uniform Regulation of Virtual-Currency Businesses Act"

In an administrative release, 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) [Source]. The guidance did not explain whether sales of virtual currencies are taxable.

With respect to state tax laws, Nebraska introduced L.B. 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. This proposal would affect the collection and remittance of sales tax. 2019 NE L.B. 284 (NS) January 15, 2019

Nevada

Nevada's Money Transmitter Act does not explicitly include "virtual currencies" or "monetary value" and the State's Department of Business and Industry has not published guidance on virtual currency regulations. However, on February 18, 2019, the Nevada Senate proposed S.B. 195, which would enact the Uniform Regulation of Virtual-Currency Businesses Act and the Uniform Supplemental Commercial Law for the Uniform Regulation of Virtual-Currency Businesses Act. 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 NV S.B. 195 (NS) February 18, 2019

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.

On February 14, 2019, the Nevada Senate introduced bills S.B. 162, 163, and 164. These three bills, respectively, seek to:

• revise "the definition of "electronic transmission" as it relates to certain communications of certain business entities to include the use of a blockchain or public Blockchain,"
• revise "provisions relating to electronic transactions ... including a public blockchain as a type of electronic record for the purposes of the Uniform Electronic Transactions Act," and,
• recognize, "certain virtual currencies as a form of intangible personal property for purposes of taxation."

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

New Jersey's Money Transmitter Act does not explicitly include "virtual currencies" or "monetary value" and the State's Department of Banking and Insurance.

In 2017 the state enacted the Uniform Fiduciary Access to Digital Assets Act that expressly authorizes an estate's executor under certain circumstances to manage digital assets, including virtual currencies, of a decedent. N.J.S.A. 3B: 14-61.1. The State's tax code § 54:32B-3.6 was also amended to virtual currency issuers as "marketplace facilitators."

In January 2018, the New Jersey Assembly introduced the Digital Currency Jobs Creation Act. If enacted the law would create a regulatory framework for virtual currency businesses and offer incentives for virtual currencies economic development.

Other bills pending in the General Assembly (A.B. 3613) and the Senate (S.B. 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." Assemb. 3613, 218th Leg., 1st Ann. Sess. (N.J. 2018). Another pair of bills (A.B. 3768 and S.B. 2462) pending in each house would permit corporations to use blockchain technology for certain recordkeeping requirements. Both of these bills continue to progress through the legislative process.

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

The State's Money Transmitter Act does not explicitly include the concept of "virtual currencies" but the State's Regulation and Licensing Department has issued guidance that those that exchange "virtual currency or money or any other form of monetary value or stored value" must be licensed by the FID as a money transmitter. [Source].

However, in February 2019, the New Mexico House introduced H.B. 649 entitled "Internet Business Development & Innovations." Part of the proposal states:

1. A person shall not engage in business as a cryptovalue creator and distributor or as a cryptovalue exchange without first having obtained a license to do so from the division.
2. Licensees shall pay to the division an annual licensing fee of one hundred dollars ($100).
3. A licensee shall be an active corporation organized pursuant to the laws of New Mexico.
4. A cryptovalue creator and distributor and a cryptovalue exchange is not a money service as defined in Subsection P of Section 58-32-102 NMSA.

Therefore, the progression of this statute will be important to determine whether a money transmission license is required for cryptocurrency businesses.

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 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. Information about the pending case, including briefings by the parties, can be found at [Source].

Other legislation pending before NY's legislature is AB8783, which creates a digital currency task force to determine the impact of cryptocurrencies on New York financial markets;

With respect to blockchain technology and applications, several bills were introduced in the first quarter of 2019 and include:

• "allowing signatures, records and contracts secured through blockchain technology to be considered in an electronic form and to be an electronic record and signature" and "allow[ing] smart contracts to exist in commerce." 2019 NY S.B. 4142 (NS) March 1, 2019,
• The creation of an "office of financial resilience" of which one responsibility would be "to advocate on behalf of blockchain startups and companies focused on building and supporting local economies." 2019 NY A.B. 2239 (NS) January 22, 2019,
• The establishment of a task force "to study and report on the potential implementation of blockchain technology in state record keeping, information storage, and service delivery." 2019 NY A.B. 1371 (NS) January 15, 2019,
• The creation of a task force "to study the potential designation of economic empowerment zones for the mining of cryptocurrencies in the state of New York." 2019 NY A.B. 1502 (NS) January 15, 2019

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).

In 2018, the State enacted legislation clarifying that the State's Money Transmitters Act does not require virtual currency exchanges to maintain a reserve fund equal to their customer's aggregate investment.

North Dakota

The State's Money Transmitter laws do not explicitly include "virtual currencies," but does include the concept of "monetary value" as a medium of exchange. 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].] NDCC 13-09; [Source].

The State introduced SB 2100 which enables the legislature to study the "feasibility and desirability of regulating virtual currency." However, the bill died in chamber. [Source].

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." 2019 ND H.C.R. 3002 (NS) January 3, 2019

On January 3, 2019, the North Dakota House introduced H.B. 1043 and H.B. 3004, which seeks to exempt "an open blockchain token from specified securities transactions and dealings" and "to study the potential benefit value of Blockchain technology implementation and utilization in state government administration and affairs." 2019 ND H.B. 1043 (NS) January 3, 2019; 2019 ND H.C.R. 3004 (NS) February 8, 2019.

North Dakota also proposed a bill to create a pilot program for a state agency to "research and develop the use of distributed ledger-enabled platform technologies, such as blockchains, for computer-controlled programs, data transfer and storage, and program regulation to protect against falsification, improve internal data security, and identify external hacking threats. Research must include efforts to protect the privacy of personal identifying information maintained within distributed ledger programs." 2019 ND H.B. 1048 (NS) January 14, 2019.

Finally, in March 2019, a bill was proposed to amend North Dakota state code related to the inclusion of electronic signatures, smart contracts, and blockchain technology. 2019 ND H.B. 1045 (NS) March 8, 2019

Ohio

Ohio's Money Transmitter Act does not explicitly include "virtual currencies" or "monetary value" and the State's Department of Commerce has not published guidance on virtual currency regulations.

In November 2018, Ohio became the first state to allow companies to pay a variety of tax burdens with cryptocurrency. [Source].

The State amended its 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) [Source].

S.B. 300 was pending before the State's legislature and would amend Ohio's Uniform Electronic Transactions Act to include blockchain records and smart contracts and recognize smart contracts as legally enforceable. However, that bill died in committee.

Oklahoma

Oklahoma's Money Transmitter Act does not explicitly include "virtual currencies" or "monetary value" and the State's Financial Regulation has not published guidance on virtual currency regulations.

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 determined that a seller who accepts bitcoin does not take the cryptocurrency free of an existing security interest. Okla. Stat. Ann. § 1-9-332.

In February 2019, a Senate Bill was introduced to amend the definitions for electronic records and signatures to be valid if secured via blockchain technology. 2019 OK S.B. 700 (NS) February 25, 2019.

The Senate also introduced a bill "clarifying status of open blockchain tokens under certain conditions." The proposal delineates when a person is not considered a broker-dealer and posits ways to comply with exemptions. 2019 OK S.B. 843 (NS) February 4, 2019.

The House also proposed a bill to create "the Uniform Regulation of Virtual-Currency Businesses Act and the Uniform Supplemental Commercial Law for the Uniform Regulation of Virtual-Currency Businesses Act." 2019 OK H.B. 1954 (NS) February 4, 2019.

Additionally, "virtual currency" is being proposed to be included within the definition of "contribution" for purposes of campaign finance. 2019 OK S.B. 809 (NS) February 20, 2019.

Oregon

Oregon's Money Transmitter Act does not explicitly include "virtual currencies" or "monetary value," but the State has said publicly that the Act's definition of money includes virtual currencies, including Bitcoin. [Source].

The Oregon Department of Human Services has adopted a regulation to set Department policy on how virtual currency or cryptocurrency will be treated for purposes of determining eligibility in APD medical and self-sufficiency programs. 2018 OR REG TEXT 491365 (NS), 2018 OR REG TEXT 491365 (NS).

In January 2019, the Oregon House introduced H.B. 2487, proposing that, "[t]he Oregon Department of Administrative Services shall study and make recommendations regarding the use of blockchain technology by state agencies to administer public services." 2019 OR H.B. 2487 (NS) January 14, 2019. On the same day, the House also introduced H.B. 2179 to establish a task force on blockchain applications and legislation. Per the proposal, "[t]he task force shall study and evaluate the status and development of blockchain technology, investigate potential uses for the technology for economic development and business transactions and make recommendations for any changes necessary in state statutes that can promote adopting, using and developing blockchain technologies." 2019 OR H.B. 2179 (NS).

With respect to cryptocurrency, the House also proposed that unless authorized by the state treasurer:

1. The state government, as defined in ORS 174.111, may not accept payments using cryptocurrency.
2. No candidate for public office may accept campaign contributions made using cryptocurrency.

2019 OR H.B. 2488 (NS) January 14, 2019.

Pennsylvania

Pennsylvania's Money Transmission Business Law does not explicitly include "virtual currencies" or "monetary value." In 2014, the State's Department of Banking and Securities ("DoBS") provided informal guidance that "virtual currencies like Bitcoin" are not "money" and therefore transmission of them does not require a license. See [Source].

In January 2019, the DoBS published guidance clarifying that, generally, virtual currency trading platforms are not money transmitters under state law. Similarly, entities operating virtual currency kiosks, ATMs, and vending machines are not considered money transmitters because "there is no transfer of money to any third party." [Source]

Rhode Island

Rhode Island's money transmitter act does not explicitly include "virtual currencies" or "monetary value" and the State's Department of Banking has not published guidance on virtual currency regulations.

In February 2019, the Rhode Island House proposed a bill entitled, "AN ACT RELATING TO STATE AFFAIRS AND GOVERNMENT—DEPARTMENT OF BUSINESS REGULATION—VIRTUAL CURRENCY (Establishes "Digital Asset Business Act". Regulates virtual-currency. Exempts virtual-currency from securities requirements and taxation.)." The proposal is quite comprehensive and intersects with money transmission, securities, and tax law, amongst others. 2019 RI H.B. 5776 (NS) February 28, 2019.

With respect to blockchain technology, the House introduced bills that:

• "exempt[s] a developer or seller of an open blockchain token from the provisions of the Rhode Island Uniform Securities Act." 2019 RI H.B. 5595 (NS) February 27, 2019
• "would add virtual currency to the existing electronic money transmission and sale of check licenses and would add additional regulatory provisions to simplify and clarify licensing related thereto." 2019 RI H.B. 5847 (NS) March 14, 2019.

There is also pending legislation that exempts virtual currency from property taxation (H.B. 5596) and the state's Rhode Island Uniform Security Act (H.B. 5598). However, with respect to the collection of sales and use tax, 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." 2019 RI H.B. 5278 (NS) February 5, 2019.

South Carolina

The State's money transmitter laws do not explicitly include "virtual currencies," but does include the concept of "monetary value" as a medium of exchange. The State has not provided any guidance as to the applicability of its regulations on virtual currencies.

South Carolina has proposed to add "virtual currency" to its unclaimed property act. 2019 SC H.B. 4200 (NS) March 7, 2019

South Dakota

South Dakota's money transmitter laws do not explicitly include "virtual currencies," but do include the concept of "monetary value" as a medium of exchange. The State's Department of Labor and Regulation has not issued guidance as to their applicability on virtual currencies.

The House recently adopted a definition of blockchain technology for certain purposes. The bill defines blockchain as "technology that uses a distributed, shared, and replicated ledger, either public or private, with or without permission, or driven with or without tokenized crypto economics where the data on the ledger is protected with cryptography and is immutable and auditable." 2019 SD H.B. 1196 (NS) March 7, 2019.

Tennessee

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).

According to Tennessee's Uniform Unclaimed Property Act, "property" includes virtual currency. Tenn. Code Ann. § 66-29-102.

On March 22, 2018, Governor Bill Haslam signed Tennessee Senate Bill 1662 which recognizes the legal authority to use blockchain technology and smart contracts in conducting electronic transactions. S.B. 1662, 110th Ge. Ass. 2nd Reg. Sess. (Tenn. 2017). The bill also recognizes smart contracts as having legal power. S.B. 1662, 110th Ge. Ass. 2nd Reg. Sess. (Tenn. 2017).

On April 9, 2018, Governor Haslam signed Tennessee Senate Bill S.B. 2508, which prohibits trustees of any defined contribution plan or related investment vehicle established as a health benefit by the state insurance company from investing in any cryptocurrency. S.B. 2508, 110th Gen. Ass. 2nd Reg. Sess. (Tenn. 2017).

The House proposed to include "blockchain" into the cryptocurrency definition in the state law related to the "Revised Tennessee Captive Insurance Act." 2019 TN H.B. 1300 (NS) February 6, 2019

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 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. H.J.R 89, 85th Leg., Reg. Sess. (Tx. 2017). However, the proposed constitutional amendment died in committee. H.J.R 89, 85th Leg., Reg. Sess. (Tx. 2017).

In March 2019, the Texas House introduced a bill to establish a Texas blockchain working group. The proposal states, "blockchain technology is a critically important development in commerce and finance, and in recognition of the importance of Texas as a center of technology and commerce, the Legislature deems it important to the future of this State to develop and recommend policies for the blockchain industry and to create appropriate legal infrastructure for transactions based upon blockchain, including digital assets and virtual currencies." 2019 TX H.B. 4517 (NS) March 8, 2019

There are also proposals to build in statutory language for blockchain technology in the state's Business Organizations Code in the context of "electronic data system[s]." 2019 TX H.B. 3608 (NS) March 6, 2019.

Utah

Utah's money transmitter law does not explicitly include "virtual currencies" or "monetary value" and the State's Department of Financial Institutions has not published guidance on virtual currency regulations.

Virtual currency is explicitly included in the definition of "property" in Utah's Revised Uniform Unclaimed Property Act. Utah Code Ann. § 67-4a-102.

Per a new proposal, 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." 2019 UT S.B. 168 (NS) February 14, 2019.

With respect to blockchain technology, the state has proposed:

• a "Joint Resolution Directing a Study of Blockchain Technology." 2019 UT H.J.R. 19 (NS) February 25, 2019, and,
• the "Blockchain Technology Act," which exempts a person who facilitates the creation, exchange, or sale of certain blockchain technology-related products from Title 7, Chapter 25, Money Transmitter Act [and] creates a legislative task force to study the potential applications of blockchain technology to government services." 2019 UT S.B. 213 (NS) March 6, 2019.

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).

On May 3, 2018, the Vermont General Assembly proposed legislation that enables blockchain technology records to be governed under the authentication, admissibility, and presumptions requirements of the Vermont Rules of Evidence. Vt. Stat. Ann. tit. 12, § 1913.

On May 30, 2018, Governor Phil Scott signed S.B. 269, which allowed for the creation of so-called "blockchain-based limited liability companies." S.B. 269, 2017–18 Leg., Reg. Sess. (Vt. 2017). The bill describes these businesses as "limited liability compan[ies] organized ... for the purpose of operating a business that utilizes blockchain technology for a material portion of its business activities." S.B. 269, 2017–18 Leg., Reg. Sess. (Vt. 2017). In order to set up a blockchain-based company, applicants must "specify whether the decentralized consensus ledger or database utilized or enabled by the BBLLC will be fully decentralized or partially decentralized and whether such ledger or database will be fully or partially public or private." S.B. 269, 2017–18 Leg., Reg. Sess. (Vt. 2017). The bill also calls for a study—due before January 15, 2019—into the technology's use in insurance and banking and how state officials can clear the way for such applications within the state's economy. S.B. 269, 2017–18 Leg., Reg. Sess. (Vt. 2017). The Vermont Department of Financial Regulation will conduct the study. S.B. 269, 2017–18 Leg., Reg. Sess. (Vt. 2017).

For state sales tax purposes, a bill was proposed that deems a party a "marketplace facilitator" if that person or business "Provid[es] a virtual currency that purchasers are allowed or required to use to purchase products from sellers." 2019 VT H.B. 117 (NS) January 30, 2019.

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." 2019 VT S.B. 154 (NS) March 14, 2019.

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.

A Joint House Resolution was introduced that, if enacted, would establish a one-year joint subcommittee consisting of seven legislative and five nonlegislative members to study the potential implementation of blockchain in state recordkeeping. H.J.R. 153, 2018 Reg. Sess. (Va. 2018). However, that bill died in committee.

Nevertheless, the House proposed a new bill to establish a "joint subcommittee to study the emergence and integration of blockchain technology in the economy of the Commonwealth." 2018 VA H.J.R. 677 (NS) February 18, 2019. Other proposals related to blockchain technology include:

• a bill establishing the significance of business records electronically registered on a blockchain self-authenticating. 2018 VA H.B. 2415 (NS) January 9, 2019,
• the establishment of "the Health Care Provider Credentials Data Solution Fund for the purpose of soliciting proofs of concept to establish or improve a system for the storage and accessing of health care provider credentials data, utilizing blockchain or a similar technology, to be maintained by the Department of Health Professions." 2018 VA H.B. 1900 (NS) January 9, 2019,
• a directive to "the Commissioner of Elections to establish and supervise a pilot program by which an active duty member of a uniformed service who has been deployed overseas and is a registered voter of a county or city participating in such pilot program may return his voted military-overseas ballot by electronic means ... To the fullest extent practicable, these standards and procedures are required to incorporate the use of blockchain technology, defined in the bill as technology using distributed databases and ledgers protected against revision by publicly verifiable open source cryptographic algorithms and protected from data loss by distributed records sharing." 2018 VA H.B. 2588 (NS) January 9, 2019

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." See, e.g., 2018 VA S.B. 1601 (NS) January 9, 2019

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.

In January 2018, the Washington House introduced a bill that would amend the Washington Unclaimed Property Act to explicitly include virtual currency as property. 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 also, 2019 WA H.B. 1179 (NS) February 14, 2019.

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. 2018 WA REG TEXT 463297 (NS), 2018 WA REG TEXT 463297 (NS).

The Washington Senate proposed a bill "[r]elating to recognizing the validity of distributed ledger technology." In particular, this relates to the state's business regulations, and even federal rules, related to electronic signatures. 2019 WA S.B. 5638 (NS) February 19, 2019.

West Virginia

West Virginia's money transmitter act does not explicitly include "virtual currencies" and the State's Department of Financial Institutions has not published guidance on virtual currency regulations.

The State explicitly prohibits the laundering of value through cryptocurrencies. W. Va. Code § 61-15-1, et seq. A bill was introduced that, if enacted, would require the Joint Committee on Government and Finance to study Bitcoin. H.B. 29, 83rd Leg. Re. Sess. (W. Va. 2018). A bill was recently introduced that, if enacted, would require the Joint Committee on Government and Finance to study Bitcoin. H.B. 29, 83rd Leg. Re. Sess. (W. Va. 2018).

With respect to the collection of use tax, 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." 2019 WV H.B. 2813 (NS) March 8, 2019

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 [Source]. 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). Relatedly, the "providing [of] a virtual currency used to purchase products from the marketplace seller" deems a person a "marketplace provider" who might need to collect sales tax. 2019 WI S.B. 59 (NS) February 28, 2019.

Wyoming

Wyoming has emerged as one of the most crypto-friendly jurisdictions in the United States. In March 2018, H.B. 70, known as the "Utility Token Bill" was signed into law. The Bill exempts "Utility Tokens" from the state's securities laws provided the issued token and its issuer meet the following requirements:

1. The developer or seller of the token, or the registered agent of the developer or seller, files a notice of intent with the secretary of state[;]
2. The purpose of the token is for a consumptive purpose, which shall only be exchangeable for, or provided for the receipt of, goods, services or content, including rights of access to goods, services or content; and
3. The developer or seller of the token did not sell the token to the initial buyer as a financial investment.

Under the statute, the part (iii) requirement is only met if:

1. The developer or seller did not market the token as a financial investment; and
2. At least one (1) of the following is true:
   1. The developer or seller of the token reasonably believed that it sold the token to the initial buyer for a consumptive purpose;
   2. The token has a consumptive purpose that is available at the time of sale and can be used at or near the time of sale for use for a consumptive purpose;
   3. If the token does not have a consumptive purpose available at the time of sale, the initial buyer of the token is prevented from reselling the token until the token is available for use for a consumptive purpose; or
   4. The developer or seller takes other reasonable precautions to prevent buyers from purchasing the token as a financial investment.

H.B. 70's liberal approach is facially at-odds with recent statements from the Federal Securities and Exchange Commission which, at least informally, has stated a belief that all tokens are likely securities. See, e.g., [Source]. Accordingly, because of federal supremacy, Wyoming's statute does not give complete safe harbor to issuers of "Utility Tokens."

In attempting to build the Nation's most crypto-friendly state, Wyoming also passed legislation authorizing corporations to create Blockchains to store records House Bill 101; amended its Wyoming Money Transmitter Act to provide an exemption for virtual currency. H.B. 19, 2018 Budget Sess. (Wyo. 2018) and exempted cryptocurrencies from state property taxes. S.F. 111, 2018 Budget Sess. (Wyo. 2018).

On March 10, 2018, the Wyoming legislature also passed legislation that exempts virtual currencies from property taxation. Currency. S. F. 111, 2018 Budget Sess. (Wyo. 2018).

The Wyoming House, in its latest appropriations bill, created a blockchain task force meant to identify governance issues related to blockchain technology. 2018 Wyoming House Bill No. 1, Wyoming 2018 Budget Session.

In February, a bill focused on digital assets was approved,

• classifying digital assets within existing laws;
• specifying that digital assets are property within the Uniform Commercial Code;
• authorizing security interests in digital assets;
• establishing an opt-in framework for banks to provide custodial services for digital asset property as custodians;
• specifying standards and procedures for custodial services under this act;
• clarifying the jurisdiction of Wyoming courts relating to digital assets

2019 Wyoming Laws Ch. 91 (S.F. 125), February 26, 2019;

Another bill was approved on February 28, 2019 focused on open blockchain tokens:

• 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

2019 Wyoming Laws Ch. 170 (H.B. 62)

Finally, other bills that were approved include:

• the authorization of "the secretary of state to develop and implement a blockchain filing system." 2019 Wyoming Laws Ch. 94 (H.B. 70), February 26, 2019.
• the authorization of "corporations to issue certificate tokens in lieu of stock certificates as specified." 2019 WY H.B. 185 (NS) February 26, 2019
• the idea to create a "new type of Wyoming financial institution that has expertise with customer identification, anti-money laundering and beneficial ownership requirements could seamlessly integrate these requirements into its operating model ... [a]uthorizing special purpose depository institutions to be chartered in Wyoming [that] will provide a necessary and valuable service to blockchain innovators, emphasiz[ing] Wyoming's partnership with the technology and financial industry and [to] safely grow this state's developing financial sector."
• 2019 WY H.B. 74 (NS) February 26, 2019
• the creation if the "Financial Technology Sandbox Act," whereas the adopted bill states that "Wyoming currently offers one of the best business environments in the United States for blockchain and financial technology innovators, and should offer a regulatory sandbox for these innovators to develop the next generation of financial technology products and services in Wyoming." 2019 WY H.B. 57 (NS) February 19, 2019