United States: State Regulations On Virtual Currency And Blockchain Technologies

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

INTRODUCTION:

As of this inaugural publication, there exists no uniformity with respect to how businesses that deal in virtual currencies (also known as "cryptocurrencies") such as Bitcoin are treated among the states. For these proprietors, often the first question asked when deciding whether to operate within a state is whether existing state money transmitter rules apply to the sale or exchange of virtual currencies. As you will see from the discussion below, most states have not yet enacted regulations that provides virtual currency operators with any guidance on this question.

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

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

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

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

ALABAMA

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

ALASKA

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

ARIZONA

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

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

ARKANSAS

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

CALIFORNIA

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

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

COLORADO

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

CONNECTICUT

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

DELAWARE

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

FLORIDA

Governor Rick Scott signed House Bill 1379 in June 2017. The bill is viewed by many as a legislative response to a criminal decision by the Eleventh Judicial Circuit's, Florida v. Espinoza, F14-2023, dismissing a criminal information against Michell Espinoza for money laundering under the rationale that virtual currencies such as Bitcoin are not "money" as defined by the state's Money Laundering Act. The bill expands the Florida Money Laundering Act, Fla. Stat. § 896.101 to expressly prohibit the laundering of virtual currency, which the bill defines as "a medium of exchange in electronic or digital format that is not a coin or currency of the United States or any other country." H.B. 1379, 119th Reg. Sess. (Fla. 2017). The bill took effect July 1, 2017.

GEORGIA

In spring 2016, Gov. Nathan Deal signed a bill into law amending Title 7 of the Official Code of Georgia Annotated. The bill authorizes the state's Department of Banking and Finance "to enact rules and regulations that apply solely to persons engaged in money transmission or the sale of payment instruments involving virtual currency," including rules to "[f]oster the growth of businesses engaged in money transmission or the sale of payment instruments involving virtual currency in Georgia and spur state economic development." Ga. Code Ann. § 7-1-690(b)(1). In addition, the code's banking and finance section now includes "virtual currency" as a defined term. Ga. Code Ann. § 7-1¬680(26) ("'Virtual currency" means a digital representation of monetary value that does not have legal tender status as recognized by the United States government."). Georgia also requires that all money transmitters obtain a license to conduct any activity involving virtual currency.

HAWAII

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

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

IDAHO

Though no laws are currently in place or pending in Idaho, the state's Department of Finance issued several "Money Transmitter No-Action and Opinion Letters" addressing problems related to virtual currency and the state's money transmission laws. The latest letter was posted July 26, 2016. In it, the Department wrote "[a]n exchanger that sells its own inventory of virtual currency is generally not considered a virtual currency transmitter under the Idaho Money Transmitters Act." However, "an exchanger that holds customer funds while arranging a satisfactory buy/sell order with a third party, and transmits virtual currency...between buyer and seller, will typically be considered a virtual currency transmitter." See Idaho Department of Finance, Letter Re: Money Transmissions (Dated July 26, 2016), available at http://www.finance.idaho.gov/MoneyTransmitter/Documents/NAOP/
Digital%20Currency/2016-07-26.pdf
(last visited 10/02/2017).

ILLINOIS

Though no laws are currently in place or pending in Illinois, the state's Department of Financial and Professional Regulation issued guidance regarding application of the state's Transmitters of Money Act to those dealing in virtual currencies. Under the Department's guidance, digital currencies are not "money" under the Transmitters of Money Act and therefore "[a] person or entity engaged in the transmission of solely digital currencies, as defined, would not be required to obtain a TOMA license." See Illinois Department of Financial and Professional Regulation, Digital Currency Regulatory Guidance, (July 13, 2017), available at http://www.idfpr.com/Forms/DFI/CCD/IDFPR%20-%20 Digital%20Currency%20Regulatory%20Guidance.pdf (last visited 10/02/2017).

This guidance suggests a willingness by the state to embrace the use of virtual currencies and blockchain technologies, as made further evident by the Illinois legislature having empaneled a Blockchain Task Force in February 2017 to study how the state could benefit from a transition to a blockchain based system of record keeping any service delivery.

INDIANA

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

IOWA

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

KANSAS

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

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

KENTUCKY

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

LOUISIANA

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

MAINE

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

MARYLAND

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

MASSACHUSETTS

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

MICHIGAN

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

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

MINNESOTA

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

MISSISSIPPI

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

MISSOURI

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

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

MONTANA

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

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

NEBRASKA

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

NEVADA

Nevada became the first state to ban local governments from taxing blockchain use when it enacted Senate Bill No. 398 in June 2017. The bill defines blockchain as an electronic record, transaction, or other data which is (1) uniformly ordered; (2) Redundantly maintained or processed by one or more computers or machines to guarantee the consistency or nonrepudiation of the recorded transactions or other data; and (3) Validated by the use of cryptography. N.R.S. SB 398 § 1. Under the bill, local governments are prevented from taxing blockchain use. Additionally, the bill states that, "if a law requires a record to be in writing, submission of a blockchain which electronically contains the record satisfies the law" – meaning that data from a blockchain can be introduced in legal proceedings in Nevada courts. N.R.S. SB 398 § 1.

NEW HAMPSHIRE

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

NEW JERSEY

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

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

NEW MEXICO

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

NEW YORK

The New York State Department of Financial Services established a comprehensive regulatory framework for virtual currency businesses called "BitLicense" that requires operations related to transactions involving any form of virtual currency to obtain a license from the state. 23 NYCRR 200. Before being granted a license, the state requires applicants to have strict compliance and supervisory policies and procedures in place, including, among other things, anti-money laundering/know-your-customer and cybersecurity programs in place. 23 NYCRR 200.

Since its enactment in 2015, the regulatory scheme has been the subject of much criticism and has resulted in an exodus of businesses fleeing the state because of the costs and regulatory hurdles associated with the BitLicense. In late 2016, Theo Chin, a well-known Bitcoin entrepreneur filed a petition to the Supreme Court of New York challenging the authority of the state's Department of Financial Services to use the Bitcoin community as guinea pigs to test new banking regulations, arguing that under Article 78 of the State of New York regulations must be preceded by a law enacted by the Legislature. Information about the pending case, including briefings by the parties, can be found at https://www.article78againstnydfs.com/raw.php.

NORTH CAROLINA

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

NORTH DAKOTA

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

OHIO

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

OKLAHOMA

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

OREGON

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

PENNSYLVANIA

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

RHODE ISLAND

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

SOUTH CAROLINA

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

SOUTH DAKOTA

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

TENNESSEE

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

TEXAS

Texas was the first state to release an official position on bitcoin with Memorandum 1037 clarifying that no money transmitter's license is required to sell Bitcoin. Memo, Tx. Dep't of Banking, Regulatory Treatment of Virtual Currencies Under the Texas Money Services Act (April 3, 2014). The memo, developed by the Texas Department of Banking, states that Bitcoin and other virtual currencies will not be treated as legal money in Texas. Memo, Tx. Dep't of Banking, Regulatory Treatment of Virtual Currencies Under the Texas Money Services Act (April 3, 2014).

There is an effort among some of the state's lawmakers to codify the state's hands-off approach to virtual currency through a proposed constitutional amendment that would protect the right to own and use digital currencies. H.J.R 89, 85th Leg., Reg. Sess. (Tx. 2017). If passed, the amendment would alter Article 1 of the Texas constitution to include the right to use any "mutually agreed upon medium of exchange." H.J.R 89, 85th Leg., Reg. Sess. (Tx. 2017).

UTAH

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

VERMONT

Vermont applies its money transmission laws to virtual currency. On May 1, 2017 Vermont amended its money transmitter law to allow companies to hold virtual currency as a permissible investment. H.B. 182, 2017 Gen. Assemb., Reg. Sess. (Vt. 2017). Digital currency businesses with money transmitter licenses are required to hold a certain amount of permissible investments and this law makes it clear that virtual currency counts as a permissible investment.

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

VIRGINIA

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

WASHINGTON

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

WEST VIRGINIA

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

WISCONSIN

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

WYOMING

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

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

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

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Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions