HASBSB185 MCCLOUDT 2919
SENATE SUMMARY OF HOUSE AMENDMENTS
SB 185 2023 Regular Session Reese
KEYWORD AND SUMMARY AS RETURNED TO THE SENATE
COMMERCIAL REGULATIONS. Provides relative to the licensing and regulation
of virtual businesses. (gov sig)
SUMMARY OF HOUSE AMENDMENTS TO THE SENATE BILL
1. Delete the definitions of the terms "coin" and token".
2. Amend the definition of the term "mining".
3. Define the terms "minting" and "non-fungible token".
4. Add that virtual currency business activity shall not include mining, minting
non-fungible tokens, or certain blockchain activities.
5. Provides that an independent research firm conducting an investigative
background report on an applicant residing outside of the United States shall
demonstrate that it does not have an interest in, nor affiliation with, the
person who is the subject of the background check.
6. Requires the commissioner to provide quarterly reports to the legislature.
7. Creates a sunset clause.
8. Changes the effective date from August 1, 2023 to upon signature by the
governor.
DIGEST OF THE SENATE BILL AS RETURNED TO THE SENATE
SB 185 Reengrossed 2023 Regular Session Reese
Present law provides relative to the Virtual Currency Business Act and provides for the
regulation of virtual currency business and defines certain terms.
Proposed law defines additional terms, including "acting in concert", "affiliate",
"blockchain", "commissioner", "mining", "minting", "Nationwide Mulitistate Licensing
System and Registry", "non-fungible token", "office", "tangible net worth", "unsafe or
unsound act or practice", and "virtual currency network".
Present law provides for the licensure and regulation of a person who engages in or holds
itself out as engaging in virtual currency business activity with, or on behalf of, a resident.
Present law describes activities for which present law is not applicable. Allows the office of
financial institutions (OFI) to determine that a person or class of persons, given facts
particular to that person, shall be exempt from the provisions of present law.
Proposed law retains present law and provides that activities of proposed law are applicable
to a person who provides virtual currency to a person exempt under this Chapter that has no
agreement or relationship with a resident that is an end user of virtual currency and a person
whose virtual currency business activity, with or on behalf of a resident, is valued at $5,000
or less on an annual basis. Further, proposed law deletes the requirement that allows the OFI
to determine that a person or class of persons, given facts particular to that person, shall be
exempt from the provisions of this Chapter. HASBSB185 MCCLOUDT 2919
Present law requires a person engaging in virtual currency business activity, or holding itself
out as being able to engage in virtual currency business activity, with or on behalf of a
resident, to be licensed by OFI and establishes the criteria for licensure.
Proposed law retains present law and adds as a requirement for licensure a copy of the
applicant's business plan, which includes a three-year financial pro forma, the anticipated
volume of virtual currency business activities in this state, the anticipated number of virtual
currency locations, including kiosk machines, and evidence of the surety bond, and current
and continued maintenance of the tangible net worth.
Proposed law adds as a requirement for licensure that a person who has resided outside of
the United States at any time in the last 10 years to provide an investigative background
report prepared by an independent search firm, which includes the person's criminal records,
employment history, media history, and a financial service-related regulator history.
Present law provides for the acceptance or denial of an application for licensure within 30
days of completing an application.
Proposed law provides for the acceptance or denial of an application for licensure within 60
days of completing an application.
Proposed law provides that no license shall be issued unless the applicant provides a surety
bond, evidence of tangible net worth, pay all cost and fees, and notice is issued by the
commissioner of its decision to approve or conditionally approve the application.
Proposed law provides procedures, information, and notice when change of control of a
licensee or an applicant is contemplated by any person or persons acting in concert.
Proposed law provides procedures for approval of an advanced change of responsible
individual of a licensee or applicant.
Present law requires the licensee to submit a surety bond prior to the issuance of a license
in the amount of $100,000, tangible net worth of the greater of $100,000, or 3% of total
assets.
Proposed law retains present law and further adds that prior to issuance of a license a
licensee shall submit a tangible net worth of greater of $100,000 or 3% of total assets for the
first $100,000,000, 2% of additional assets for $100,000,000 to $1,000,000,000, and ½
percent of additional assets for over $1,000,000,000.
Proposed law provides that the commissioner may use the following factors in determining
additional tangible net worth:
(1)The actual and projected volume of the licensee's virtual currency business activity
in the state.
(2)Whether the licensee is currently licensed or regulated by the commissioner in this
state and is in good standing.
(3)The amount of leverage employed by the licensee.
(4)The liquidity position of the licensee.
(5)The products or services offered by the licensee.
Proposed law requires that tangible net worth shall be clearly evidenced by filing or
submitting a current audited financial statement to the commissioner. Provides that all
license requirements relative to tangible net worth shall be evidenced at the time of initial
application, maintained at all times during licensure, and reported annually to the
commissioner.
Proposed law provides that a licensee who stores, holds, or maintains custody or control of
virtual currency for a resident, such licensee shall hold virtual currency of the same type and
of the same amount. Prohibits a licensee from selling, transferring, assigning, lending, HASBSB185 MCCLOUDT 2919
hypothecating, pledging, using, or encumbering virtual currency except for the sale, transfer,
or assignment of the virtual currency at the direction of the resident. Allows the licensee to
commingle the resident virtual currency with the licensee's virtual currency, provided the
licensee's assets are deemed resident assets and the licensee may only withdraw or assert a
claim on that amount to the extent that the amount exceeds that amount of resident assets
held by or for a resident.
Present law provides for the appeal of a denial of an application for licensure and the
renewal of a license.
Proposed law provides that no license shall be issued unless the commissioner has made a
determination that an applicant has met licensing requirements. Provides that in a case of
denial of an advanced change of control notice or denial of an advanced change of
responsible individual notice, the applicant can appeal the denial not later than 30 days after
the office notifies the applicant or licensee of the denial.
Proposed law provides that each person licensed as a virtual currency business activity
licensee shall submit an annual license renewal application on or before December 31st of
each year, accompanied by all fees. Further provides that any license renewal application
submitted after December 31st and before March first of the following year, shall be charged
an annual licensee renewal late fee. An annual licensee renewal application that is timely
submitted on or before the expiration date shall remain in force and effect until approved or
denied by the commissioner.
Present law requires quarterly financial reports.
Proposed law retains the requirements of quarterly financial reports.
Present law provides for the examination of books, records, and accounts of its virtual
currency business activities as the commissioner may reasonably require in order to
determine whether the person is complying with present law.
Proposed law retains present law and further provides that the examination can be conducted
on-site, or concurrent with another state or federal agency.
Proposed law provides that a licensee engaging in virtual currency business activities shall
maintain and preserve books, records, and accounts of its virtual currency business activities
for a period of five years or longer, if required by the commissioner.
Proposed law provides that all books, records, and accounts that are maintained by the
licensee shall have specific requirements.
Proposed law provides that licensees engaged in virtual currency business activity in the
state shall adopt and implement compliance policies and procedures, in writing, with
minimum standards in accordance with proposed law. Requires approval of policies and
procedures by the licensee's board of directors or an equivalent governing body.
Present law authorizes the office to enforce the provisions of present law through certain
actions and provides for penalties.
Proposed law retains present law and further provides that the enforcement actions may be
supplemented by the exercise of any other enforcement power by the commissioner as
authorized by present law.
Proposed law provides for suspension of a license for a person who fails to maintain a surety
bond, commits a violation that demands emergency action be taken, submits a fee that is
returned or not paid in full, convicted of a felony offense, or has his license to engage in
virtual currency business activities suspended or revoked in another jurisdiction.
Proposed law requires a licensee engaged in virtual currency business activity in this state
to provide certain accurate and appropriate disclosures, describing all material risks
associated with the licensees virtual currency products, services, and activities and virtual
currency in general, and a failure to do so shall result in a violation. HASBSB185 MCCLOUDT 2919
Present law requires OFI to promulgate administrative rules to implement and enforce
proposed law.
Proposed law retains present law and authorizes the commissioner to adopt emergency rules
as necessary and appropriate to enforce the provisions of the Virtual Currency Business Act.
Proposed law provides that the commissioner shall report quarterly reports to the legislature.
Proposed law provides that the provisions of this Act shall terminate on July 1, 2025.
Effective upon signature of the governor or lapse of time for gubernatorial action.
(Amends R.S. 6:1382, 1384-1388, 1390, and 1392-1394; adds R.S. 6:1385.1, 1385.2, 1386.1,
1386.2, 1388.1, 1391(D)-(G), 1391.1, 1391.2, and 1393.1; repeals R.S. 6:1383(C)(5)(c) and
(7) and (D) and 1389)
______________________
Xavier Alexander
Attorney