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Jordan D. Teuscher proposes the following substitute bill:
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Blockchain and Digital Innovation Amendments
2025 GENERAL SESSION
STATE OF UTAH
Chief Sponsor: Jordan D. Teuscher
Senate Sponsor:
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LONG TITLE
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General Description:
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This bill creates authority for the state treasurer to invest public funds in certain digital
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assets.
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Highlighted Provisions:
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This bill:
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▸ defines terms;
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▸ authorizes the state treasurer to invest certain public funds in qualifying digital assets;
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▸ establishes requirements for the custody and management of digital assets;
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▸ creates regulatory requirements for stablecoin investments; and
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▸ authorizes the state treasurer to engage in staking and lending of digital assets under
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specified conditions.
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Money Appropriated in this Bill:
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None
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Other Special Clauses:
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None
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Utah Code Sections Affected:
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AMENDS:
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51-7-2, as last amended by Laws of Utah 2024, Chapters 418, 492 and 510
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ENACTS:
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7-28-101, Utah Code Annotated 1953
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7-28-102, Utah Code Annotated 1953
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7-28-103, Utah Code Annotated 1953
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7-28-104, Utah Code Annotated 1953
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10-9a-541, Utah Code Annotated 1953
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17-27a-536, Utah Code Annotated 1953
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67-4-20, Utah Code Annotated 1953
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Be it enacted by the Legislature of the state of Utah:
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Section 1. Section 7-28-101 is enacted to read:
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7-28-101 . Definitions.
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As used in this chapter:
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(1) "Blockchain protocol" means any executable software deployed to enable the transfer of
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data and electronic records through a distributed network of nodes, including an
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additional standardized set of rules that uses a previously existing blockchain as a base.
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(2) "Digital asset" means:
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(a) virtual currency;
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(b) cryptocurrency;
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(c) natively electronic assets, including:
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(i) stablecoins; and
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(ii) non-fungible tokens; or
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(d) other digital-only assets that confer economic, proprietary, or access rights or powers.
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(3) "Hardware wallet" means a physical device that:
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(a) is not continuously connected to the Internet;
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(b) allows an individual to secure and transfer digital assets; and
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(c) enables the owner of digital assets to retain independent control over the digital
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assets.
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Section 2. Section 7-28-102 is enacted to read:
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7-28-102 . Permitted uses of digital assets.
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A state or local governmental entity may not prohibit, restrict, or impair a person's
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ability to:
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(1) accept digital assets as a method of payment for legal goods and services; or
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(2) take custody of digital assets using:
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(a) a self-hosted wallet; or
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(b) a hardware wallet.
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Section 3. Section 7-28-103 is enacted to read:
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7-28-103 . Access to blockchain protocols and transfer of digital assets.
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A person may:
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(1) operate a node for the purpose of:
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(a) connecting to a blockchain protocol; and
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(b) participating in the blockchain protocol's operations;
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(2) develop software on a blockchain protocol;
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(3) transfer digital assets to another individual or business utilizing a blockchain protocol; or
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(4) participate in staking on a blockchain protocol.
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Section 4. Section 7-28-104 is enacted to read:
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7-28-104 . Exemption from money transmission license.
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The following activities do not require an individual or business to obtain a money
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transmitter license under Title 7, Chapter 25, Money Transmitter Act:
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(1) operating one or more nodes on a blockchain protocol;
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(2) developing software on a blockchain protocol; or
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(3) operating a business or decentralized protocol that:
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(a) effectuates the exchange of one digital asset for another digital asset; and
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(b) does not exchange digital assets for legal tender or bank deposits.
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Section 5. Section 10-9a-541 is enacted to read:
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10-9a-541 . Digital asset mining -- Zoning restrictions.
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(1) As used in this section:
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(a) "Digital asset" means the same as that term is defined in Section 7-28-101.
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(b) "Digital asset mining" means using computer hardware and software specifically
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designed or utilized for validating data and securing a blockchain network.
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(c) "Digital asset mining business" means a group of computers working at a single site
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that:
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(i) consumes more than one megawatt of energy on an average annual basis; and
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(ii) operates for the purpose of generating blockchain tokens by securing a
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blockchain network.
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(2) A political subdivision of the state may not enact an ordinance, resolution, or rule that:
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(a) for digital asset mining businesses located in areas zoned for industrial use, imposes
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sound restrictions on digital asset mining businesses that are more stringent than the
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generally applicable limits set for industrial-zoned areas; or
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(b) prevents a digital asset mining business from operating in an area zoned for
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industrial use if the digital asset mining business meets other requirements for
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industrial use.
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Section 6. Section 17-27a-536 is enacted to read:
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17-27a-536 . Digital asset mining -- Zoning restrictions.
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(1) As used in this section:
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(a) "Digital asset" means the same as that term is defined in Section 7-28-101.
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(b) "Digital asset mining" means using computer hardware and software specifically
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designed or utilized for validating data and securing a blockchain network.
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(c) "Digital asset mining business" means a group of computers working at a single site
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that:
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(i) consumes more than one megawatt of energy on an average annual basis; and
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(ii) operates for the purpose of generating blockchain tokens by securing a
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blockchain network.
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(2) A political subdivision of the state may not enact an ordinance, resolution, or rule that:
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(a) for digital asset mining businesses located in areas zoned for industrial use, imposes
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sound restrictions on digital asset mining businesses that are more stringent than the
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generally applicable limits set for industrial-zoned areas; or
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(b) prevents a digital asset mining business from operating in an area zoned for
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industrial use if the digital asset mining business meets other requirements for
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industrial use.
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Section 7. Section 51-7-2 is amended to read:
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51-7-2 . Exemptions from chapter.
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(1) Except as provided in Subsection (2), the following funds are exempt from this chapter:
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(a) funds invested in accordance with the participating employees' designation or
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direction pursuant to a public employees' deferred compensation plan established and
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operated in compliance with Section 457 of the Internal Revenue Code of 1986, as
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amended;
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(b) funds of the Utah State Retirement Board;
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(c) funds of the Utah Housing Corporation;
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(d) endowment funds of higher education institutions, including funds of the Higher
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Education Student Success Endowment, created in Section 53B-7-802;
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(e) permanent and other land grant trust funds established pursuant to the Utah Enabling
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Act and the Utah Constitution;
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(f) the State Post-Retirement Benefits Trust Fund;
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(g) the funds of the Utah Educational Savings Plan;
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Constitution, Article XXII, Section 4;
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(i) the funds in the Navajo Trust Fund;
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(j) the funds in the Radioactive Waste Perpetual Care and Maintenance Account;
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(k) the funds in the Employers' Reinsurance Fund;
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(l) the funds in the Uninsured Employers' Fund;
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(m) the Utah State Developmental Center Long-Term Sustainability Fund, created in
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Section 26B-1-331;
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(n) the funds in the Risk Management Fund created in Section 63A-4-201;
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(o) the Utah fund of funds created in Section 63N-6-401;
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(p) the funds deposited into the Utah Homes Investment Program from the
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Transportation Infrastructure General Fund Support Subfund created in Section
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72-2-134;[ and]
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(q) subject to Subsection 67-4-19(2), the portion of the funds in the following accounts
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invested by the state treasurer in precious metals:
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(i) the State Disaster Recovery Restricted Account, created in Section 53-2a-603;
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(ii) the General Fund Budget Reserve Account, created in Section 63J-1-312;
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(iii) the Income Tax Fund Budget Reserve Account, created in Section 63J-1-313; and
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(iv) the Medicaid Growth Reduction and Budget Stabilization Account, created in
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Section 63J-1-315[.] ; and
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(r) subject to Subsection 67-4-20(2), the portion of the funds in the following accounts
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invested by the state treasurer in qualifying digital assets:
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(i) the State Disaster Recovery Restricted Account, created in Section 53-2a-603;
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(ii) the General Fund Budget Reserve Account, created in Section 63J-1-312;
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(iii) the Income Tax Fund Budget Reserve Account, created in Section 63J-1-313; and
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(iv) the Medicaid Growth Reduction and Budget Stabilization Account, created in
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Section 63J-1-315.
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(2) Except for the funds of the Utah State Retirement Board and the Utah Educational
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Savings Plan, the funds described in Subsection (1) are not exempt from Subsections
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51-7-14(2) and (3).
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(3) Notwithstanding Title 52, Chapter 4, Open and Public Meetings Act, a public body that
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administers a fund described in Subsection (1) may hold a closed meeting to discuss the
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sale or purchase of identifiable securities, investment funds, or investment contracts.
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(4) A paper, electronic, or other depiction or record of information relating to investment
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activities of a fund described in Subsection (1) is not subject to Title 63G, Chapter 2,
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Government Records Access and Management Act.
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Section 8. Section 67-4-20 is enacted to read:
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67-4-20 . Investments of public funds in digital assets by state treasurer -- Digital
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asset investment study and report to Legislature.
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(1) As used in this section:
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(a) "Digital asset" means virtual currency, cryptocurrencies, natively electronic assets,
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including stablecoins and non-fungible tokens, and other digital-only assets that
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confer economic, proprietary, or access rights or powers.
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(b) "Qualified custodian" means an entity that manages digital assets and is:
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(i) a federal or state-chartered bank;
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(ii) a trust company;
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(iii) a special purpose depository institution;
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(iv) a federal or state-chartered credit union; or
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(v) a company regulated by the state.
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(c) "Qualifying digital asset" means:
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(i) a digital asset with a market capitalization of over $500 billion averaged over the
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previous 12 months; or
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(ii) a stablecoin.
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(d) "Secure custody solution" means a technological product or blended product and
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service that:
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(i) maintains cryptographic private keys that secure digital assets exclusively known
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by and accessible by the government entity;
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(ii) contains cryptographic private keys exclusively within an encrypted environment
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accessible only via end-to-end encrypted channels;
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(iii) does not allow cryptographic private keys to be accessible by or controllable via
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a smartphone;
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(iv) maintains hardware containing cryptographic private keys in at least two
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geographically diversified specially designated secure data centers;
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(v) enforces a multi-party governance structure for authorizing transactions, user
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access controls, and logs all user-initiated actions;
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(vi) implements a disaster recovery protocol ensuring customer access to assets if the
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provider becomes unavailable; and
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(vii) undergoes regular code audits and penetration testing from audit firms with
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prompt remedy of identified vulnerabilities.
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(e) "Stablecoin" means a digital asset that:
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(i) is issued by a corporation;
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(ii) is backed by dollars or high-quality liquid assets;
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(iii) is redeemable on demand by the holder at par for United States dollars; and
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(iv) has received appropriate regulatory approval from:
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(A) the United States of America; or
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(B) a state of the United States of America.
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(2)(a) For the following accounts, in addition to other authorized investments, the state
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treasurer may invest a portion of public funds in qualifying digital assets:
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(i) the State Disaster Recovery Restricted Account, created in Section 53-2a-603;
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(ii) the General Fund Budget Reserve Account, created in Section 63J-1-312;
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(iii) the Income Tax Fund Budget Reserve Account, created in Section 63J-1-313; and
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(iv) the Medicaid Growth Reduction and Budget Stabilization Account, created in
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Section 63J-1-315.
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(b)(i) The amount of public funds that the state treasurer may invest under Subsection
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(2)(a) may not, at the time the investment is made, exceed 5% of the total amount
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of public funds in that account.
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(ii) The requirements of Subsections 51-7-14(2) and (3) apply to the state treasurer's
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investments under Subsection (2)(a).
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(3) The state treasurer shall hold digital assets acquired under this section:
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(a) directly through the use of a secure custody solution;
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(b) through a qualified custodian on behalf of the state; or
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(c) in the form of an exchange traded product issued by a registered investment company.
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(4) The state treasurer may engage in staking of qualifying digital assets if:
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(a) the treasurer's office retains legal ownership of the digital asset; and
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(b) the staking is conducted using a third-party solution.
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(5) The state treasurer may loan qualifying digital assets if:
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(a) the loan does not increase the financial risk to the state; and
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(b) the loan complies with rules established by the treasurer.
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Section 9. Effective Date.
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This bill takes effect on May 7, 2025.
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