Originally published on October 17, 2017.
Updated on January 9, 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 provide 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 § 40-23-197, the state affirmatively taxes virtual currencies as "marketplace facilitators.". H.B. 470, 2018 Leg., Reg. Sess. (Ala. 2018) § 40-23-197.

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

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).

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 final reading 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).

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 make it unlawful to sell or exchange raffle ticket for any kind of cryptocurrency.

Colorado

Colorado's Money Transmitter Act does not expressly contemplate virtual currencies and the Colorado Division of Banking has not published any guidelines. 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).

Connecticut

House Bill 7141 became law on October 1, 2017, and requires that anybody engaged in the 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).

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 serve 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). Other bills related to the use of blockchain technology related to trusts, domestic LLCs, and limited partnerships have been proposed but not yet enacted. S.B. 194, 149th Leg., 1st Reg. Ass. (Del. 2018); S.B. 194, 149th Leg., 1st Reg. Ass. (Del. 2018); S.B. 183, 149th Leg., 1st Reg. Ass. (Del. 2018); S.B. 183, 149th Leg., 1st Reg. Ass. (Del. 2018).

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 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 on 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.

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.

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. "How Bad Policy Harms Coinbase Customers in Hawaii"; "Hawaii’s Issue with Bitcoin Businesses Has an Obvious and Easy Solution".

The Hawaiin 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).

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 on 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).

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."

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).

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).

Indiana

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

Iowa

There are no blockchain or virtual currency specific regulations enacted or pending in Iowa at the time of publication. The State's Money Services Act does, however, require 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. 

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).

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

House Bill 2756 is pending in the Kansas legislature that would amend the State's definition of "marketplace facilitator" to include those that provide a virtual currency that buyers are allowed or required to use to purchase products from the internet.

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."

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." See Consumer and Investor Advisory on Virtual Currency

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.

Maine proposed legislation that would establish a study to use blockchain technology in conjunction with paper ballots in Maine elections. S.B. 950, 127th Gen. Ass. 1st Reg. Sess. (Me. 2018).

Maryland

There are no blockchain or virtual currency specific regulations enacted in Maryland at the time of publication. Two bills before the Maryland legislature would mandate that the state's Financial Consumer Protection Commission study cryptocurrencies, initial coin offerings, cryptocurrency exchanges, and blockchain technologies. House Bill 1634 and Senate Bill 1068 — together called the Financial Consumer Protection Act of 2018 — would require the Commission to make "recommendations for State actions to regulate cryptocurrencies in its 2018 report to the Governor and the General Assembly." H.R. 1634, 2018 Gen. Assemb., 438th Sess. (Md. 2018).

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. Maryland Financial Consumer Protection Commission.

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).

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. (209 CMR 45.00: Licensing and regulation of money services businesses). 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. Selected Opinion 18-003; Selected Opinion 18-002.

Massachusetts 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.

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.

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).

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).

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. See State of Minnesota Joins Other States in Cryptocurrency Investment Crackdown.

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 Minnesota Commerce Department has not published guidance as to its applicability on virtual currencies.

Missouri

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).

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). 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).

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).

Nebraska

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.

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). 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 on August 1, 2017.

New Jersey

The only blockchain or virtual currency specific regulation in New Jersey is a recently enacted statute, effective December 12, 2017, titled 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.

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.

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 statute's 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 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, ," (May 29, 2015).

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)

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 statute's 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

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).

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).

Utah

In 2015, Utah proposed a bill that would allow residents to pay taxes with virtual currencies. H.C.R. 6, 2015 Leg., Gen. Sess. (Utah 2015). The bill would have encouraged widespread use of the virtual currency and made provisions for the council to examine whether the state could minimize risks if Bitcoin or other virtual currencies become a new norm of payment, however it ultimately did not get through the legislature.

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

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 company[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).

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).

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 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."

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)

West Virginia

There are no blockchain or virtual currency specific regulations enacted in West Virginia at the time of publication. West Virginia explicitly prohibits the laundering of 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).

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. 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

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:

• (i) The developer or seller of the token, or the registered agent of the developer or seller, file a notice of intent with the secretary of state[;]
• (ii) 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
• (iii) 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:

• (A) The developer or seller did not market the token as a financial investment; and
• (B) At least one (1) of the following is true:
• (I) The developer or seller of the token reasonably believed that it sold the token to the initial buyer for a consumptive purpose;
• (II) 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;
• (III) 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
• (IV) 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 "SEC Chief Clayton: ‘Every ICO I’ve Seen Is a Security’". 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.