Rhode Island 2023 Regular Session

Rhode Island House Bill H5836 Compare Versions

Only one version of the bill is available at this time.

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7	7	LC001944
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9	9	S TATE OF RHODE IS LAND
10	10	IN GENERAL ASSEMBLY
11	11	JANUARY SESSION, A.D. 2023
12	12	____________
13	13
14	14	A N A C T
15	15	RELATING TO STATE AFFAIRS AND GOVERNMENT -- RHODE ISLAND ECONOMI C
16	16	GROWTH BLOCKCHAIN AC T
17	17	Introduced By: Representative David J. Place
18	18	Date Introduced: March 01, 2023
19	19	Referred To: House Corporations
20	20
21	21
22	22	It is enacted by the General Assembly as follows:
23	23	SECTION 1. Title 42 of the General Laws entitled "STATE AFFAIRS AND 1
24	24	GOVERNMENT" is hereby amended by adding thereto the following chapter: 2
25	25	CHAPTER 64.35 3
26	26	RHODE ISLAND ECONOMIC GROWTH BLOCKCHAIN ACT 4
27	27	42-64.35-1. Short title. 5
28	28	This chapter shall be known and may be cited as the "Rhode Island Economic Growth 6
29	29	Blockchain Act." 7
30	30	42-64.35-2. Legislative Findings. 8
31	31	The general assembly finds and declares: 9
32	32	(1) It is declared to be the policy of the state to promote a vigorous and growing economy, 10
33	33	to prevent economic stagnation, and to encourage the creation of new job opportunities in order to 11
34	34	ameliorate the hazards of unemployment and underemployment, reduce the level of public 12
35	35	assistance, increase revenues to the state and its municipalities, and to achieve a stable diversified 13
36	36	economy. 14
37	37	(2) The State of Rhode Island understands that to compete in the twenty-first century 15
38	38	economy, Rhode Island must offer one of the best business environments in the United States for 16
39	39	blockchain and technology innovators, and should offer a comprehensive regulatory technology 17
40	40	sandbox for these innovators to develop the next generation of digital products and services in 18
41	41
42	42
43	43	LC001944 - Page 2 of 34
44	44	Rhode Island; 1
45	45	(3) Building a more robust public-private partnership framework is mandatory for 2
46	46	economic success; 3
47	47	(4) The State of Rhode Island understands that further developing technology industries 4
48	48	within a robust public-private partnership brings better efficiency, trust, and accountability between 5
49	49	Rhode Island state government, businesses, and residents. 6
50	50	(5) The state understands a public-private partnership developing an immutable 7
51	51	interagency-industry-operability blockchain filing system is vital and redevelopment investment in 8
52	52	opportunity zones that shall install, maintain, and organize within the system of blockchain records 9
53	53	throughout the state is advantageous. 10
54	54	(6) Financial and health technology is undergoing a transformational period in which new 11
55	55	technologies are providing greater automation, connectivity and transparency for provenance of 12
56	56	products and services: 13
57	57	(i) Existing legal frameworks are restricting technology innovation because these 14
58	58	frameworks were largely established at a time when technology was not a fundamental component 15
59	59	of products and services; 16
60	60	(ii) Technology innovators require a supervised, flexible regulatory sandbox to test new 17
61	61	products and services using waivers of specified statutes and rules under defined conditions; 18
62	62	(iii) Jurisdictions which establish regulatory sandboxes are more likely to provide a 19
63	63	welcoming business environment for technology innovators and may experience significant 20
64	64	business growth; 21
65	65	(iv) Other jurisdictions have enacted, or are considering, regulatory sandboxes for financial 22
66	66	technology innovators in their jurisdictions; 23
67	67	(v) Other jurisdictions have enacted, or are considering public-private partnerships for 24
68	68	health technology innovators in their jurisdictions; 25
69	69	(vi) Other jurisdictions have enacted or are considering blockchain track and trace 26
70	70	identifiers for highly regulated products and industry such as hemp; while recognizing there are 27
71	71	legitimate concerns on implementing a widespread hemp industry in the state, necessitating 28
72	72	incremental rollout of newly licensed and credentialed entities to best ensure public health and 29
73	73	safety: Rhode Island seeks to establish a best in the nation blockchain technology hub for twenty-30
74	74	first century commerce that will increase economic opportunity; including highly regulated 31
75	75	industries that otherwise left unchecked could cause continued harm to public health and safety. 32
76	76	(7)(i) The rapid innovation of blockchain technology including the growing use of virtual 33
77	77	currency and other digital assets has resulted in many blockchain innovators being unable to access 34
78	78
79	79
80	80	LC001944 - Page 3 of 34
81	81	secure and reliable banking services thereby hampering development of blockchain services and 1
82	82	products in the marketplace; 2
83	83	(ii) Federally insured financial institutions are not generally permitted to manage accounts 3
84	84	in virtual currency or hold other digital assets; 4
85	85	(iii) Blockchain innovators have greater compliance challenges with federal customer 5
86	86	identification, anti-money laundering and beneficial ownership requirements because of the 6
87	87	complex nature of these obligations and the unfamiliarity of regulators with blockchain innovators' 7
88	88	businesses; 8
89	89	(iv) These intricate obligations have resulted in many financial institutions in Rhode Island 9
90	90	and across the United States refusing to provide banking services to blockchain innovators and also 10
91	91	refusing to accept deposits in United States currency obtained from the sale of virtual currency or 11
92	92	other digital assets; 12
93	93	(v) Compliance with applicable federal and state laws is critical to ensuring the future 13
94	94	growth and reputation of the blockchain and technology industries as a whole; 14
95	95	(vi) Most financial institutions today do not have the requisite expertise or familiarity with 15
96	96	the challenges facing blockchain innovators which is required to provide secure and reliable 16
97	97	banking services to these innovators; 17
98	98	(vii) A new type of Rhode Island financial payments and depository institution that has 18
99	99	expertise with customer identification, anti-money laundering and beneficial ownership 19
100	100	requirements could seamlessly integrate these requirements into its operating model; and 20
101	101	(viii) Authorizing special purpose depository institutions to be chartered in Rhode Island 21
102	102	will provide a necessary and valuable service to blockchain innovators, emphasize Rhode Island's 22
103	103	partnership with the technology and financial industry and safely grow this state's developing 23
104	104	financial sector. 24
105	105	42-64.35-3. Definitions. 25
106	106	As used in this chapter the following words and phrases shall have the following meanings, 26
107	107	unless the context otherwise requires: 27
108	108	(1) "Agency" or "public body" means any executive, legislative, judicial, regulatory, 28
109	109	administrative body of the state, or any political subdivision thereof: including, but not limited to, 29
110	110	any department, division, agency, commission, board, office, bureau, authority, any school, fire, or 30
111	111	water district, or other agency or quasi-public agency of Rhode Island state or local government 31
112	112	which exercises governmental functions or any other public or private agency, person, partnership, 32
113	113	corporation, or business entity acting on behalf of any public agency. 33
114	114	(2) "Bank" means any corporation, excluding national banks, having a place of business 34
115	115
116	116
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118	118	within this state which engages in banking business, and includes a special purpose depository 1
119	119	institution, subject to the limitations set forth in § 42-64.34-9. 2
120	120	(3) "Batch" means a specific quantity of real or digital product that is part of a regulated 3
121	121	industry, such as hemp or vital records. 4
122	122	(4) "Blockchain" means a digital ledger or database which is chronological, consensus-5
123	123	based, decentralized and mathematically verified in nature. 6
124	124	(5) "Bureau" means an office or department in charge of administering any agency or bank 7
125	125	regulated by the provisions of this chapter. 8
126	126	(6) "Commercial hemp activity" means and includes the cultivation, possession, 9
127	127	manufacture, distribution, processing, storing, laboratory testing, packaging, labeling, 10
128	128	transportation, delivery, or sale of hemp and hemp products as provided for in this chapter. 11
129	129	(7) "Commissioner" means the state banking commissioner. 12
130	130	(8) "Compassion Center" as defined under § 21-28.6-3. 13
131	131	(9) "Consumer" means a person, whether a natural person or a legal entity, in Rhode Island 14
132	132	who purchases or enters into an agreement to receive an innovative financial product or service 15
133	133	made available through the financial technology sandbox; 16
134	134	(10) "Consumptive" means a circumstance when a token is exchangeable for, or provided 17
135	135	for the receipt of, services, software, content or real or tangible personal property, including rights 18
136	136	of access to services, content or real or tangible personal property. 19
137	137	(11) "Control" means: 20
138	138	(i) When used in reference to a transaction or relationship involving virtual currency, the 21
139	139	power to execute unilaterally or prevent indefinitely a virtual currency transaction; and 22
140	140	(ii) When used in reference to a person, the direct or indirect power to direct the 23
141	141	management, operations, or policies of the person through legal or beneficial ownership of twenty-24
142	142	five percent (25%) or more of the voting power in the person or under a contract, arrangement, or 25
143	143	understanding. 26
144	144	(12) "Cultivation" means any activity involving the planting, growing, harvesting, drying, 27
145	145	curing, grading, or trimming of hemp. 28
146	146	(13) "Cultivation site" means a location where hemp is planted, grown, harvested, dried, 29
147	147	cured, graded, or trimmed, or a location where any combination of those activities occurs. 30
148	148	(14) "Custodial services" means the safekeeping and management of customer currency 31
149	149	and digital assets through the exercise of fiduciary and trust powers under this section as a 32
150	150	custodian, and includes fund administration and the execution of customer instructions. 33
151	151	(15) "Customer" means a natural person twenty-one (21) years of age or older or a natural 34
152	152
153	153
154	154	LC001944 - Page 5 of 34
155	155	person eighteen (18) years of age or older who possesses a physician's recommendation, or a 1
156	156	primary caregiver. 2
157	157	(16) "Database" means a set of data held on a secured computer software program or 3
158	158	encrypted electronic storage system providing an immutable distributed ledger of records. 4
159	159	(17) "Department" means the department of business regulation, division of banking. 5
160	160	(18) "Developer" means the person primarily responsible for creating an open blockchain 6
161	161	token or otherwise designing the token, including by executing the technological processes 7
162	162	necessary to create the token; 8
163	163	(19) "Digital asset" means a representation of economic, proprietary or access rights that 9
164	164	is stored in a computer readable format, and includes digital consumer assets, digital securities and 10
165	165	virtual currency; 11
166	166	(20) "Digital consumer asset" means a digital asset that is used or bought primarily for 12
167	167	consumptive, personal or household purposes and includes: 13
168	168	(i) An open blockchain token constituting intangible personal property as otherwise 14
169	169	provided by law; and 15
170	170	(ii) Any other digital asset which does not fall within the scope of this chapter. 16
171	171	(21) "Exchange," used as a verb, means to assume control of virtual currency from or on 17
172	172	behalf of a resident, at least momentarily, to sell, trade, or convert: 18
173	173	(i) Virtual currency for legal tender, bank credit, or one or more forms of virtual currency; 19
174	174	or 20
175	175	(ii) Legal tender or bank credit for one or more forms of virtual currency. 21
176	176	(22) "Facilitator" means a person who, as a business, makes open blockchain tokens under 22
177	177	this section available for resale to the public after a token has been purchased by an initial buyer. 23
178	178	(23) "Fees" means charge(s) imposed by the private entity of a qualifying project for use 24
179	179	of all or a portion of such qualifying project pursuant to a comprehensive agreement; 25
180	180	(24) "Financial investment" means a contract, transaction or arrangement where a person 26
181	181	invests money in a common enterprise and is led to expect profits solely from the efforts of a 27
182	182	promoter or a third party. 28
183	183	(25) "Financial product or service" means a product or service related to finance, including 29
184	184	banking, securities, consumer credit or money transmission, which is subject to statutory or rule 30
185	185	requirements identified in title 19 and is under the jurisdiction of the commissioner or secretary. 31
186	186	(26) "Financial technology sandbox" means the program created by this chapter which 32
187	187	allows a person to make an innovative financial product or service available to consumers during a 33
188	188	sandbox period through a waiver of existing statutory and rule requirements, or portions thereof, 34
189	189
190	190
191	191	LC001944 - Page 6 of 34
192	192	by the commissioner or secretary. 1
193	193	(27) "Hemp" means marijuana and all parts of the plant of the genus hemp, whether 2
194	194	growing or not; the seeds thereof; the resin extracted from any part of the plant; and every 3
195	195	compound, manufacture, salt, derivative, mixture, or preparation of the plant, its seeds, or resin. It 4
196	196	does not include hemp, the mature stalks of the plant, fiber produced from the stalks, oil or cake 5
197	197	made from the seeds of the plant, or any other compound, manufacture, salt, derivative, mixture, 6
198	198	or preparation of the mature stalks (except the resin extracted from it), fiber, oil, or cake, or the 7
199	199	sterilized seed of the plant that is incapable of germination. 8
200	200	(28) "Hemp cultivation facility" means an entity that is licensed pursuant to chapter 26 of 9
201	201	title 2, to be exempt from state penalties for manufacturing hemp or hemp products, cultivating, 10
202	202	preparing, packaging, and selling hemp to a retailer, processor, or another hemp cultivation facility, 11
203	203	but not for selling hemp products or selling hemp to the general public. 12
204	204	(29) "Hemp processor" means an entity licensed pursuant to chapter 26 of title 2 to be 13
205	205	exempt from state penalties for purchasing hemp from hemp cultivation facilities, manufacturing 14
206	206	hemp products, and selling, giving, or transferring hemp products to a hemp retailer or a hemp 15
207	207	testing facility. 16
208	208	(29) "Hemp products" means all parts of the plant hemp sativa linnaeus, hemp indica, or 17
209	209	hemp ruderalis, whether growing or not. 18
210	210	(30) "Hemp testing facility" means an entity that is licensed pursuant to chapter 26 of title 19
211	211	2 to be exempt from state penalties for testing hemp and hemp products for potency and 20
212	212	contaminants. 21
213	213	(31) "Innovative" means new or emerging technology, or new uses of existing technology, 22
214	214	that provides a product, service, business model or delivery mechanism to the public and has no 23
215	215	substantially comparable, widely available analogue in Rhode Island including blockchain 24
216	216	technology. 25
217	217	(32) "Issuer" means a person that issues or proposes to issue a security 26
218	218	(33) "Legal tender" means a medium of exchange or unit of value, including the coin or 27
219	219	paper money of the United States, issued by the United States or by another government. 28
220	220	(34) "License'' means a state license issued under this division, and includes both a 29
221	221	cultivation license and a medicinal use license, as well as a testing laboratory license. 30
222	222	(35) "Licensee" means any person holding a license under this chapter, regardless of the 31
223	223	license held, and includes the holder of a testing laboratory license. 32
224	224	(36) "Licensing authority" means the state agency responsible for the issuance, renewal, or 33
225	225	reinstatement of the license, or the state agency authorized to take disciplinary action against the 34
226	226
227	227
228	228	LC001944 - Page 7 of 34
229	229	licensee. 1
230	230	(37) "Local jurisdiction" means a city or town. 2
231	231	(38) "M-license" means a state license issued for commercial activity involving hemp or 3
232	232	medicinal cannabis. 4
233	233	(39) "M-licensee" means any person holding a license under this chapter for commercial 5
234	234	hemp activity involving hemp or medicinal cannabis. 6
235	235	(40) "Manufacture" means to compound, blend, extract, infuse, or otherwise make or 7
236	236	prepare a hemp product. 8
237	237	(41) "Manufacturer" means a licensee that conducts the production, preparation, 9
238	238	propagation, or compounding of hemp or hemp products either directly or indirectly or by 10
239	239	extraction methods or independently by means of chemical synthesis, or by a combination of 11
240	240	extraction and chemical synthesis at a fixed location that packages or repackages hemp or hemp 12
241	241	products or labels or relabels its container. 13
242	242	(42) "Medicinal cannabis" or "medicinal cannabis product" means cannabis or a cannabis 14
243	243	product, respectively, intended to be sold for use, pursuant to chapter 28.6 of title 21, by a medicinal 15
244	244	cannabis patient in Rhode Island who possesses a physician's recommendation. 16
245	245	(43) "Monetary value" means a medium of exchange, whether or not redeemable in money. 17
246	246	(44) "Nursery" means a licensee that produces only clones, immature plants, seeds, and 18
247	247	other agricultural products used specifically for the propagation and cultivation of hemp. 19
248	248	(45) "Open blockchain token" means a digital unit which is: 20
249	249	(i) Created in response to the verification or collection of a specified number of transactions 21
250	250	relating to a digital ledger or database; 22
251	251	(ii) Created by deploying computer code to a digital ledger or database, which may include 23
252	252	a blockchain, that allows for the creation of digital tokens or other units; 24
253	253	(iii) Created by using a combination of the methods specified in §§ 42-64.35-7 or 42-64.35-25
254	254	8. 26
255	255	(iv) Recorded to a digital ledger or database, which may include a blockchain; or 27
256	256	(v) Capable of being traded or transferred between persons without an intermediary or 28
257	257	custodian of value. 29
258	258	(46) "Operation" means any act for which licensure is required under the provisions of this 30
259	259	chapter, or any commercial transfer of hemp or hemp products. 31
260	260	(47) "Opportunity zones" means designated areas included in the Tax cuts and Jobs Act of 32
261	261	2017. Rhode Island opportunity zones are located in twenty-five (25) census tracts spread across 33
262	262	the following fifteen (15) municipalities: Bristol, Central Falls, Cranston, Cumberland, East 34
263	263
264	264
265	265	LC001944 - Page 8 of 34
266	266	Providence, Narragansett, Newport, North Providence, Pawtucket, Providence, South Kingstown. 1
267	267	Warren, West Warwick, Westerly, and Woonsocket. 2
268	268	(48) "Owner" means any of the following: 3
269	269	(i) A person with an aggregate ownership interest of twenty percent (20%) or more in the 4
270	270	person applying for a license or a licensee, unless the interest is solely a security, lien, or 5
271	271	encumbrance; 6
272	272	(ii) The chief executive officer of a nonprofit or other entity; 7
273	273	(iii) A member of the board of directors of a nonprofit; 8
274	274	(iv) An individual who will be participating in the direction, control, or management of the 9
275	275	person applying for a license. 10
276	276	(49) "Person" means and includes any individual, firm, partnership, joint venture, 11
277	277	association, corporation, limited-liability company, estate, trust, business trust, receiver, syndicate, 12
278	278	or any other group or combination acting as a unit, and the plural as well as the singular. 13
279	279	(50) "Premises" means the designated structure or structures and land specified in the 14
280	280	application that is owned, leased, or otherwise held under the control of the applicant or licensee 15
281	281	where the commercial hemp activity will be or is conducted. The premises shall be a contiguous 16
282	282	area and shall only be occupied by one licensee. 17
283	283	(51) "Private entity" means any natural person, corporation, general partnership, limited 18
284	284	liability company, limited partnership, joint venture, business trust, public benefit corporation, 19
285	285	nonprofit entity, or one other private business entity. 20
286	286	(52) "Proposal" means a plan for a qualifying project with detail beyond a conceptual level 21
287	287	for which terms such as fixing costs, payment schedules, financing, deliverables, and project 22
288	288	schedules are defined. 23
289	289	(53) "Public record(s)" means all documents, papers, letters, maps, books, tapes, 24
290	290	photographs, films, sound recordings, or other material regardless of physical form or 25
291	291	characteristics made or received pursuant to law or ordinance or in connection with the transaction 26
292	292	of official business by any agency. 27
293	293	(54) "Purchaser" means the customer who is engaged in a transaction with a licensee for 28
294	294	purposes of obtaining hemp or hemp products. 29
295	295	(55) "Qualifying project" means: 30
296	296	(i) A facility or project that serves a public purpose, including, but not limited to, any ferry 31
297	297	or mass transit facility, vehicle parking facility, airport or seaport facility, rail facility or project, 32
298	298	transportation facilities, technology infrastructure, fuel supply facility, oil or gas pipeline, medical 33
299	299	or nursing care facility, or educational facility or other building or facility that is used or will be 34
300	300
301	301
302	302	LC001944 - Page 9 of 34
303	303	used by a public educational institution, or any other public facility or infrastructure that is used or 1
304	304	will be used by the public at large or in support of an accepted public purpose or activity; 2
305	305	(ii) An improvement, including equipment, of a building that will be principally used by a 3
306	306	public entity or the public at large or that supports a service delivery system in the public sector; 4
307	307	(iii) A water, wastewater, or surface water management facility or other related 5
308	308	infrastructure; or 6
309	309	(iv) Notwithstanding any provision of this section, for projects that involve a facility owned 7
310	310	or operated by the governing board of a city or town, district, or hospital or health care system, or 8
311	311	projects that involve a facility owned or operated by an electric utility, only those projects that the 9
312	312	governing board designates as qualifying projects pursuant to this section. 10
313	313	(56) "Reciprocity agreement" means an arrangement between the department and the 11
314	314	appropriate licensing agency of another state that permits a licensee operating under a license 12
315	315	granted by the other state to engage in currency transmission business activity with or on behalf of 13
316	316	a resident. 14
317	317	(57) "Record" means information that is inscribed on a tangible medium or that is stored 15
318	318	in an electronic or other medium and is retrievable in perceivable form. 16
319	319	(58) "Registry" means the Nationwide Multistate Licensing System. 17
320	320	(59) "Regulated Products" means any raw materials, ingredients, pharmaceuticals, 18
321	321	fabricated devices, manufactured goods, media, health, finance, identification records, or other 19
322	322	goods and services requiring local, state, or federal regulatory compliance. 20
323	323	(60) "Resident" means a person that: 21
324	324	(i) Is domiciled in this state; 22
325	325	(ii) Is physically located in this state for more than one hundred eighty-three (183) days of 23
326	326	the previous three hundred sixty-five (365) days; or 24
327	327	(iii) Has a place of business in this state and includes a legal representative of a person that 25
328	328	satisfies subsection (60)(i) of this section. 26
329	329	(61) "Responsible individual" means an individual who has managerial authority with 27
330	330	respect to a licensee's currency transmission business activity with or on behalf of a resident. 28
331	331	(62) "Responsible public entity" means the state, a city, town, district, school board, or any 29
332	332	other political subdivision of the state; a public body corporate and politic; or a regional entity that 30
333	333	serves a public purpose and is authorized to develop or operate a qualifying project. 31
334	334	(63) "Revenue" means the income, earnings, user fees, lease payments, or other service 32
335	335	payments relating to the development or operation of a qualifying project, including, but no limited 33
336	336	to, money received as grants or otherwise from the federal government, a public entity, or an agency 34
337	337
338	338
339	339	LC001944 - Page 10 of 34
340	340	or instrumentality thereof in aid of the qualifying project. 1
341	341	(64) "Sandbox period" means the period of time, initially not longer than twenty-four (24) 2
342	342	months, in which the commissioner or secretary has authorized an innovative financial product or 3
343	343	service to be made available to consumers, which shall also encompass any extension granted under 4
344	344	§§ 42-64.35-l through 42-64.35-8. 5
345	345	(65) "Secretary" means the secretary of state; 6
346	346	(66) "Sell" or "sale" means any transaction whereby, for any consideration, title to hemp 7
347	347	or hemp products is transferred from one person to another, and includes the delivery of hemp or 8
348	348	hemp products pursuant to an order placed for the purchase of the same and soliciting or receiving 9
349	349	an order for the same, but does not include the return of hemp or hemp products by a licensee to 10
350	350	the licensee from whom the hemp or hemp product was purchased. 11
351	351	(67) "Seller" means a person who makes an open blockchain token available for purchase 12
352	352	to an initial buyer. 13
353	353	(68) "Service contract" means a contract between a public entity and the private entity 14
354	354	which defines the terms of the services to be provided with respect to a qualifying project. 15
355	355	(69) "Sign" means with present intent to authenticate or adopt a record, to execute or adopt 16
356	356	a tangible symbol or to attach to or logically associate with the record an electronic symbol, sound, 17
357	357	or process. 18
358	358	(70) "Special purpose depository institution" means a corporation operating pursuant to § 19
359	359	42-64.35-8; 20
360	360	(71) "State" means a state of the United States, the District of Columbia, Puerto Rico, the 21
361	361	United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the 22
362	362	United States. 23
363	363	(72) "Store," except in the phrase "store of value," means to maintain control of virtual 24
364	364	currency on behalf of a resident by a person other than the resident. "Storage" and "storing" have 25
365	365	corresponding meanings. 26
366	366	(73) "Supervisor of the regulatory body" means the chief or head of a section having 27
367	367	enforcement responsibility for a particular statute or set of rules and regulations within a regulatory 28
368	368	agency 29
369	369	(74) "System of vital records" means the registration, collection, preservation, amendment, 30
370	370	and certification of vital statistics records, and activities related to them including the tabulation, 31
371	371	analysis, and publication of statistical data derived from those records. 32
372	372	(75) "Transfer" means to assume control of virtual currency from or on behalf of a resident 33
373	373	and to: 34
374	374
375	375
376	376	LC001944 - Page 11 of 34
377	377	(i) Credit the virtual currency to the account of another person; 1
378	378	(ii) Move the virtual currency from one account of a resident to another account of the 2
379	379	same resident; or 3
380	380	(iii) Relinquish control of virtual currency to another person. 4
381	381	(76) "Unique identifier" means an alphanumeric code or designation used for reference to 5
382	382	a specific plant on a licensed premises and any hemp or hemp product derived or manufactured 6
383	383	from that plant. 7
384	384	(77) "U.S. Dollar equivalent of virtual currency" means the equivalent value of a particular 8
385	385	virtual currency in United States dollars shown on a virtual currency exchange based in the United 9
386	386	States for a particular date or period specified in this chapter. Virtual currency or a digital security, 10
387	387	as defined in §§ 19-14-1 and 19-14.3-1.1, shall not constitute an open blockchain token as defined 11
388	388	within §§ 42-64.35-7 and 42-64.35-8. 12
389	389	42-64.35-4. Council established. 13
390	390	There is hereby created a Rhode Island blockchain technology advisory council to consist 14
391	391	of thirteen (13) members: three (3) of whom shall be appointed by the governor, with two (2) of 15
392	392	those so appointed to be designated by the governor as co-chairs; six (6) of whom shall be directors 16
393	393	from the Rhode Island commerce corporation, as established by chapter 64 of title 42; four (4) 17
394	394	members shall be appointed by majority of the nine (9) members appointed by the governor and 18
395	395	Rhode Island commerce corporation; two (2) of the four members shall be appointed from the 19
396	396	private sector: with one holding expertise in complex financial services, and one with expertise in 20
397	397	cybersecurity; two (2) of the four members shall be appointed from academia: with one holding 21
398	398	expertise in financial systems, and one with expertise in computer engineering. The membership 22
399	399	of said council shall receive no compensation for their services. The council shall support the state's 23
400	400	research institutions, promote entrepreneurial development, enable all organizations to become 24
401	401	more innovative, and perform any other advisory functions as the legislature may designate. 25
402	402	42-64.35-5. Filing System. 26
403	403	Relating to § 42-64.35-4 authorizing the thirteen (13) member council to develop and 27
404	404	implement a blockchain filing system specific only to record council actions; authorizing the 28
405	405	promulgation of rules; and providing for an effective date. 29
406	406	(a) Not later than December 31, 2024, the council may develop and implement an industry 30
407	407	leading filing system through which the council shall endeavor to use blockchain technology and 31
408	408	include an application programming interface as components of the filing system, as well as robust 32
409	409	security measures and other components determined by the secretary of state to be best practices 33
410	410	or which are likely to increase the effective and efficient administration of the laws of this state, if 34
411	411
412	412
413	413	LC001944 - Page 12 of 34
414	414	adapted by future legislation. The council may create a blockchain for the purposes of this section 1
415	415	or contract for the use of a privately created blockchain to best meet its needs. 2
416	416	(b) The council may: 3
417	417	(i) Consult with all interested parties before developing the filing system specified by §§ 4
418	418	42-64.35-5 through 4-64.35-8, including businesses, registered agents, attorneys, law enforcement 5
419	419	and other interested persons; 6
420	420	(ii) If possible, partner with technology innovators and private companies to develop 7
421	421	necessary components of the system. 8
422	422	42-64.35-6. Coordination with existing programs. 9
423	423	(a) To the maximum extent possible, the directors of the departments shall provide special 10
424	424	assistance to the council for review of blockchain and related technology, and provide opinions as 11
425	425	to how all the administrative powers and duties vested by law in the several state departments, 12
426	426	boards, divisions, bureaus, commissions, and other agencies vested in the following departments 13
427	427	and other agencies which are specified in this chapter might benefit from further innovation of 14
428	428	blockchain technology: 15
429	429	(1) Executive department (chapter 7 of title 42); 16
430	430	(2) Department of state (chapter 8 of title 42); 17
431	431	(3) Department of the attorney general (chapter 9 of title 42); 18
432	432	(4) Treasury department (chapter 10 of title 42); 19
433	433	(5) Department of administration (chapter 11 of title 42); 20
434	434	(6) Department of business regulation (chapter 14 of title 42); 21
435	435	(7) Department of children, youth and families (chapter 72 of title 42); 22
436	436	(8) Department of corrections (chapter 56 of title 42): 23
437	437	(9) Department of elderly affairs (chapter 66 of title 42); 24
438	438	(10) Department of elementary and secondary education (chapter 60 of title 16): 25
439	439	(11) Department of environmental management (chapter 17.1 of title 42); 26
440	440	(12) Department of health (chapter 18 of title 42); 27
441	441	(13) Council on postsecondary education (chapter 59 of title 16); 28
442	442	(14) Department of labor and training (chapter 16.1 of title 42); 29
443	443	(15) Department of behavioral healthcare, developmental disabilities and hospitals (chapter 30
444	444	12.1 of title 42); 31
445	445	(16) Department of human services (chapter 12 of title 42); 32
446	446	(17) Department of transportation (chapter 13 of title 42); 33
447	447	(18) Public utilities commission (chapter 14.3 of title 42); 34
448	448
449	449
450	450	LC001944 - Page 13 of 34
451	451	(19) Department of revenue (chapter 142 of title 42); 1
452	452	(20) Department of public safety (chapter 7.3 of title 42); 2
453	453	This shall include, but not be limited to: 3
454	454	(i) Expedited processing; 4
455	455	(ii) Priority funding: 5
456	456	(iii) Program set asides. 6
457	457	42-64.35-7. Financial Sandbox -Financial technology sandbox waiver; applicability of 7
458	458	criminal and consumer protection statutes; referral to investigatory agencies; civil liability. 8
459	459	(a) Notwithstanding any other provision of law, a person who makes an innovative 9
460	460	financial product or service available to consumers in the financial technology sandbox may be 10
461	461	granted a waiver of specified requirements imposed by statute or rule, or portions thereof, if these 11
462	462	statutes or rules do not currently permit the product or service to be made available to consumers. 12
463	463	A waiver under this subsection shall be no broader than necessary to accomplish the purposes and 13
464	464	standards set forth in this act, as determined by the commissioner or secretary. 14
465	465	(b) A person who makes an innovative financial product or service available to consumers 15
466	466	in the financial technology sandbox is: 16
467	467	(1) Not immune from civil damages for acts and omissions relating to this act; and 17
468	468	(2) Subject to all criminal and consumer protection laws, including, but not limited to, 18
469	469	violations of any provisions of title 11, title 19, and title 21. 19
470	470	(c) The commissioner or secretary may refer suspected violations of law relating to this 20
471	471	chapter to appropriate state or federal agencies for investigation, prosecution, civil penalties and 21
472	472	other appropriate enforcement actions, including, but not limited to, suspension or revocation of 22
473	473	any license or authorization granted under this chapter. 23
474	474	(d) If service of process, relative to any civil proceeding, on a person making an innovative 24
475	475	financial product or service available to consumers in the financial technology sandbox is not 25
476	476	feasible, service on the secretary of state shall be deemed service on the person. 26
477	477	(e) Financial technology sandbox application; standards for approval; consumer protection: 27
478	478	A person shall apply to the commissioner or secretary to make an innovative financial product or 28
479	479	service available to consumers in the financial technology sandbox, based on the office that 29
480	480	administers the statute, regulation, rule or portion thereof, for which a waiver is sought. If both the 30
481	481	commissioner and the secretary jointly administer a statute or regulation or rule, or if the 31
482	482	appropriate office is not known, an application may be filed with either the commissioner or the 32
483	483	secretary. If an application is filed with an office that does not administer the statute, regulation or 33
484	484	rule for which a waiver is sought, the receiving office shall forward the application to the correct 34
485	485
486	486
487	487	LC001944 - Page 14 of 34
488	488	office. The person shall specify in an application the statutory or rule requirements for which a 1
489	489	waiver is sought and the reasons why these requirements prohibit the innovative financial product 2
490	490	or service from being made available to consumers. The commissioner and secretary shall each, by 3
491	491	rule, prescribe a method of application. 4
492	492	(f) A business entity making an application under this section shall be a domestic 5
493	493	corporation or other organized domestic entity with a physical presence, other than that of a 6
494	494	registered office or agent, in Rhode Island. 7
495	495	(g) Before an employee applies on behalf of an institution, firm or other entity intending to 8
496	496	make an innovative financial product or service available through the financial technology sandbox, 9
497	497	the employee shall obtain the consent of the institution, firm or entity before filing an application 10
498	498	under this section. 11
499	499	(h) The individual filing an application under this section and the individuals who are 12
500	500	substantially involved in the development, operation or management of the innovative financial 13
501	501	product or service shall, as a condition of an application, submit to a criminal history background 14
502	502	check with the department of attorney general. 15
503	503	(i) An application made under this section shall be accompanied by a fee of five hundred 16
504	504	dollars ($500). The fee shall be deposited into the financial technology innovation account as 17
505	505	required by title 19. 18
506	506	(j) The commissioner or secretary, as applicable, shall authorize or deny a financial 19
507	507	technology sandbox application in writing within ninety (90) days of receiving the application. The 20
508	508	commissioner or secretary and the person who has made an application may jointly agree to extend 21
509	509	the time beyond ninety (90) days. The commissioner or secretary may impose conditions on any 22
510	510	authorization, consistent with this chapter. In deciding to authorize or deny an application under 23
511	511	this section, the commissioner or secretary shall consider each of the following: 24
512	512	(1) The nature of the innovative financial product or service proposed to be made available 25
513	513	to consumers in the sandbox, including all relevant technical details which may include whether 26
514	514	the product or service utilizes blockchain technology; 27
515	515	(2) The potential risk to consumers and methods which will be used to protect consumers 28
516	516	and resolve complaints during the sandbox period; 29
517	517	(3) A business plan proposed by the person, including proof of capital requirements; 30
518	518	(4) Whether the person has the necessary personnel, adequate financial and technical 31
519	519	expertise and a sufficient plan to test, monitor and assess the innovative financial product or service; 32
520	520	(5) Whether any person substantially involved in the development, operation or 33
521	521	management of the innovative financial product or service has been convicted of, or is currently 34
522	522
523	523
524	524	LC001944 - Page 15 of 34
525	525	under investigation for, fraud, state or federal securities violations or any property based offense; 1
526	526	(6) A copy of the disclosures required under this chapter that will be provided to 2
527	527	consumers; 3
528	528	(7) Any other factor that the commissioner or secretary determines to be relevant. 4
529	529	(k) If an application is authorized under subsection (j) of this section, the commissioner or 5
530	530	secretary shall specify the statutory or rule requirements, or portions thereof, for which a waiver is 6
531	531	granted and the length of the initial sandbox period. The commissioner or secretary shall also post 7
532	532	notice of the approval of a sandbox application under this section, a summary of the innovative 8
533	533	financial product or service and the contact information of the person making the product or service 9
534	534	available through the sandbox on the Internet website of the commissioner or secretary. 10
535	535	(l) A person authorized under section (j) of this section to enter into the financial 11
536	536	technology sandbox shall post a consumer protection bond with the commissioner or secretary as 12
537	537	security for potential losses suffered by consumers. The bond amount shall be determined by the 13
538	538	commissioner or secretary in an amount not less than ten thousand dollars ($10,000) and shall be 14
539	539	commensurate with the risk profile of the innovative financial product or service. The 15
540	540	commissioner or secretary may require that a bond under this subsection be increased or decreased 16
541	541	at any time based on risk profile. Unless the bond is enforced, the commissioner or secretary shall 17
542	542	cancel or allow the bond to expire two (2) years after the date of the conclusion of the sandbox 18
543	543	period. 19
544	544	(m) A person authorized under subsection (j) of this section to enter into the financial 20
545	545	technology sandbox shall be deemed to possess an appropriate license for the purposes of federal 21
546	546	law requiring state licensure or authorization. 22
547	547	(n) Authorization under subsection (j) of this section shall not be construed to create a 23
548	548	property right. 24
549	549	(o) Financial technology innovation account: 25
550	550	(1) There is created the financial technology innovation account. Funds within the account 26
551	551	shall only be expended by legislative appropriation. All funds within the account shall be invested 27
552	552	by the state treasurer and all investment earnings from the account shall be credited to the general 28
553	553	fund. The account shall be divided into two (2) sub-accounts controlled by the commissioner and 29
554	554	secretary, respectively, for the purposes of administrative management. For the purposes of 30
555	555	accounting and investing only, the subaccounts shall be treated as separate accounts. 31
556	556	(2) Subject to legislative appropriation, application fees remitted to the account shall be 32
557	557	deposited into the subaccount controlled by the commissioner or secretary, as applicable, based on 33
558	558	the receiving official. These funds, and any additional funds appropriated by the legislature, shall 34
559	559
560	560
561	561	LC001944 - Page 16 of 34
562	562	be used only for the purposes of administering this act, including processing of sandbox 1
563	563	applications and monitoring, examination and enforcement activities relating to this chapter. 2
564	564	(p) Operation of financial technology sandbox: 3
565	565	(1) Except as otherwise provided under chapter 56 of title 6 ("uniform supplemental 4
566	566	commercial law for the uniform regulation of virtual-currency businesses act"), chapter 14 of title 5
567	567	19 ("licensed activities"), and chapter 14.3 of title 19 ("currency transmissions"). a person 6
568	568	authorized under this chapter to enter into the financial technology sandbox may make an 7
569	569	innovative financial product or service available to consumers during the sandbox period. 8
570	570	(2) The commissioner or secretary may, on a case by case basis, specify the maximum 9
571	571	number of consumers permitted to receive an innovative financial product or service, after 10
572	572	consultation with the person authorized under this chapter to make the product or service available 11
573	573	in the financial technology sandbox. 12
574	574	(3) Before a consumer purchases or enters into an agreement to receive an innovative 13
575	575	financial product or service through the financial technology sandbox the person making the 14
576	576	product or service available shall provide a written statement of the following to the consumer: 15
577	577	(i) The name and contact information of the person making the product or service available 16
578	578	to consumers; 17
579	579	(ii) That the product or service has been authorized to be made available to consumers for 18
580	580	a temporary period by the commissioner or secretary, as applicable, under the laws of Rhode Island; 19
581	581	(iii) That the State of Rhode Island does not endorse the product or service and is not 20
582	582	subject to liability for losses or damages caused by the product or service; 21
583	583	(iv) That the product or service is undergoing testing, may not function as intended and 22
584	584	may entail financial risk; 23
585	585	(v) That the person making the product or service available to consumers is not immune 24
586	586	from civil liability for any losses or damages caused by the product or service; 25
587	587	(vi) The expected end date of the sandbox period; 26
588	588	(vii) The name and contact information of the commissioner or secretary, as applicable, 27
589	589	and notification that suspected legal violations, complaints or other comments related to the product 28
590	590	or service may be submitted to the commissioner or secretary; 29
591	591	(viii) Any other statements or disclosures required by rule of the commissioner or secretary 30
592	592	which are necessary to further the purposes of this act. 31
593	593	(q) A person authorized to make an innovative financial product or service available to 32
594	594	consumers in the financial technology sandbox shall maintain comprehensive records relating to 33
595	595	the innovative financial product or service. The person shall keep these records for not less than 34
596	596
597	597
598	598	LC001944 - Page 17 of 34
599	599	five (5) years after the conclusion of the sandbox period. The commissioner and secretary may 1
600	600	specify further records requirements under this subsection by rule. 2
601	601	(r) The commissioner or secretary, as applicable, may examine the records maintained 3
602	602	under by any depository or financial technology innovation account opened pursuant to this 4
603	603	chapter, with or without notice. All direct and indirect costs of an examination conducted under 5
604	604	this subsection shall be paid by the person making the innovative financial product or service 6
605	605	available in the financial technology sandbox. Records made available to the commissioner or 7
606	606	secretary under this subsection shall be confidential and shall not be subject to disclosure under the 8
607	607	Rhode Island public records act but may be released to appropriate state and federal agencies for 9
608	608	the purposes of investigation. 10
609	609	(s) Unless granted an extension pursuant to not less than thirty (30) days before the 11
610	610	conclusion of the sandbox period, a person who makes an innovative financial product or service 12
611	611	available in the financial technology sandbox shall provide written notification to consumers 13
612	612	regarding the conclusion of the sandbox period and shall not make the product or service available 14
613	613	to any new consumers after the conclusion of the sandbox period until legal authority outside of 15
614	614	the sandbox exists to make the product or service available to consumers. The person shall wind 16
615	615	down operations with existing consumers within sixty (60) days after the conclusion of the sandbox 17
616	616	period, except that, after the sixtieth day, the person may: 18
617	617	(1) Collect and receive money owed to the person and service loans made by the person, 19
618	618	based on agreements with consumers made before the conclusion of the sandbox period; 20
619	619	(2) Take necessary legal action; and 21
620	620	(3) Take other actions authorized by the commissioner or secretary by rule which are not 22
621	621	inconsistent with this subsection. 23
622	622	(t) The commissioner and the secretary may, jointly or separately, enter into agreements 24
623	623	with state, federal or foreign regulatory agencies to allow persons who make an innovative financial 25
624	624	product or service available in Rhode Island through the financial technology sandbox to make 26
625	625	their products or services available in other jurisdictions and to allow persons operating in similar 27
626	626	financial technology sandboxes in other jurisdictions to make innovative financial products and 28
627	627	services available in Rhode Island under the standards of this chapter. 29
628	628	(u) Revocation or suspension of financial technology sandbox authorization: 30
629	629	(1) The commissioner or secretary may, by order, revoke or suspend authorization granted 31
630	630	to a person under this chapter if: 32
631	631	(i) The person has violated or refused to comply with this chapter or any lawful rule, order 33
632	632	or decision adopted by the commissioner or secretary; 34
633	633
634	634
635	635	LC001944 - Page 18 of 34
636	636	(ii) A fact or condition exists that, if it had existed or become known at the time of the 1
637	637	financial technology sandbox application, would have warranted denial of the application or the 2
638	638	imposition of material conditions; 3
639	639	(iii) A material error, false statement, misrepresentation or material omission was made in 4
640	640	the financial technology sandbox application; or 5
641	641	(iv) After consultation with the person, continued testing of the innovative financial 6
642	642	product or service would: 7
643	643	(A) Be likely to harm consumers; or 8
644	644	(B) No longer serve the purposes of this chapter because of the financial or operational 9
645	645	failure of the product or service. 10
646	646	(v) Written notification of a revocation or suspension order made under subsection (c) of 11
647	647	this section shall be served using any means authorized by law, and if the notice relates to a 12
648	648	suspension, include any conditions or remedial action which shall be completed before the 13
649	649	suspension will be lifted by the commissioner or secretary. 14
650	650	(w) Extension of sandbox period: 15
651	651	(1) A person granted authorization under subsection (j) of this section may apply for an 16
652	652	extension of the initial sandbox period for not more than twelve (12) additional months. An 17
653	653	application for an extension shall be made not later than sixty (60) days before the conclusion of 18
654	654	the initial sandbox period specified by the commissioner or secretary. The commissioner or 19
655	655	secretary shall approve or deny the application for extension in writing not later than thirty-five 20
656	656	(35) days before the conclusion of the initial sandbox period. An application for extension by a 21
657	657	person shall cite one of the following reasons as the basis for the application and provide all relevant 22
658	658	supporting information that: 23
659	659	(i) Statutory or rule amendments are necessary to conduct business in Rhode Island on a 24
660	660	permanent basis; or 25
661	661	(ii) An application for a license or other authorization required to conduct business in 26
662	662	Rhode Island on a permanent basis has been filed with the appropriate office and approval is 27
663	663	currently pending. 28
664	664	(x) Rules and orders; enforcement of bond; restitution: 29
665	665	(1) The commissioner and secretary shall each adopt rules to implement this act. The rules 30
666	666	adopted by the commissioner and secretary under this chapter shall be as consistent as reasonably 31
667	667	possible, but shall account for differences in the statutes and programs administered by the 32
668	668	commissioner and secretary. 33
669	669	(2) The commissioner or secretary may issue: 34
670	670
671	671
672	672	LC001944 - Page 19 of 34
673	673	(i) All necessary orders to enforce this chapter, including, but not limited to, ordering the 1
674	674	payment of restitution and enforcement of these orders in any court of competent jurisdiction; 2
675	675	(ii) An order under subsection (x)(2)(i) of this section to enforce the bond or portion of the 3
676	676	bond posted under this chapter, and use proceeds from the bond to offset losses suffered by 4
677	677	consumers as a result of an innovative financial product or service. 5
678	678	(3) All actions of the commissioner or secretary under this chapter shall be subject to the 6
679	679	rules and regulations under title 19 and chapter 14 of title 42. 7
680	680	(y) Access to, and dissemination of, information: 8
681	681	(1) Criminal history record information shall be disseminated by criminal justice agencies 9
682	682	in this state, whether directly or through any intermediary, only to the banking commissioner or the 10
683	683	secretary of state for purposes of obtaining background information on persons applying for 11
684	684	financial technology sandbox authorization; provided, however, that all officers and directors 12
685	685	subsequently hired or appointed, shall be required to submit to a criminal history background check. 13
686	686	(z) State or national criminal history record information: 14
687	687	(1) The following persons shall be required to submit to fingerprinting in order to obtain 15
688	688	state and national criminal history record information: 16
689	689	(i) Applicants for a financial technology sandbox authorization: 17
690	690	(aa) The financial technology sandbox definitions shall apply to this chapter. 18
691	691	(bb) Electronic records and signatures; applicability: 19
692	692	(1) This chapter modifies, limits, and supersedes the federal Electronic Signatures in 20
693	693	Global and National Commerce Act, but does not modify, limit, or supersede section 10l(c) of that 21
694	694	act (15 U.S.C. § 7001 (c)) or authorize electronic delivery of any of the notices described in section 22
695	695	103(b) of that act (15 U.S.C. § 7003(b)). This chapter authorizes the filing of records and signatures, 23
696	696	when specified by provisions of this chapter or by a rule adopted or order issued under this chapter, 24
697	697	in a manner consistent with section 104(a) of that act (15 U.S.C. § 7004(a)). 25
698	698	42-64.35-8. Special depository institutions. 26
699	699	(a) The legislature shall create special purpose depository institutions as a new financial 27
700	700	institution, providing that the following rules shall apply to these institutions: 28
701	701	(1) Special purpose depository institutions shall be corporations; 29
702	702	(2) Require that depositors be business entities; 30
703	703	(3) Specify compliance with applicable federal laws; 31
704	704	(4) Establish procedures for the incorporation, chartering and operation of special purpose 32
705	705	depository institutions; 33
706	706	(5) Establish procedures for liquidation, conservatorship and voluntary dissolution; 34
707	707
708	708
709	709	LC001944 - Page 20 of 34
710	710	(6) Require a surety bond or pledged investments and specified private insurance; 1
711	711	(7) Authorize special purpose depository institutions to obtain federal deposit insurance; 2
712	712	(8) Make conforming amendments; 3
713	713	(9) Authorize positions; 4
714	714	(10) Provide an appropriation; and 5
715	715	(11) Provide for effective dates. 6
716	716	(b) Applicability of other provisions. Except as otherwise provided in this section, if any 7
717	717	provision of law conflicts with this chapter, this chapter shall control, except as to those provisions 8
718	718	set forth in §42-64.35-9. 9
719	719	(c) Special purpose depository institutions created as corporations; operating authority; 10
720	720	powers; prohibition on lending. 11
721	721	(1) Consistent with this chapter, special purpose depository institutions shall be organized 12
722	722	as corporations under chapter 1.2 of title 7, (the "Rhode Island business corporation act"), to 13
723	723	exercise the powers set forth in this section; 14
724	724	(2) Each special purpose depository institution may: 15
725	725	(i) Make contracts as a corporation under Rhode Island law; 16
726	726	(ii) Sue and be sued; 17
727	727	(iii) Receive notes and buy and sell gold and silver coins and bullion as permitted by federal 18
728	728	law; 19
729	729	(iv) Carry on a non-lending banking business for depositors, consistent with subsection (d) 20
730	730	of this section; 21
731	731	(v) Provide payment services upon the request of a depositor; 22
732	732	(vi) Make an application to become a member bank of the Federal Reserve System; 23
733	733	(vii) Engage in any other activity that is usual or incidental to the business of banking, 24
734	734	subject to the prior written approval of the commissioner. The commissioner shall not approve a 25
735	735	request to engage in an incidental activity if he or she finds that the requested activity will adversely 26
736	736	affect the solvency or the safety and soundness of the special purpose depository institution or 27
737	737	conflict with any provision of this chapter; 28
738	738	(viii) Exercise powers and rights otherwise authorized by law which are not inconsistent 29
739	739	with this chapter. 30
740	740	(d) Except as otherwise provided in this subsection, a special purpose depository institution 31
741	741	shall not make loans, including the provision of temporary credit relating to overdrafts. A special 32
742	742	purpose depository institution may purchase debt obligations consistent with provisions of title 19. 33
743	743	(e) A special purpose depository institution shall maintain its principal operating 34
744	744
745	745
746	746	LC001944 - Page 21 of 34
747	747	headquarters and the primary office of its chief executive officer in Rhode Island. 1
748	748	(f) As otherwise authorized by this section, the special purpose depository institution may 2
749	749	conduct business with depositors outside this state. 3
750	750	(g) Subject to the laws of the host state, a special purpose depository institution may open 4
751	751	a branch in another state upon obtaining a certificate of good standing from the commissioner or 5
752	752	secretary, as long as any new branch located outside of this state is in compliance with state and 6
753	753	federal regulations. A special purpose depository institution, including any branch of the institution, 7
754	754	may only accept deposits or provide other services under this chapter to depositors engaged in a 8
755	755	bona fide business which is lawful under the laws of Rhode Island, the laws of the host state and 9
756	756	federal law. 10
757	757	(h) Requirements relating to depositors; nature of business: 11
758	758	(1) No depositor shall maintain an account with a special purpose depository institution or 12
759	759	otherwise receive any services from the institution unless the depositor meets the criteria of this 13
760	760	subsection. A depositor shall: 14
761	761	(i) Be a legal entity other than a natural person; 15
762	762	(ii) Be in good standing with the jurisdiction in the United States in which it is incorporated 16
763	763	or organized; 17
764	764	(iii) Maintain deposits with the institution totaling not less than five thousand dollars 18
765	765	($5,000); 19
766	766	(iv) Be engaged in a lawful, bona fide business; and 20
767	767	(v) Make sufficient evidence available to the special purpose depository institution to 21
768	768	enable compliance with anti-money laundering practices, customer identification and beneficial 22
769	769	ownership requirements, as determined by the institution. 23
770	770	(2) A depositor which meets the criteria of subsection (h) of this section shall be issued a 24
771	771	depository account and otherwise receive services from the special purpose depository institution 25
772	772	contingent on the availability of sufficient insurance as required under § 19-4-10. 26
773	773	(3) Consistent with subsection (h) of this section and in addition to any requirements 27
774	774	specified by federal law, a special purpose depository institution shall require that a potential 28
775	775	depositor provide reasonable evidence that the person is engaged in a lawful, bona fide business or 29
776	776	is likely to open a lawful, bona fide business within the next six (6) months. As used in this 30
777	777	subsection, "reasonable evidence" includes business entity filings, articles of incorporation or 31
778	778	organization, bylaws, operating agreements, business plans, promotional materials, financing 32
779	779	agreements or other evidence. 33
780	780	(i) Required liquid assets: 34
781	781
782	782
783	783	LC001944 - Page 22 of 34
784	784	(1) At all times, a special purpose depository institution shall maintain unencumbered 1
785	785	liquid assets valued at not less than one hundred percent (100%) of its depository liabilities; 2
786	786	(2) As used in this section, "liquid assets" means: 3
787	787	(i) United States currency held on the premises of the special purpose depository 4
788	788	institution; 5
789	789	(ii) United States currency held for the special purpose depository institution by a federal 6
790	790	reserve bank or a federally insured financial institution; 7
791	791	(iii) Investments which are highly liquid, and obligations of the United States treasury or 8
792	792	other federal agency obligations consistent with rules adopted by the commissioner. 9
793	793	(j) Required contingency account: 10
794	794	(1) A special purpose depository institution shall maintain a contingency account to 11
795	795	account for unexpected losses and expenses. A special purpose depository institution may require 12
796	796	the payment of contributions from depositors to fund a contingency account. Sufficient funding as 13
797	797	determined and required by the commissioner for the initial capitalization shall constitute 14
798	798	compliance with this subsection for the first three (3) years a special purpose depository institution 15
799	799	is in operation. After the conclusion of the first three (3) years of operation, a special purpose 16
800	800	depository institution shall maintain a contingency account totaling not less than two percent (2%) 17
801	801	of the depository liabilities of the special purpose depository institution; provided, however, that 18
802	802	the contingency account shall be adequate and reasonable in light of current and prospective 19
803	803	business conditions. as determined by the commissioner; 20
804	804	(2) A depositor shall obtain a refund of any contingency account contributions made under 21
805	805	this subsection after closing an account with the special purpose depository institution. 22
806	806	(k) Applicable federal and state law. A special purpose depository institution shall comply 23
807	807	with all applicable federal laws, including, but not limited to, those relating to anti-money 24
808	808	laundering practices, customer identification and beneficial ownership. 25
809	809	(l) Required disclosures: 26
810	810	(1) A special purpose depository institution shall display on any Internet website it 27
811	811	maintains, and at each window or place where it accepts deposits, a sign conspicuously stating that 28
812	812	deposits are not insured by the federal deposit insurance corporation, if applicable. 29
813	813	(2) Upon opening an account and if applicable, a special purpose depository institution 30
814	814	shall require each depositor to execute a statement acknowledging that all deposits at the special 31
815	815	purpose depository institution are not insured by the federal deposit insurance corporation. The 32
816	816	special purpose depository institution shall permanently retain this acknowledgment; 33
817	817	(3) A special purpose depository institution shall include in all advertising a disclosure that 34
818	818
819	819
820	820	LC001944 - Page 23 of 34
821	821	deposits are not insured by the federal deposit insurance corporation, if applicable. 1
822	822	(m) Formation; articles of incorporation: 2
823	823	(1) Except as otherwise provided, five (5) or more adult persons may form a special purpose 3
824	824	depository institution. The incorporators shall subscribe the articles of incorporation and transmit 4
825	825	them to the commissioner as part of an application for a charter under title 19. 5
826	826	(2) The articles of incorporation shall include the following information: 6
827	827	(i) The corporate name; 7
828	828	(ii) The purpose for which the corporation is organized; 8
829	829	(iii) The term of its existence, which may be perpetual; 9
830	830	(iv) The place where its office shall be located and its operations conducted; 10
831	831	(v) The amount of capital stock and the number of shares; 11
832	832	(vi) The name and residence of each shareholder subscribing to more than ten percent 12
833	833	(10%) of the stock and the number of shares owned by that shareholder; 13
834	834	(vii) The number of directors and the names of those who shall manage the affairs of the 14
835	835	corporation for the first year; and 15
836	836	(viii) A statement that the articles of incorporation are made to enable the incorporators to 16
837	837	avail themselves of the advantages of the laws of the state. 17
838	838	(n) Copies of all amended articles of incorporation shall be filed in the same manner as the 18
839	839	original articles of incorporation. 19
840	840	(o) The incorporators shall raise sufficient capital prior to filing an application for a charter 20
841	841	with the commissioner, consistent with § 19-2-2. In the event an application for a charter is not 21
842	842	filed or is denied by the board, all capital shall be promptly returned without loss, to each person 22
843	843	or entity investing. 23
844	844	(p) Subject to applicable federal and state law, a bank holding company may apply to hold 24
845	845	a special purpose depository institution to raise required initial capital and surplus and additional 25
846	846	capital. 26
847	847	(q) The capital stock of each special purpose depository institution chartered under this 27
848	848	chapter shall be subscribed for as fully paid stock. No special purpose depository institution shall 28
849	849	be chartered with capital stock less than five million dollars ($5,000,000). 29
850	850	(r) No special purpose depository institution shall commence business until the full amount 30
851	851	of its authorized capital is subscribed and all capital stock is fully paid in. No special purpose 31
852	852	depository institution may be chartered without a paid up surplus fund of not less than three (3) 32
853	853	years of estimated operating expenses in an amount to be determined by the commissioner; 33
854	854	(s) A special purpose depository institution may acquire additional capital prior to the 34
855	855
856	856
857	857	LC001944 - Page 24 of 34
858	858	granting of a charter and may report this capital in its charter application. 1
859	859	(t) Application for charter; fee; sub-account created: 2
860	860	(1) No person shall act as a special purpose depository institution without first obtaining a 3
861	861	charter and certificate of authority to operate from the commissioner under this chapter 4
862	862	(2) The incorporators, under title 19, shall apply to the commissioner for a charter. The 5
863	863	application shall contain the special purpose depository institution's articles of incorporation, a 6
864	864	detailed business plan, a comprehensive estimate of operating expenses for the first three (3) years 7
865	865	of operation, a complete proposal for compliance with the provisions of this chapter and evidence 8
866	866	of the capital as required under subsection (s) of this section. The commissioner may prescribe the 9
867	867	form of application by rule. 10
868	868	(3) Each application for a charter shall be accompanied by an application fee established 11
869	869	by the commissioner pursuant to rule, which shall be no greater than the costs incurred by the 12
870	870	commissioner in reviewing the application. The application fee shall be credited to the special 13
871	871	purpose depository institutions subaccount created by subsection (o) of this section 14
872	872	(u) Special purpose depository institutions subaccount. Funds in the subaccount shall be 15
873	873	used by the commissioner to supervise special purpose depository institutions and to otherwise 16
874	874	carry out the duties specified by this chapter. Funds in the subaccount are continuously appropriated 17
875	875	to the subaccount and shall not lapse at the end of any fiscal period. For purposes of accounting 18
876	876	and investing only the special purpose depository institutions subaccount shall be treated as a 19
877	877	separate account from the financial institutions administration account. 20
878	878	(v) Procedure upon filing application: 21
879	879	(1) Upon receiving an application for a special purpose depository charter, the 22
880	880	commissioner shall notify the applicants in writing within thirty (30) calendar days of any 23
881	881	deficiency in the required information or that the application has been accepted for filing. When 24
882	882	the commissioner is satisfied that all required information has been furnished, he or she shall notify 25
883	883	the chairman of the board who shall establish a time and place for a public hearing which shall be 26
884	884	conducted not less than sixty (60) days, nor more than one hundred twenty (120) days, after notice 27
885	885	from the commissioner to the applicants that the application is in order. 28
886	886	(2) Within thirty (30) days after receipt of notice of the time and place of the public hearing 29
887	887	the applicants shall cause notice of filing of the application and the hearing to be published at the 30
888	888	applicant's expense in a newspaper of general circulation within the county where the proposed 31
889	889	special purpose depository institution is to be located. Publication shall be made at least once a 32
890	890	week for three (3) consecutive weeks before the hearing and shall state: the proposed location of 33
891	891	the special purpose depository institution; the names of the applicants for a charter; the nature of 34
892	892
893	893
894	894	LC001944 - Page 25 of 34
895	895	the activities to be conducted by the proposed institution and other information required by rule. 1
896	896	The applicants shall furnish proof of publication to the commissioner not more than ten (10) days 2
897	897	prior to the hearing. The commissioner shall send notice of the hearing to state and national banks, 3
898	898	federal savings and loan associations and other financial institutions in the state and federal 4
899	899	agencies who have requested notice from the commissioner. 5
900	900	(w) Procedure for hearings on charter applications. The hearing for a charter application 6
901	901	shall be conducted as a contested case under chapter 35 of title 42 ("administrative procedures") 7
902	902	and shall comply with the requirements of that chapter. 8
903	903	(x) Investigation and examination by commissioner: 9
904	904	(1) Upon receiving the articles of incorporation, the application for a charter and other 10
905	905	information required by the commissioner, the commissioner shall make a careful investigation and 11
906	906	examination of the following: 12
907	907	(i) The character, reputation, financial standing and ability of the incorporators; 13
908	908	(ii) The character, financial responsibility, banking or other financial experience and 14
909	909	business qualifications of those proposed as officers and directors; and 15
910	910	(iii) The application for a charter, including the adequacy and plausibility of the business 16
911	911	plan of the special purpose depository institution and whether the institution has offered a complete 17
912	912	proposal for compliance with the provisions of this chapter. 18
913	913	(2) The commissioner shall submit the results of his or her investigation and examination 19
914	914	at the public hearing on the charter application and shall be subject to cross examination by any 20
915	915	interested party. No relevant information shall be excluded by the board as hearsay. 21
916	916	(y) Approval or disapproval of application; criteria for approval; action upon application: 22
917	917	(1) Within ninety (90) days after receipt of the transcript of the public hearing the board 23
918	918	shall render a decision on the charter application based solely on the following criteria: 24
919	919	(i) Whether the character, reputation, financial standing and ability of the incorporators is 25
920	920	sufficient to afford reasonable promise of a successful operation; 26
921	921	(ii) Whether the character, financial responsibility, banking or other financial experience 27
922	922	and business qualifications of those proposed as officers and directors is sufficient to afford 28
923	923	reasonable promise of a successful operation; 29
924	924	(iii) The adequacy and plausibility of the business plan of the special purpose depository 30
925	925	institution; 31
926	926	(iv) Compliance with the capital and surplus requirements as set forth in this section; 32
927	927	(v) The special purpose depository institution is being formed for no other purpose than 33
928	928	legitimate objectives authorized by law; 34
929	929
930	930
931	931	LC001944 - Page 26 of 34
932	932	(vi) That the name of the proposed special purpose depository institution does not resemble 1
933	933	so closely the name of any other financial institution transacting business in the state so as to cause 2
934	934	confusion; and 3
935	935	(vii) Whether the applicants have complied with all applicable provisions of state law. 4
936	936	(2) The board shall approve an application upon making favorable findings on the criteria 5
937	937	set forth in this section. If necessary, the board may either conditionally approve an application by 6
938	938	specifying conditions relating to the criteria or may disapprove the application. The board shall 7
939	939	state findings of fact and conclusions of law as part of its decision. If the board approves the 8
940	940	application, the commissioner shall endorse upon the articles of incorporation the approval of the 9
941	941	board and shall transmit one copy to the secretary of state, retain one copy and return a copy to the 10
942	942	applicants within twenty (20) days after the date of the decision of the board approving the 11
943	943	application. If the board conditionally approves an application and upon compliance with necessary 12
944	944	conditions required by the board, the commissioner shall proceed as provided in the preceding 13
945	945	sentence. If the board disapproves the application, the commissioner shall mail notice of the 14
946	946	disapproval to the applicants within twenty (20) days of the board's disapproval. 15
947	947	(z) Certificate of authority to commence business required; application; approval or denial; 16
948	948	failure to commence business: 17
949	949	(1) If an application is approved and a charter granted by the board, the special purpose 18
950	950	depository institution shall not commence business before receiving a certificate of authority to 19
951	951	operate from the commissioner. The application for a certificate of authority shall be made to the 20
952	952	commissioner and shall certify the address at which the special purpose depository institution will 21
953	953	operate and that all adopted bylaws of the institution have been attached as an exhibit to the 22
954	954	application. The application shall state the identities and contact information of officers and 23
955	955	directors. The commissioner shall approve or deny an application for a certificate of authority to 24
956	956	operate within thirty (30) days after a complete application has been filed. The authority of the 25
957	957	commissioner to disapprove any application shall be restricted solely to noncompliance with this 26
958	958	section; provided that, if the commissioner approves the application, he or she shall issue a 27
959	959	certificate of authority to the applicants within twenty (20) days. If the commissioner denies the 28
960	960	application he or she shall mail a notice of denial to the applicants within twenty (20) days, stating 29
961	961	the reasons for denying the application, and grant to the applicants a period of ninety (90) days to 30
962	962	resubmit the application with the necessary corrections. If the applicants fail to comply with 31
963	963	requirements of the notice of denial within ninety (90) days from the receipt of the notice, the 32
964	964	charter of the special purpose depository institution shall be revoked by the commissioner. The 33
965	965	failure of the commissioner to act upon an application for a certificate of authority within thirty 34
966	966
967	967
968	968	LC001944 - Page 27 of 34
969	969	(30) days shall be deemed an approval 1
970	970	(2) If an approved special purpose depository institution fails to commence business in 2
971	971	good faith within six (6) months after the issuance of a certificate of authority to operate by the 3
972	972	commissioner, the charter and certificate of authority shall expire. The board, for good cause and 4
973	973	upon an application filed prior to the expiration of the six (6) month period, may extend the time 5
974	974	within which the special purpose depository institution may open for business. 6
975	975	(aa) Decisions by board appealable. Grounds. Any decision of the board or commissioner 7
976	976	in approving, conditionally approving or disapproving a charter for a special purpose depository 8
977	977	institution or the issuance or denial of a certificate of authority to operate is appealable to the district 9
978	978	court of the county in which the institution is to be located, in accordance with the provisions of 10
979	979	chapter 35 of title 42 ("administrative procedures"). In addition to the grounds for appeal contained 11
980	980	in chapter 35 of title 42 ("administrative procedures"), an appellant may appeal if the board or the 12
981	981	commissioner fails to make any of the required findings or otherwise take an action required by 13
982	982	law. 14
983	983	(bb) Surety bond; pledged investments; investment income; bond or pledge increases-15
984	984	hearings: 16
985	985	(1) Except as otherwise provided by this section, a special purpose depository institution 17
986	986	shall, before transacting any business, pledge or furnish a surety bond to the commissioner to cover 18
987	987	costs likely to be incurred by the commissioner in a liquidation or conservatorship of the special 19
988	988	purpose depository institution. The amount of the surety bond or pledge of assets under this section 20
989	989	shall be determined by the commissioner in an amount sufficient to defray the costs of a liquidation 21
990	990	or conservatorship. 22
991	991	(2) In lieu of a bond, a special purpose depository institution may irrevocably pledge 23
992	992	specified capital equivalent to a bond to satisfy this section. Any capital pledged to the 24
993	993	commissioner under this subsection shall be held in a state or nationally chartered bank or savings 25
994	994	and loan association having a principal or branch office in this state. All costs associated with 26
995	995	pledging and holding such capital are the responsibility of the special purpose depository 27
996	996	institution. 28
997	997	(3) Capital pledged to the commissioner shall be of the same nature and quality as those 29
998	998	required for state financial institutions under title 19. 30
999	999	(4) Surety bonds shall run to the state of Rhode Island, and shall be approved under the 31
1000	1000	terms and conditions established by the commissioner pursuant to his/her authority under title 19. 32
1001	1001	(5) The commissioner may adopt rules to establish additional investment guidelines or 33
1002	1002	investment options for purposes of the pledge or surety bond required by this section. 34
1003	1003
1004	1004
1005	1005	LC001944 - Page 28 of 34
1006	1006	(6) In the event of a liquidation or conservatorship of a special purpose depository 1
1007	1007	institution pursuant chapters 10, 11 or 12 of title 19, the commissioner may, without regard to 2
1008	1008	priorities, preferences or adverse claims, reduce the surety bond or capital pledged under this 3
1009	1009	section to cash as soon as practicable and utilize the cash to defray the costs associated with the 4
1010	1010	liquidation or conservatorship. 5
1011	1011	(7) Income from capital pledged under subsection (bb)(2) of this section shall be paid to 6
1012	1012	the special purpose depository institution, unless a liquidation or conservatorship takes place. 7
1013	1013	(8) Upon evidence that the current surety bond or pledged capital is insufficient, the 8
1014	1014	commissioner may require a special purpose depository institution to increase its surety bond or 9
1015	1015	pledged capital by providing not less than thirty (30) days' written notice to the institution. The 10
1016	1016	special purpose depository institution may request a hearing before the board not more than thirty 11
1017	1017	(30) days after receiving written notice from the commissioner under this subsection. Any hearing 12
1018	1018	before the board shall be held pursuant to chapter 35 of title 42 ("administrative procedures"). 13
1019	1019	(cc) Reports and examinations; supervisory fees: required private insurance or bond: 14
1020	1020	(1) The commissioner may call for reports verified under oath from a special purpose 15
1021	1021	depository institution at any time as necessary to inform the commissioner of the condition of the 16
1022	1022	institution. 17
1023	1023	(2) All reports required of special purpose depository institutions by the commissioner and 18
1024	1024	all materials relating to examinations of these institutions shall be subject to the provisions of 19
1025	1025	chapter 4 of title 19. 20
1026	1026	(3) Every special purpose depository institution is subject to the examination of the 21
1027	1027	commissioner. The commissioner or a duly appointed examiner shall visit and examine special 22
1028	1028	purpose depository institutions on a schedule established by rule. The commissioner or a duly 23
1029	1029	appointed examiner shall make a complete and careful examination of the condition and resources 24
1030	1030	of a special purpose depository institution, the mode of managing institution affairs and conducting 25
1031	1031	business, the actions of officers and directors in the investment and disposition of funds, the safety 26
1032	1032	and prudence of institution management, compliance with the requirements of this chapter and such 27
1033	1033	other matters as the commissioner may require. After an examination, the special purpose 28
1034	1034	depository institution shall remit to the commissioner an amount equal to the total cost of the 29
1035	1035	examination. This amount shall be remitted to the state treasurer and deposited into the special 30
1036	1036	purpose depository institutions subaccount established under this chapter. 31
1037	1037	(4) On or before January 31 and July 31 of each year, a special purpose depository 32
1038	1038	institution shall compute and pay supervisory fees to the commissioner based on the total assets of 33
1039	1039	the special purpose depository institution as of the preceding December 31 and June 30 34
1040	1040
1041	1041
1042	1042	LC001944 - Page 29 of 34
1043	1043	respectively. Supervisory fees under this section shall provide for the operating costs of the office 1
1044	1044	of the commissioner and the administration of the laws governing special purpose depository 2
1045	1045	institutions. Such fees shall be established by rule of the commissioner and shall be adjusted by the 3
1046	1046	commissioner to ensure consistency with the cost of supervision. Supervisory fees shall be 4
1047	1047	deposited by the commissioner with the state treasurer and credited to the special purpose 5
1048	1048	depository institutions subaccount established under this chapter 6
1049	1049	(5) A special purpose depository institution shall maintain appropriate insurance or a bond 7
1050	1050	covering the operational risks of the institution, which shall include coverage for directors' and 8
1051	1051	officers' liability, errors and omissions liability and information technology infrastructure and 9
1052	1052	activities liability. 10
1053	1053	(dd) Suspension or revocation of charter: 11
1054	1054	(1) The commissioner may suspend or revoke the charter of a special purpose depository 12
1055	1055	institution if, after notice and opportunity for a hearing, the commissioner determines that: 13
1056	1056	(i) The special purpose depository institution has failed or refused to comply with an order 14
1057	1057	issued by the commissioner or other regulatory body; 15
1058	1058	(ii) The application for a charter contained a false statement or material misrepresentation 16
1059	1059	or material omission; or 17
1060	1060	(iii) An officer, director or agent of the special purpose depository institution, in connection 18
1061	1061	with an application for a charter, examination, report or other document filed with the 19
1062	1062	commissioner, knowingly made a false statement, material misrepresentation or material omission 20
1063	1063	to the board, the commissioner or the duly authorized agent of the board or commissioner. 21
1064	1064	(ee) Continuing jurisdiction. If the charter of a special purpose depository institution is 22
1065	1065	surrendered, suspended or revoked, the institution shall continue to be subject to the provisions of 23
1066	1066	this chapter during any liquidation or conservatorship. 24
1067	1067	(ff) Failure of institution; unsound or unsafe condition; applicability of other insolvency 25
1068	1068	and conservatorship provisions: 26
1069	1069	(1) If the commissioner finds that a special purpose depository institution has failed or is 27
1070	1070	operating in an unsafe or unsound condition, as defined in this section, that has not been remedied 28
1071	1071	within the time prescribed under chapter 4 of title 19 or an order of the commissioner, the 29
1072	1072	commissioner shall conduct a liquidation or appoint a conservator pursuant to chapters 11 or 12 of 30
1073	1073	title 19; 31
1074	1074	(2) As used in this section: 32
1075	1075	(i) "Failed" or "failure" means, consistent with rules adopted by the commissioner, a 33
1076	1076	circumstance when a special purpose depository institution has not: 34
1077	1077
1078	1078
1079	1079	LC001944 - Page 30 of 34
1080	1080	(A) Complied with the requirements of this chapter; 1
1081	1081	(B) Maintained a contingency account, as required by this section; 2
1082	1082	(C) Paid, in the manner commonly accepted by business practices, its legal obligations to 3
1083	1083	depositors on demand or to discharge any certificates of deposit, promissory notes or other 4
1084	1084	indebtedness when due. 5
1085	1085	(ii) "Unsafe or unsound condition" means, consistent with rules adopted by the 6
1086	1086	commissioner, a circumstance relating to a special purpose depository institution which is likely 7
1087	1087	to: 8
1088	1088	(A) Cause the failure of the institution as defined in subsection (2)(i) of this subsection; 9
1089	1089	(B) Cause a substantial dissipation of assets or earnings: 10
1090	1090	(C) Substantially disrupt the services provided by the institution to depositors; 11
1091	1091	(D) Otherwise substantially prejudice the depository interests of depositors. 12
1092	1092	(gg) Voluntary dissolution of special purpose depository institution; liquidation; 13
1093	1093	reorganization; application for dissolution; filing fee; filing with the secretary of state; revocation 14
1094	1094	of charter. 15
1095	1095	(1) A special purpose depository institution may voluntarily dissolve in accordance with 16
1096	1096	the provisions of this section. Voluntary dissolution shall be accomplished by either liquidating the 17
1097	1097	special purpose depository institution or reorganizing the institution into an appropriate business 18
1098	1098	entity that does not engage in any activity authorized only for a special purpose depository 19
1099	1099	institution. Upon complete liquidation or completion of the reorganization, the commissioner shall 20
1100	1100	revoke the charter of the special purpose depository institution and afterward, the company shall 21
1101	1101	not use the word "special purpose depository institution" or "bank" in its business name or in 22
1102	1102	connection with its ongoing business. 23
1103	1103	(2) The special purpose depository institution may dissolve its charter either by liquidation 24
1104	1104	or reorganization. The board of directors shall file an application for dissolution with the 25
1105	1105	commissioner, accompanied by a filing fee established by rule of the commissioner. The 26
1106	1106	application shall include a comprehensive plan for dissolution setting forth the proposed disposition 27
1107	1107	of all assets and liabilities, in reasonable detail to effect a liquidation or reorganization, and any 28
1108	1108	other plans required by the commissioner. The plan of dissolution shall provide for the discharge 29
1109	1109	or assumption of all of the known and unknown claims and liabilities of the special purpose 30
1110	1110	depository institution. Additionally, the application for dissolution shall include other evidence, 31
1111	1111	certifications, affidavits, documents or information as the commissioner may require, including a 32
1112	1112	demonstration of how assets and liabilities will be disposed, the timetable for effecting disposition 33
1113	1113	of the assets and liabilities and a proposal of the special purpose depository institution for 34
1114	1114
1115	1115
1116	1116	LC001944 - Page 31 of 34
1117	1117	addressing any claims that are asserted after dissolution has been completed. The commissioner 1
1118	1118	shall examine the application for compliance with this section, the business entity laws applicable 2
1119	1119	to the required type of dissolution and applicable rules. The commissioner may conduct a special 3
1120	1120	examination of the special purpose depository institution consistent with chapter 4 of title 19 and 4
1121	1121	the guidelines set forth in this chapter for purposes of evaluating the application. 5
1122	1122	(3) If the commissioner finds that the application is incomplete, the commissioner shall 6
1123	1123	return it for completion not later than sixty (60) days after it is filed. If the application is found to 7
1124	1124	be complete by the commissioner, the commissioner shall approve or disapprove the application 8
1125	1125	not later than thirty (30) days after it is filed. If the commissioner approves the application the 9
1126	1126	special purpose depository institution may proceed with the dissolution pursuant to the plan 10
1127	1127	outlined in the application subject to any further conditions the commissioner may prescribe. If the 11
1128	1128	special purpose depository institution subsequently determines that the plan of dissolution needs to 12
1129	1129	be amended to complete the dissolution, it shall file an amended plan with the commissioner and 13
1130	1130	obtain approval to proceed under the amended plan. If the commissioner does not approve the 14
1131	1131	application or amended plan, the special purpose depository institution may appeal the decision to 15
1132	1132	the board pursuant to chapter 35 of title 42 ("administrative procedures"). 16
1133	1133	(4) Upon completion of all actions required under the plan of dissolution and satisfaction 17
1134	1134	of all conditions prescribed by the commissioner, the special purpose depository institution shall 18
1135	1135	submit a written report of its actions to the commissioner. The report shall contain a certification 19
1136	1136	made under oath that the report is true and correct. Following receipt of the report, the 20
1137	1137	commissioner, no later than sixty (60) days after the filing of the report, shall examine the special 21
1138	1138	purpose depository institution to determine whether the commissioner is satisfied that all required 22
1139	1139	actions have been taken in accordance with the plan of dissolution and any conditions prescribed 23
1140	1140	by the commissioner. If all requirements and conditions have been met, the commissioner shall, 24
1141	1141	within thirty (30) days of the examination, notify the special purpose depository institution in 25
1142	1142	writing that the dissolution has been completed and issue a certificate of dissolution. 26
1143	1143	(5) Upon receiving a certificate of dissolution, the special purpose depository institution 27
1144	1144	shall surrender its charter to the commissioner. The special purpose depository institution shall then 28
1145	1145	file articles of dissolution and other documents required by § 7-1.2-1309. In the case of 29
1146	1146	reorganization, the special purpose depository institution shall file the documents required by the 30
1147	1147	secretary of state to finalize the reorganization. 31
1148	1148	(6) If the commissioner determines that all required actions under the plan for dissolution, 32
1149	1149	or as otherwise required by the commissioner, have not been completed the commissioner shall 33
1150	1150	notify the special purpose depository institution not later than thirty (30) days after this 34
1151	1151
1152	1152
1153	1153	LC001944 - Page 32 of 34
1154	1154	determination, in writing what additional actions shall be taken in order for the institution to be 1
1155	1155	eligible for a certificate of dissolution. The commissioner shall establish a reasonable deadline for 2
1156	1156	the submission of evidence that additional actions have been taken and the commissioner may 3
1157	1157	extend any deadline upon good cause. If the special purpose depository institution fails to file a 4
1158	1158	supplemental report showing that the additional actions have been taken before the deadline, or 5
1159	1159	submits a report that is found not to be satisfactory by the commissioner, the commissioner shall 6
1160	1160	notify the special purpose depository institution in writing that its voluntary dissolution is not 7
1161	1161	approved, and the institution may appeal the decision to the board pursuant to chapter 35 of title 42 8
1162	1162	("administrative procedures"). 9
1163	1163	(hh) Failure to submit required report; fees; rules. If a special purpose depository institution 10
1164	1164	fails to submit any report required by this chapter or by rule within the prescribed period, the 11
1165	1165	commissioner may impose and collect a fee of up to one thousand dollars ($1000) for each day the 12
1166	1166	report is overdue, as established by rule. 13
1167	1167	(ii) Each officer, director, employee or agent of a special purpose depository institution, 14
1168	1168	following written notice from the commissioner is subject to removal upon order of the 15
1169	1169	commissioner if he/she knowingly or willfully fails to perform any duty required by this chapter or 16
1170	1170	other applicable law or conform to any rule or order of the commissioner. 17
1171	1171	42-64.35-9. Severability in a pari material construction with other chapters. 18
1172	1172	(a) Except as provided in subsection (b) of this section, if any provision of this chapter or 19
1173	1173	the application of this chapter to any person or circumstances is held invalid or unconstitutional, 20
1174	1174	the invalidity or unconstitutionality shall not affect other provisions or applications of this chapter 21
1175	1175	that can be given effect without the invalid or unconstitutional provision or application, and to this 22
1176	1176	end the provisions of this chapter are declared to be severable. 23
1177	1177	(b) The provisions of this chapter 64.34 of title 42 ("this chapter") shall be interpreted to 24
1178	1178	be in pari material with, consistent with, and harmonized with the provisions of chapter 56 of title 25
1179	1179	6 ("uniform supplemental commercial law for the uniform regulation of virtual-currency businesses 26
1180	1180	act"), chapter 14 of title 19 ("licensed activities"), and chapter 14.3 of title 19 ("currency 27
1181	1181	transmissions"). To the extent any provision of this chapter 64.3 of title 42 is determined to be 28
1182	1182	inconsistent with and cannot be harmonized with the provisions of any of the aforesaid chapters, 29
1183	1183	the provisions of chapter 56 of title 6, chapter 14 of title 19, and chapter 14.3 of title 19 shall control 30
1184	1184	and prevail over the provisions of this chapter. 31
1185	1185
1186	1186
1187	1187	LC001944 - Page 33 of 34
1188	1188	SECTION 2. This act shall take effect upon passage. 1
1189	1189	========
1190	1190	LC001944
1191	1191	========
1192	1192
1193	1193
1194	1194	LC001944 - Page 34 of 34
1195	1195	EXPLANATION
1196	1196	BY THE LEGISLATIVE COUNCIL
1197	1197	OF
1198	1198	A N A C T
1199	1199	RELATING TO STATE AFFAIRS AND GOVERNMENT -- RHODE ISLAND ECONOMI C
1200	1200	GROWTH BLOCKCHAIN AC T
1201	1201	***
1202	1202	This act would establish an economic growth blockchain act, which would regulate virtual 1
1203	1203	and digital assets, and establish depository banks for these purposes. 2
1204	1204	This act would take effect upon passage. 3
1205	1205	========
1206	1206	LC001944
1207	1207	========