68-West–Statehouse | 300 SW 10th Ave. | Topeka, Kansas 66612-1504
(785) 296-3181
[email protected] kslegislature.org/klrd
May 26, 2022
CRYPTOCURRENCY AND BLOCKCHAIN TECHNOLOGY
This memorandum provides an overview of the functions of cryptocurrency and
blockchain technology and describes relevant federal and state regulation. The appendix
provides a detailed list of state action with regard to cryptocurrency and blockchain technology.
Table of Contents
Cryptocurrency and the Exchange of Digital Money.......................2
Blockchain Technology......................................................................2
Shifts in Technological Structure
Functions of Cryptocurrency.............................................................3
Bitcoin..................................................................................................4
Regulation............................................................................................4
Federal Regulation
State Regulation
Kansas
State Actions
Appendix: State Cry ptocurrency and Blockchain Legislation ........9
Figure A: Blockchain ledger illustration.
Cryptocurrency and the Exchange of Digital Money
According to the Internal Revenue Service, virtual currency, or cryptocurrency, is “a
digital representation of value that functions as a medium of exchange, a unit of account, and/or
a store of value.”
1
Rather than using traditional intermediaries to facilitate currency transfers or
transactions, owners rely on a cryptographic procedure for exchange and production of the
digital money. This procedure, called blockchain technology, uses a decentralized public ledger
to record the movement and ownership of cryptocurrency units. Owners of cryptocurrency will
often have personal passcodes to use, exchange, and store their currency tokens. Generally,
passcodes are known only to the holder of the cryptocurrency account, but the ledger of
transactions is visible to the entire network of account holders of a particular cryptocurrency.
Blockchain Technology
Most cryptocurrencies are exchanged and produced using blockchain technology.
2
On a
blockchain, a network of computer users certifies the legitimacy of each cryptocurrency
transaction through a public ledger. The ledger shows the location of, and any transactions
involving, each unit of cryptocurrency. Transactions could involve securities and commodities
other than cryptocurrencies, such as non-fungible tokens (NFTs), which are unique assets
recorded and exchanged on blockchains and usually indicate ownership of a digital product,
such as a video or image. Unique digital signatures identify each party in the transaction.
Proponents of cryptocurrency point to the ledger’s transparency and decentralization as the
primary advantages of cryptocurrency.
3
Since all transactions are public to the blockchain network and each unit of currency
requires private credentials to access, the cryptographic protocols serve the same function as a
bank in facilitating the electronic transfer of funds among parties. Thus, according to supporters,
cryptocurrencies are more efficient and less prone to manipulation than conventional banking
practices and institutions. However, the anonymity of blockchain transactions has popularized
the technology among criminals. In 2020, victims of ransomware attacks paid hackers an
amount of cryptocurrency equivalent to $350 million.
4
Recently, the cybercriminal group
DarkSide received 75 bitcoin (equivalent to about $5.0 million at the time) as ransom after its
hack of Colonial Pipeline Co. in May 2021. Shortly after the ransom payment, U.S. federal law
enforcement officials traced and recovered nearly 90 percent of the bitcoin used in the ransom
exchange with DarkSide, raising hopes that the transparency of blockchain transactions could
aid governments in their attempt to recoup future ransom payments and deter criminal use of
cryptocurrencies. However, since the successful recovery of the bitcoin ransom, hackers have
1 State statute and federal regulation use various terms to refer to cryptocurrency, including “virtual
currency” and “digital tokens.” In this memorandum, “cryptocurrency” is used to differentiate between
currency that relies on cryptographic procedures and proprietary tokens, such as digital casino credits,
that private businesses may accept but whose value is normally not reducible to fiat currency, which is
a government-issued currency not backed by a commodity.
2 Blockchain technology is not used just for cryptocurrency accounting. Digital, decentralized ledgers
are relatively new technologies, but various industries, from agriculture to health care, are testing the
potential utility of the ledgers. See appendix for information on state action authorizing the use of
blockchain technology. For more on the uses of blockchain, see The World Bank, “Blockchain and
Distributed Ledger Technology (DLT),” April 12, 2018. For an illustration of a blockchain ledger, see
Figure A.
3 Users might still be identified by pseudonyms only.
4 The actual amount is probably much higher, considering many cyberattacks go unreported.
Kansas Legislative Research Department 2 Cryptocurrency and Blockchain
Technology – May 26, 2022
started to prefer so-called “privacy coins,” which do not leave digital “trails” of visible
transactions. According to Europol, the European Union’s law enforcement agency, the criminal
use of such coins has “rendered cryptocurrency investigations more challenging.”
Shifts in Technological Structure
Blockchain technology continues to evolve, and changes in the technical structure of
cryptocurrency exchanges have the potential to alter fundamentally the value and use of each
currency. For example, Bitcoin and Ethereum, the two most widely used cryptocurrencies, rely
upon “proof-of-work” systems, wherein users verify the coins’ blockchains through energy-
intensive computer use. Analysts speculate Ethereum will soon shift to a “proof-of-stake”
system, wherein owners validate blockchain transactions if they can provide their own
cryptocurrency as collateral and have established such a “stake” longer than those of other
blockchain users. Such a change would signal a major technological shift in how the
cryptocurrency is produced, exchanged, and valued by its owners. This change, and other
transformations in blockchain technology, have the potential to unsettle markets and
cryptocurrency exchange rates.
Blockchain technology also could provide the digital architecture for a new, more
decentralized internet, generally referred to as Web3. Web3 is an emergent technology, and
little consensus exists about what it would look like or how it would differ from the current
architecture of the platform- and application-based internet. According to the Congressional
Research Service, in a “Web3 architecture, NFTs or cryptocurrencies could be used to purchase
items online, represent digital ownership, pay royalties, or access certain applications and
services,” without the need for intermediary entities such as web-hosting corporations.
Functions of Cryptocurrency
The two primary functions of cryptocurrency are as units of exchange and as stores of
value. Despite the rapid growth in cryptocurrency usage over the past decade, relatively few
entities own or use cryptocurrency. Few businesses accept any cryptocurrencies as payment.
Only in El Salvador is a cryptocurrency official legal tender.
5
Generally, cryptocurrency values
are independent of those of fiat currency. “Stablecoins,” which are designed to reflect certain fiat
currency values, are an exception to this. Cryptocurrency usage among consumers is still rare.
In 2020, the 30-day average of Bitcoin transactions per day peaked at about 330,000,
representing a fraction of the billions of financial transactions made daily around the world.
Surveys estimate 16 percent of adult Americans have invested in, traded, or owned
cryptocurrencies.
Over the past decade, more businesses have begun to invest in, trade, and accept
Bitcoin.
6
Consequently, platforms for trading, exchanging, and storing cyptocurrencies have
become more widely available. In April 2021, Coinbase became the first major cryptocurrency
exchange platform to become a publicly traded company in the United States. In April 2022,
5 In June 2021, El Salvador enacted law recognizing Bitcoin as legal tender in the country and requiring
private businesses to accept the cryptocurrency as payment. It became the first government in the
world to do so.
6 Among the major companies now accepting Bitcoin are Microsoft, Home Depot, and Whole Foods.
The electric vehicle company Tesla started accepting Bitcoin for car purchases in early 2021 but
ended the policy weeks later. J.P. Morgan is considering launching an actively managed Bitcoin fund.
Kansas Legislative Research Department 3 Cryptocurrency and Blockchain
Technology – May 26, 2022
Fidelity, the largest provider of 401(k) retirement plans in the U.S., announced it will allow plan
enrollees to invest in Bitcoin with their employer’s permission. Still, according to the consulting
group Deloitte, only 2,300 out of 31 million American businesses accept any type of
cryptocurrency.
Bitcoin
Created in 2008 by a pseudonymous computer programmer, Bitcoin was the first, and is
still the most widely used, cryptocurrency. As of May 2021, Bitcoin accounted for about 39
percent of total cryptocurrency value, though that share can fluctuate significantly over short
periods of time.
7
Bitcoin, like other currencies, is still often traded in and measured in U.S.
dollars.
Bitcoin, like other cryptocurrencies, is scarce. In contrast, governments can usually
create more units of fiat currencies. The only way to acquire more bitcoin is to either purchase
existing units or “mine” for more. Cryptocurrency “mining” requires solving complex
mathematical problems using significant computing power. Miners are awarded more bitcoin
through their verification of other transactions on the blockchain network. Often, miners will
establish large complexes of supercomputers to collect more bitcoin. Total bitcoin supply,
however, is limited—only about 21 million bitcoin are ultimately available to be mined.
Additionally, each subsequent harvest of bitcoin yields less than the previous one, meaning an
increase in demand cannot produce an equal increase in supply.
Compared to the production of other cryptocurrencies, Bitcoin mining expends large
amounts of energy. Because the costs of running supercomputers are extraordinarily high,
purchasing an existing bitcoin is easier than securing a new one. Other cryptocurrencies do not
typically require as many resources to mine and can have many more tokens in circulation than
Bitcoin. However, Bitcoin can be traded fractionally, and the value of one whole bitcoin currently
far exceeds that of any other cryptocurrency. The cost of cryptocurrency production, particularly
Bitcoin mining, has drawn international attention from regulators and companies. The
Cambridge Center for Alternative Finance estimates Bitcoin mining and usage requires 108.4
terawatt hours of electricity annually.
8
Regulation
Because cryptocurrencies do not require intermediaries or government backing, some
proponents state the digital assets fall outside the traditional scope of government regulation.
Others argue the instability of cryptocurrency valuations and the assets’ increasing integration
into the global financial system necessitate regulation. With the growing acceptance of
cryptocurrencies at major corporations and financial institutions, industry and government
experts have begun to consider in more detail how to protect consumers and financial
institutions from the volatility and uncertainties of the novel technology.
9
7 Market value calculation accessed via CoinMarketCap on May 18, 2021.
8 For context, the Netherlands consumed about the same amount of electricity in 2019.
9 International governments have begun to regulate the financial as well as the environmental
consequences of cryptocurrencies. As of May 2021, China has issued a regional ban and Iran a
national ban on cryptocurrency mining. Both countries cited the extreme energy costs of mining as the
primary reason.
Kansas Legislative Research Department 4 Cryptocurrency and Blockchain
Technology – May 26, 2022
Federal Regulation
The federal government has extended some of its authority to regulate traditional
financial activity to cryptocurrencies, including:
● The U.S. Department of the Treasury’s Financial Crimes Enforcement Network
(FinCEN) has announced that certain cryptocurrency activities qualify as “money
services businesses” and thus parties to certain transactions must report
suspicious activities. Additionally, those parties must operate anti-money-
laundering compliance programs;
● The Internal Revenue Service treats virtual currencies as property, so users must
pay taxes on any realized gains from the sale of cryptocurrency; and
● The Consumer Financial Protection Bureau and the Securities and Exchange
Commission (SEC) have issued alerts about the high risk for financial scams
involving cryptocurrency investments and transactions.
Federal regulation remains preliminary, however. Officials continue to study
cryptocurrencies, including potential risks. Regulatory authority is dispersed across several
entities, including the Federal Reserve, the SEC, the Commodity Futures Trading Commission,
and the Treasury Department. The SEC, for one, has taken action to regulate cryptocurrency
exchanges. In February 2022, the agency reached a settlement with the cryptocurrency
company BlockFi after the SEC accused it of selling billions of dollars in unlicensed investment
products. Included among its cryptocurrency investment products, BlockFi offered “yield farms,”
which allow investors to lend their cryptocurrencies to other investors in exchange for a return,
either in other cryptocurrencies or U.S. dollars. As part of the settlement, the SEC required
BlockFi to register the “yield farm” product as BlockFi Yield, which allowed current investors to
keep their accounts with the company. Experts in the finance industry considered the settlement
a significant federal recognition of cryptocurrency activity.
In May 2021, U.S. senators Cynthia Lummis and Kyrsten Sinema announced the
creation of the Financial Innovation Caucus, which will study “responsible innovation” in financial
technologies, including cryptocurrencies. The same month, after the price of Bitcoin dropped
over 50.0 percent in a week, the U.S. Department of the Treasury briefed White House officials
on potential “gaps” in cryptocurrency market regulation, including the risk of turmoil and
devaluation in the broader financial system.
On March 9 2022, President Biden signed an Executive Order that outlined the first
“whole-of-government” plan to address the risks posed by digital assets, including
cryptocurrency. Among other things, the Executive Order:
● Directed the Department of the Treasury to assess and develop policy
recommendations to address the implications of the growing digital asset sector;
● Encouraged the Financial Stability Oversight Council to identify and mitigate
economy-wide financial risks posed by digital assets;
Kansas Legislative Research Department 5 Cryptocurrency and Blockchain
Technology – May 26, 2022
● Directed coordinated action across all relevant U.S. Government agencies to
mitigate the illicit finance and national security risks posed by the illicit use of
digital assets;
● Direct the Department of Commerce to establish a framework to drive national
competitiveness and leadership in, and leveraging of, digital asset technologies;
● Affirmed the critical need for safe, affordable, and accessible financial services as
a U.S. national interest;
● Directed the U.S. government to support technological advances and ensure
responsible development and use of digital assets; and
● Directed the U.S. government to assess the technological infrastructure and
capacity needs for a potential U.S. Central Bank Digital Currency.
State Regulation
State action concerning cryptocurrencies varies widely. For example, some states have:
● Defined virtual currencies as “money” or “property”;
● Applied existing money transmitter law to cryptocurrencies; and
● Debated the applicability of consumer protection laws.
Wyoming has enacted the most legislation related to cryptocurrency. As of June 2021,
Wyoming is the only state to create an entirely new category of assets (“utility tokens”) for
cryptocurrencies. When the cryptocurrency exchange Coinbase tried to operate in the state,
Wyoming restricted the company’s business activities because the State’s Money Transmitter
Act of 2003 did not define “virtual currency.” As a result, the State required Coinbase to hold
equal amounts of fiat currency for all cryptocurrencies traded in the state. Coinbase suspended
activities in Wyoming rather than comply with the regulations. In 2018, the Governor approved
legislation allowing transactions involving “smart contracts,” including blockchain transactions. In
2019, the Legislature created a new category of banks, the Special Purpose Depository
Institution, that can perform custodial and management services for owners of cryptocurrencies,
among other digital assets. In 2021, the State legalized Decentralized Autonomous
Organizations. These limited liability corporations are managed according to a set of “smart
contracts” established on a blockchain.
Kansas
On May 18, 2021, the Office of the State Bank Commissioner (OSBC) updated a
guidance document concerning the regulation of virtual currencies under the Kansas Money
Transmitter Act (Act). The guidance applies to money transmission involving “decentralized
cryptocurrencies,” such as Bitcoin, which have no primary administrator. While the Act does not
address two-party currency exchange, the involvement of a third party would likely qualify the
Kansas Legislative Research Department 6 Cryptocurrency and Blockchain
Technology – May 26, 2022
exchange as “money transmission” under the Act.
10
Because “money” is not defined in Kansas
statute, and no governmental entity in the United States has adopted a cryptocurrency as fiat
money, the OSBC does not consider cryptocurrency “money” under the Act. Therefore, the Act
does not currently apply to cryptocurrencies.
11
The OSBC clarified the Act’s applicability to select uses of cryptocurrency, including:
● The exchange of cryptocurrency for sovereign currency between two parties is
similar to a sale of goods and therefore does not qualify as money transmission;
● Since Kansas statute does not consider cryptocurrency money, the exchange of
one cryptocurrency for another does not count as money transmission; and
● If an entity that expects to regularly handle cryptocurrencies seeks a money
transmitter license, the OSBC requires the applicant to submit a third-party
security audit of its information systems due to the increased risk to consumers
posed by a cryptocurrency exchange.
State Actions
The types of legislation state legislatures have passed with respect to cryptocurrency,
virtual exchanges, and blockchain technology are reviewed below. The appendix contains a
detailed table of enacted legislation through 2020, as well as pending and enacted 2021
legislation.
Blockchain Technology
Arizona (2018 HB 2602, 2017 HB 2417, and 2017 HB 2216), Delaware (2017 SB 69),
Illinois (2019 HB 2540 and HB 3575), and Maryland (2019 SB 136) have passed laws related to
the use of blockchain technology.
Crimes
Several new laws in Michigan in 2019 amended definitions in the Michigan Penal Code
to add virtual currency. Other state legislatures, including those of Nevada (2019 AB 15), Texas
(2019 SB 207), and Florida (2017 HB 1379), passed laws adding virtual currency to definitions
related to certain crimes, including money laundering.
10 KSA 9-508(h) defines “money transmission” as engaging “in the business of the sale or issuance of
payment instruments or of receiving money or monetary value for transmission to a location within or
outside the United States by wire, facsimile, electronic means or any other means, except that money
transmission does not include currency exchange where no transmission of money occurs.”
11 KSA 9-508(f) defines “monetary value” as “a medium of exchange, whether or not redeemable in
money.” Because cryptocurrencies are generally not accepted as means of payment, the OSBC does
not define cryptocurrencies as having “monetary value.”
Kansas Legislative Research Department 7 Cryptocurrency and Blockchain
Technology – May 26, 2022
Exemption from Certain Securities Laws
Montana (2019 HB 584) and Wyoming (2018 HB 70) have exempted virtual currencies
from certain securities laws. Wyoming (2019 HB 62) made “open blockchain tokens” not subject
to securities exemptions.
Money Transmission
Alabama (2017 HB 215), Arkansas (2021 SB 150), Connecticut (2017 HB 7141),
Georgia (2016 HB 811), Vermont (2017 B 182), and Washington (2017 SB 5031) have all
approved regulation of virtual currency transmitters. New Hampshire (2017 HB 436) and
Wyoming (2018 HB 19) exempted persons using virtual currency from being licensed as money
transmitters, and Utah (2019 SB 213) exempted a person who facilitates the creation,
exchange, or sale of certain blockchain technology-related products from money transmission
laws.
Task Forces and Study Committees
Arizona (2021 HB 2544), California (2018 AB 2658), Colorado (2021 HB 1247),
Connecticut (2018 SB 443), Indiana (2019 SR 9), Kentucky (2020 SB 55), Maryland (2018 HB
1634), New York (2020 SB 7508), North Dakota (2019 HB 1048), Vermont (2018 SB 269), and
Wyoming (2020 HB 27) have requested or directed their legislatures to establish committees
dedicated to studying virtual currencies and related issues.
Virtual Currency as Property
Wisconsin (2019 HB 62) and Wyoming (2019 SF 125) categorized virtual currency as
property. Delaware (2021 SB 103), Illinois (2017 SB 868), Indiana (2021 SB 188), Kentucky
(2018 HB 394), Nevada (2019 SB 44), New Hampshire (2021 SB 71), North Dakota (2021 SB
2048), South Dakota (2021 SB 2048), Tennessee (2017 HB 420), Utah (2017 SB 175), and
Vermont (2019 HB 550) added virtual currencies to their unclaimed property statutes.
Sources
Ryan Browne, Colonial Pipeline Hackers Received $90 million in Bitcoin Before Shutting
Down,” CNBC, May 18, 2021
● Internal Revenue Service, Notice 2014-21
● Kansas Office of the State Bank Commissioner, “Regulatory Treatment of Virtual
Currencies Under the Kansas Money Transmitter Act,” May 18, 2021
● Jemima Kelly, “Oh No, Now Deloitte with the Crypto Nonsense,” Financial Times,
May 7, 2021
● Lionel Laurent, “Bitcoin’s True Social Cost is Impossible to Ignore,” Bloomberg,
May 25, 2021
Kansas Legislative Research Department 8 Cryptocurrency and Blockchain
Technology – May 26, 2022
● Hannah Murphy, “The Rise of Crypto Laundries: How Criminals Cash Out of
Bitcoin,” Financial Times, May 27, 2021
● Nicole Perlroth, et al., “Pipeline Investigation Upends Idea that Bitcoin is
Untraceable,” New York Times, June 9, 2021
● Laura Shin, “Crypto Industry Frustrated by Haphazard Regulations,” New York
Times, June 27, 2018
● Mackenzie Sigalos, “Bitcoin’s Wild Price Moves Stem From its Design: You’ll
Need Strong Nerves to Trade It,” CNBC, May 19, 2021.
● U.S. Energy Information Administration, International Electricity Consumption
● U.S. Senate Committee on Banking, Housing, and Urban Affairs,
“Cryptocurrencies: What are They Good For?” July 27, 2021
● Janet Yellen, “Finance Committee Questions for the Record,” U.S. Senate
Committee on Finance, January 21, 2021
APPENDIX: STATE CRYPTOCURRENCY AND BLOCKCHAIN LEGISLATION
State 2014-2021 Enacted Legislation
12
2022 Legislation
13
Alabama HB 470 (2018) added the provisioning of virtual
currencies to the definition of “marketplace
facilitator” in its taxation statute.
HB 215 (2017) included virtual currency within the
regulation of money transmission.
HB 127 would exempt all virtual
currency from ad valorem taxes.
Alaska None enacted None
Arizona HB 2544 (2021) established the Blockchain and
Cryptocurrency Study Committee.
HB 2601 (2018) made exempt from certain
securities statutes transactions involving virtual
coin offerings if the coin issuer meets certain
requirements and allows all proceeds from such
offerings to be deposited into any depository
institution, physical or virtual, that is authorized to
do business in the state. The bill also prescribes
arbitration, underwriter, and facilitator regulations
as they relate to virtual coin offerings.
HB 2062 (2018) prohibited a city or town from
prohibiting a person “running a node on
blockchain technology” (mining for
cryptocurrency) in a residence.
HB 2417 (2017) made signatures, records, and
HB 2204 would provide that
specified amounts shall be
subtracted from state gross
income, including the value of
virtual currency. (Passed House)
SB 1127 would, among other
things, allow a state agency to
accept cryptocurrency as a
payment method of fines, civil
penalties, or other penalties, rent,
rates, taxes, fees, charges, and
other financial obligations. (In
Committee)
SB 1128 would make virtual
currency exempt from taxation.
(In Committee)
Kansas Legislative Research Department 9 Cryptocurrency and Blockchain
Technology – May 26, 2022
State 2014-2021 Enacted Legislation 2022 Legislation
contracts secured through blockchain technology
legally valid.
HB 2216 (2017) prohibited requiring a person to
use or be subject to electronic firearm tracking
that uses blockchain technology.
SB 1341 would make bitcoin legal
tender. (In Committee)
SB 1383 would include
cryptocurrency in the definition of
liquid assets in law relating to
dissolution of marriages. (Passed
Senate)
SB 1493 would allow the state or
a political subdivision to pay its
employees in virtual currency. (In
Committee)
SCR 1013 would amend the
Constitution of Arizona to
recognize the right of the people
to own, hold, and use a mutually
agreed on medium of exchange,
including digital currency. (In
Committee)
Arkansas HB 1926 (2021) clarified control of virtual
currency under the Uniform Commercial Code.
SB 150 (2021) amended the definition of “money
transmission” in the Uniform Money Services Act
to include virtual currency.
HB 1944 (2019) amended the Uniform Electronic
Transactions Act to add the definitions of
“blockchain distributed ledger technology” and
“smart contract.”
None
California AB 147 (2019) added the provisioning of a virtual
currency to the definition of “marketplace
facilitator” in the California Revenue and Taxation
Code.
AB 2658 (2018) defined “blockchain” and
required the appointment of a Blockchain
Working Group.
AB 2689 would authorize a
private or public entity in the state
to accept virtual currency as a
method of payment for the
provision of any good or service,
including any governmental
service. (In Committee)
SB 1275 would authorize a state
agency to accept cryptocurrency
as a method of payment for the
provision of government services.
(In Committee)
Colorado HB 1247 (2019) created an advisory group to
study the use and benefits of blockchain
technology in agriculture.
SB 23 (2019), the Colorado Digital Token Act,
provides exemptions from securities registration
and salesperson licensing requirements for digital
token dealers.
HB 1053 would instruct the
Commission of Agriculture to
create and deploy an online
program that educates
agricultural producers about
blockchain technology and
classify various types of digital
assets as the appropriate type of
property under the Uniform
Kansas Legislative Research Department 10 Cryptocurrency and Blockchain
Technology – May 26, 2022
State 2014-2021 Enacted Legislation 2022 Legislation
Commercial Code. (In
Committee)
SB 25 would expand the the
types of collateral that could be
used to secure state capital
financing managed by the state
treasurer, including digital
contracts secured through
blockchain technology. (Passed
Senate)
Connecticut SB 443 (2018) directed the Department of
Economic and Community Development to study
all facets of blockchain technology.
HB 7141 (2017) made virtual currency subject to
money transmission laws, including requiring
each licensed money transmitter that controls
virtual currency on behalf of another person to
hold currency of the same type and amount owed
to such other person.
HB 5320 would require the
registration of virtual currency
businesses, establish consumer
protections concerning virtual
currency, and allow the
acceptance of credit and debit
cards for the purchase of virtual
currency. (Passed out of House
Committee)
Delaware SB 103 (2021) amended the Delaware Code
relating to unclaimed property; required the
liquidation of and conversion to U.S. dollars of
virtual currency prior to reporting and remitting
the property to the State; limited the exposure of
the State to claims by the putative owners of this
property type for subsequent gains in value, given
the volatility inherent in the value of virtual
currency; and added “virtual currency” to the
definition of “property.”
SB 69 (2017) authorized corporations to use
blockchain to create and maintain corporate
records on the blockchain, including stock
ledgers.
None
Florida HB 1391 (2020) created the Financial Technology
Sandbox program to allow financial technology
innovators to test new products and services in a
supervised, flexible regulatory sandbox using
exceptions to specified general law.
HB 1393 (2019) established the Blockchain Task
Force.
HB 1379 (2017) defined “virtual currency” and
expanded the Florida Money Laundering Act to
prohibit the laundering of virtual currency.
HB 273, among other things,
would revise requirements for a
written contract between a money
transmitter or payment instrument
seller and an authorized vendor,
provide requirements for a money
transmitter that receives virtual
currency, and exclude virtual
currency in the calculation of
permissible investments under
certain circumstances. (Enrolled
for presentation to Governor)
Georgia SB 301 (2018), the Revised Uniform Fiduciary
Access to Digital Assets Act, defined a digital
asset as an electronic record in which an
individual has a right or interest that shall not
include an underlying asset or liability unless the
asset or liability is itself an electronic record.
HB 1342 would have exempted
the sale or use of electricity used
in the commercial mining of
digital assets from sales and use
tax. (Died in Committee)
Kansas Legislative Research Department 11 Cryptocurrency and Blockchain
Technology – May 26, 2022
State 2014-2021 Enacted Legislation 2022 Legislation
HB 811 (2016) authorized the Georgia
Department of Banking and Finance to enact
rules and regulations that apply solely to persons
engaged in money transmission or the sale of
payment instruments involving virtual currency.
Hawaii HR 94 (2021) requests the Hawaii Department of
Commerce and Consumer Affairs reconsider its
ruling on asset reserve requirements for virtual
currency companies and to align the state’s asset
reserve requirements with those of other states.
HB 2018 would establish a
program for the licensure,
regulation, and oversight of digital
currency companies. (Passed
House)
HB 2287 would exclude the
electronic transfer of virtual
currency through virtual currency
and cryptocurrency companies
from the Money Transmitters Act.
(In House Committee)
SB 2695 would establish the
Blockchain and Cryptocurrency
Task Force. (In Conference
Committee)
SB 2696 would permit any state
agency that would enter into a
virtual currency payment
agreement with a person or
virtual currency issuer to accept
convertible virtual currency. (In
Committee)
SB 2698 would prohibit any
encumberance on the right to
own, possess, and use any
medium of exchange. (In
Committee)
SB 3025 would, among other
things, establish a program for
the licensure, regulation, and
oversight of special purpose
digital currency companies.
(Passed Senate)
SCR 31 would request the state
Department of Commerce and
Consumer Affairs create a task
force to study the approval of
blockchain technology and
cryptocurrency in the state. (In
Committee))
Idaho None enacted HB 583 creates the Digital Assets
Act, provide for the classification
of digital assets, and provide for
purchase and sale of digital
Kansas Legislative Research Department 12 Cryptocurrency and Blockchain
Technology – May 26, 2022
State 2014-2021 Enacted Legislation 2022 Legislation
assets. (Signed by Governor)
Illinois SB 338 (2021) amends the definition of “virtual
currency” and provides that virtual currency is
presumed abandoned if it is unclaimed by the
apparent owner five years after the last indication
of interest in the property.
HB 2540 (2019), or the Blockchain Business
Development Act, created and provided for the
regulation of blockchain-based limited liability
corporations as businesses.
HB 3575 (2019), the Blockchain Technology Act,
provided for the use of blockchain technology in
certain transactions and proceedings and
prohibited local governmental units from
restricting the use of blockchain technology.
SB 868 (2017) amended the Revised Uniform
Unclaimed Property Act to include virtual
currency.
HB 3968 would, among other
things, amend the Blockchain
Business Development Act to
provide that the state Department
of Financial and Professional
Regulation would have the
authority to adopt rules, opinions,
or interpretive letters regarding
the custody of digital assets,
including digital consumer assets,
digital securities, and virtual
currency. (Passed House)
HB 5287 would provide that the
state Department of Revenue
could adopt rules for payment by
cryptocurrency of any amount
due only when the Department is
not required to pay a discount fee
or charge to convert the
cryptocurrency to U.S. dollars.
(Passed House)
HB 5427 would amend the
Blockchain Technology Act to
provide that a court permit
discovery of electronic records if
the existence or ownership of a
digital asset secured by a
blockchain is factually in dispute
and create the Digital Asset
Discovery Task Force to conduct
a review of the court-ordered
discovery of digital asset
procedures. (In Committee)
SB 3643 would amend the Civil
Administrative Code of Illinois to,
among other things, define
“cryptocurrency” and
“cryptocurrency mining.” (In
Committee))
Indiana SB 188 (2021) defines “virtual currency: and
includes virtual currency in the definition of
“property” in the Revised Unclaimed Property Act.
SR 9 (2017) urged the Legislative Council to
assign a study committee to consider enactment
of the Uniform Regulation of Virtual Currency
Business Act or other virtual currency regulation.
SB 351 adds new law to the
Uniform Commercial Code to,
among other things, specify the
rights and interests in controllable
electronic records. (Signed by
Governor)
Iowa None enacted SB 2333 would create new law in
the Uniform Commercial Code
covering commercial transactions
Kansas Legislative Research Department 13 Cryptocurrency and Blockchain
Technology – May 26, 2022
State 2014-2021 Enacted Legislation 2022 Legislation
involving controllable electronic
records. (In Committee)
Kansas None enacted None
Kentucky HB 230 (2021) defines various terms relating to
commercial mining of cryptocurrency using
blockchain technology and provides sales and
use tax exemptions on the personal property and
electricity used in such mining.
SB 255 (2021) renames the Energy
Independence Act the Incentives for Energy-
related Business Act and adds to the list of
qualifications for incentives the minimum capital
investment for cryptocurrency mining facilities.
SB 55 (2020) established a Blockchain
Technology Working Group that is to evaluate the
usefulness and applicability of blockchain
technology in the state’s critical infrastructure.
HB 204 (2019) amended the Developmental
Disabilities Assistance and Bill of Rights Act to
provide the holder of virtual currency shall
liquidate and remit the proceeds.
HB 354 (2019) added the providing of a virtual
currency to the definition of “marketplace
facilitator” for state tax law purposes.
HB 394 (2018) added virtual currency to the
definition of “property” in the Kentucky Unclaimed
Property Act.
SB 17 would, among other things,
define and establish property
classifications for digital assets.
(In Committee)
SB 67 would, among other things,
establish definitions, scope,
purchaser rights, debtor
discharge obligations, control
requirements, and jurisdictional
rules relating to controllable
electronic records. (In
Committee)
Louisiana HR 33 (2021) commends Bitcoin for its success
and encourages the state and local governments
to consider ways that it could help them benefit
from the increased use of this technology.
HB 701 (2020) defined terms related to virtual
currency businesses, required licensure of virtual
currency businesses, required security deposits
from applicants for licensure, and provided for
related matters.
HB 170 would allow a candidate
to receive campaign contributions
in the form of cryptocurrency. (In
Committee)
HB 741 would require the
Department of Revenue to accept
virtual currency as a form of
payment of taxes, licenses, fees,
penalties, and interest due to the
state. (In Committee)
HB 802 would allow banks to
provide custodial services relative
to digital access. (In Committee)
Maine None enacted None
Maryland SB 136 (2019) authorized corporations to
maintain certain records on a distributed
electronic network or database, or a blockchain.
HB 1634 (2018), the Financial Consumer
Protection Act of 2018, directed the Maryland
None
Kansas Legislative Research Department 14 Cryptocurrency and Blockchain
Technology – May 26, 2022
State 2014-2021 Enacted Legislation 2022 Legislation
Financial Consumer Protection Commission to
study, among other topics, cryptocurrencies,
initial coin offerings, cryptocurrency exchanges,
and other blockchain technologies.
Massachusetts None enacted HB 4513 would establish a
special commission on
blockchain and cryptocurrency.
(In Committee)
Michigan HB 4103 (2019) amended the penal code to
modify the definition of “financial transaction
device” to include the use of cryptocurrency and
blockchain technology.
HB 4105 (2019) amended the penal code to
specify the definition of “money or other personal
property” includes cryptocurrency.
HB 4107 (2019) amended the penal code to
include cryptocurrency in the definition of
“monetary instrument.”
SB 888 would establish the
Blockchain and Cryptocurrency
Commission. (In Committee)
Minnesota None enacted SF 970 would, among other
things, include cryptocurrency in
the definition of “money” as it
relates to forfeiture. (In
Conference Committee)
HB 2730 would allow a
corporation to issue all or a
portion of its shares as certificate
tokens, or a representation of
shares that is stored in an
electronic format and is either
entered into a blockchain or
linked to or associated with the
certificate token.
S 2940 would allow for the use of
electronic networks and
databases to record stock
ownership and other records.
Mississippi None enacted HB 1152 would have amended
the Money Transmitters Act to
provide an exemption for the
buying, selling, issuing, or taking
custody of payment instruments
or stored value in the form of
virtual currency or receiving
virtual currency for transmission.
(Died in Committee)
HB 1153 would have authorized
security interests in digital assets
and classified digital assets as
property. (Died in Committee)
Kansas Legislative Research Department 15 Cryptocurrency and Blockchain
Technology – May 26, 2022
State 2014-2021 Enacted Legislation 2022 Legislation
HB 1154 would have, among
other things, provided that a
person who developed, sells or
facilitates the exchange of an
open blockchain token is not
subject to certain securities and
money transmission laws. (Died
in Committee)
SB 2632 would have created the
Digital Asset Act, specified that
digital assets are property within
the Uniform Commerical Code,
and clarified the jurisdiction of
state courts relating to digital
assets. (Died in Committee)
SB 2633 would have, among
other things, created an
exemption for open blockchain
tokens from securities laws.
Missouri None enacted HB 1472 would amend statutes
related to money laundering to
include cryptocurrency in the
definition of “monetary
instruments.” (Passed House)
HB 2127 would include digital
currencies in the definition of
“teller machine” in criminal law.
(Passed House)
HB 2672 would exempt virtual
currencies from taxation. The also
would define several terms,
including “open blockchain
token.” (In Committee)
Montana HB 584 (2019) revised laws relating to
cryptocurrency, amended exempt transactions
from certain securities laws, and allowed certain
digital transactions.
None
Nebraska LB 649 (2021) enacted the Nebraska Financial
Innovation Act, which authorized digital asset
depositories to conduct business in Nebraska,
defined “blockchain,” and outlined powers and
rights of control over electronic records.
LB 284 (2019) added the providing of virtual
currency to the definition of “marketplace
facilitator” for state sales tax law purposes.
LB 648, the Transactions in
Digital Access Act, would define
terms related to digital assets;
classify such asset types,
including virtual currency; and
outline rights of control as they
relate to smart contracts and
private keys. (In Committee)
LB 993 would limit digital asset
and cryptocurrency custody
services. (In Committee)
Kansas Legislative Research Department 16 Cryptocurrency and Blockchain
Technology – May 26, 2022
State 2014-2021 Enacted Legislation 2022 Legislation
Nevada SB 71 (2021) revised provisions governing
unclaimed property and defined “virtual currency”
for these purposes.
AB 15 (2019) revised provisions governing crimes
related to certain financial transactions by adding
virtual currency to the definition of “monetary
instrument.”
AB 445 (2019) adds the providing of virtual
currency to the definition of “marketplace
facilitator” for state tax purposes.
SB 44 (2019) revised provisions of the Uniform
Unclaimed Property Act to include virtual
currency.
SB 164 (2019) defined virtual currencies as
“intangible personal property” and exempted
them from taxation.
None
New Hampshire HB 436 (2017) exempted persons using virtual
currency from being licensed as money
transmitters.
HB 1502 would specify that digital
assets are property within the
Uniform Commercial Code,
authorize security interests in
digital assets, and allow banks to
provide custodial services for
digital asset property. (In
Committee)
HB 1503 would exempt the
developer, seller, or facilitator of
the exchange of an open
blockchain token from certain
securities laws. (Passed House)
New Jersey SB 2527 (2016) authorized estate executors to
manage digital assets, including virtual
currencies.
AB 385 would require the state
Department of the Treasury to
review and approve a digital
payment platform.
AB 1975 would enact the Virtual
Currency and Blockchain
Regulation Act, which would,
among other things add the
definition of “virtual currency” to
several locations in statute
relating to investments and debt.
(In Committee)
AB 2371 would enact the Digital
Asset and Blockchain Technology
Act, which would, among other
things, regulate digital asset
business activity. (In Committee)
AB 3287 would prohibit public
Kansas Legislative Research Department 17 Cryptocurrency and Blockchain
Technology – May 26, 2022
State 2014-2021 Enacted Legislation 2022 Legislation
officials from accepting virtual
currency and non-fungible tokens
as gifts. (In Committee)
New Mexico None enacted None
New York SB 7508 (2020), among other things, established
the Digital Currency Task Force.
AB 3336 would create a
regulatory sandbox program to
test financial technology products
or services, including
cryptocurrencies. (In committee)
AB 3747 would establish a task
force to study the potential
designation of economic
empowerment zones for the
mining of cryptocurrencies in the
state of New York. (In committee)
AB 3860 would establish a task
force to study the impact of a
state-issued cryptocurrency on
the state of New York. (In
committee)
AB 3906 would establish that
state agencies are allowed to
accept cryptocurrencies such as
Bitcoin, Ethereum, Litecoin, and
Bitcoin cash as payment. (In
committee)
AB 7389 would establish a
moratorium on the operation of
cryptocurrency mining centers
and provide that authorization of
such facilities requires a full
environmental impact statement
review. (In committee)
AB 5044 would create the Digital
Currency Task Force to provide
the Governor and Legislature with
information on the potential
effects of the widespread
implementation of digital
currencies on financial markets in
the state. (In committee)
AB 6584 would direct the New
York State Energy Research and
Development Authority to conduct
a study on powering
cryptocurrency mining facilities
with renewable energy. (In
committee)
Kansas Legislative Research Department 18 Cryptocurrency and Blockchain
Technology – May 26, 2022
State 2014-2021 Enacted Legislation 2022 Legislation
AB 7742 would, among other
things, include unclaimed virtual
currency as abandoned property.
(In Committee)
AB 8598 would prohibit the
investment of certain public funds
with companies conducting a
cryptocurrency business activity.
(In Committee)
AB 8820 would establish the
offenses of virtual token fraud and
others. (In Committee)
SB 8009 includes in the definition
of “financial institution” any virtual
currency business licensed by the
superintendent of financial
services. (Signed by Governor)
AB 9028 would require certain
disclosures in advertisements
involving virtual tokens. (In
Committee)
AB 9275 would establish the New
York State Cryptocurrency and
Blockchain Study Task Force to
provide the governor and the
legislature with information on the
effects of the widespread use of
cryptocurrencies and other forms
of digital currencies and their
ancillary systems, including
blockchain technology. (Passed
Assembly)
North Carolina HB 229 (2017) defined virtual currency traders as
money transmitters and required each obtain a
money transmitter license.
HB 631 would authorize and
regulate sports wagering and
include cryptocurrency in the
definition of “cash equivalent.”
(Passed Senate)
North Dakota SB 2021 (2021) directed Legislative Management
to consider studying the feasibility and desirability
of regulating special purpose depository
institutions and other entities engaged in virtual
currency business activities.
SB 2048 (2021) amended the Revised Uniform
Unclaimed Property Act to include virtual
currency.
HB 1048 (2019) directed Legislative Management
to research and develop the use of distributed
ledger-enabled platform technologies, such as
Kansas Legislative Research Department 19 Cryptocurrency and Blockchain
Technology – May 26, 2022
State 2014-2021 Enacted Legislation 2022 Legislation
blockchains, for computer-controlled programs,
data transfer and storage, and program regulation
to protect against falsification, improve internal
data security, and identify external hacking
threats.
Ohio None enacted HB 348 would include virtual
currency in law related to
unclaimed funds. (Passed House)
HB 585 would amend the Uniform
Commercial Code to address the
classification of and perfection of
security interests in digital assets
and to allow banks to provide
custodial services of digital
assets. (In Committee)
Oklahoma None enacted HB 3279 would, among other
things, create the Distributed
Ledger Technology Assets
Offering Act, authorize the State
to develop and use distributed
ledger technologies, provide
requirements for digital and smart
contracts, and prescribe
procedure for payment. (Passed
House)
HB 4046 would add the
commercial mining of
cryptocurrency to the definition of
“manufacturing facilities” in
statute. (In Committee)
SB 590 would create the
Commercial Digital Asset Mining
Act, define certain terms, provide
sales tax exemptions for the sale
of certain equipment and
machinery related to digital asset
mining, and state the intent of the
Legislature to provide incentives
to attract investments and jobs in
innovative technological
industries such as blockchain
technology. (In Senate)
SB 1425 would include
cryptocurrency and non-fungible
tokens in the definition of
“security” in the Uniform
Securities Act of 2004. (In
Committee)
Oregon HB 2488 (2019) prohibited the State from
accepting payments using cryptocurrency and
Kansas Legislative Research Department 20 Cryptocurrency and Blockchain
Technology – May 26, 2022
State 2014-2021 Enacted Legislation 2022 Legislation
candidates for public office from accepting
campaign contributions using cryptocurrency.
Pennsylvania None enacted HB 1724 would establish a task
force on digital currency and the
impact on widespread use of
cryptocurrency and other forms of
digital currencies. (In Committee)
SB 1053 would require the
establishment of a system for the
payment of tolls or charges by an
operator of a vehicle using
alternative electronic payment
options. (In Senate)
Rhode Island HB 5847 (2019) added virtual currency to the
existing electronic money transmission and sale
of check licenses for regulation purposes.
HB 5425 would establish the
Rhode Island Economic Growth
Blockchain Act, which would offer
a regulatory technology sandbox
for “technology innovators” to test
new products and services. (In
committee)
South Carolina None enacted HB 3495, among other things,
would enact the South Carolina
Blockchain Industry
Empowerment Act; provide that a
person who develops, sells, or
facilitates the exchange of an
open blockchain token is not
subject to specified securities and
money transmission laws; and
specify that digital assets are
property within the Uniform
Commercial Code. (In committee)
HB 3529 would, among other
things, provide that candidates
and committees may accept
digital currency as contributions.
(In committee)
HB 3849 would enact the
Revised Uniform Unclaimed
Property Act and include virtual
currency in the definition of
“property.” (In committee)
South Dakota HB 1196 (2019) amended the State’s electronic
transactions statute to add the definition of
“blockchain technology” and amend other
definitions to include “blockchain technology.”
SB 47 revises certain provisions
regarding money transmission
and requires a licensee
transmitting virtual currencies to
hold like-kind virtual currencies of
the same volume as that held by
the licensee in lieu of the
permissible investments
otherwise required. (Signed by
Kansas Legislative Research Department 21 Cryptocurrency and Blockchain
Technology – May 26, 2022
State 2014-2021 Enacted Legislation 2022 Legislation
Governor)
Tennessee HB 420 (2017) included virtual currency in the
Uniform Unclaimed Property Act.
SB 1662 (2018) recognized the legal authority to
use distributed ledger technology and smart
contracts in conducting electronic transactions.
SB 2508 (2018) prohibited trustees of any defined
contribution plan or related investment vehicle
established as a health benefit by the state
insurance company from investing in any
cryptocurrency.
SB 2855 would establish the
Blockchain and Cryptocurrency
Study Committee. (In Committee)
HB 2644 would authorize a
county, municipality, or the state
to invest in cryptocurrency,
blockchains, and non-fungible
tokens. (In Committee)
Texas HB 4474 (2021) amended law relating to the
control of virtual currency and the rights of
purchasers who obtain control of virtual currency
for the purposes of the Uniform Commercial
Code.
SB 207 (2019) amended the Penal Code to
include a digital currency in the definition of
“funds” for the purpose of money laundering.
Utah SB 175 (2017) included virtual currency in the
Unclaimed Property Act.
SB 213 (2019), the Blockchain Technology Act,
defined and clarified terms related to blockchain
technology and exempted a person who
facilitates the creation, exchange, or sale of
certain blockchain technology-related products
from the Utah Money Transmitter Act.
HB 335 would create the
Blockchain and Digital Innovation
Task Force. (Sent to Governor)
HB 456 would require the
Division of Finance to contract
with a third party to accept
payments to participating
government agencies and
political subdivision in the form of
digital assets. (Sent to Governor)
SB 182 would establish a
framework for the regulation of
digital assets. (Sent to Governor)
Vermont HB 550 (2019) added virtual currency to the
definition of “property” in the Vermont Revised
Uniform Unclaimed Property Act.
SB 154 (2019) added the definition of “virtual
currency” to statutory provisions governing
financing and related services and licensees
regulated by the Department of Financial
Regulation.
SB 269 (2018) enabled the creation of
blockchain-based limited liability companies and
directed an agency to study expanding the use
and promotion of blockchain technology.
HB 182 (2017) added virtual currency to the list of
investments subject to certain money transmitter
HB 515 would amend law
governing banking, securities,
and insurance to provide that a
licensee register each remote
access unit where a consumer
may access money transmission
services, including buying or
selling cryptocurrency. (Passed
House)
Kansas Legislative Research Department 22 Cryptocurrency and Blockchain
Technology – May 26, 2022
State 2014-2021 Enacted Legislation 2022 Legislation
regulations.
Virginia None enacted HB 263 would permit banks in the
Commonwealth to provide virtual
currency custody services so long
as the bank has adequate
protocols in place to effectively
manage the associated risks.
(Passed both chambers)
Washington SB 5031 (2017) included virtual currency in
money transmitter regulations.
SB 5531 would revise the
Uniform Unclaimed Property Act
to include virtual currency.
(Signed by Governor)
West Virginia None enacted HB 4511 would amend the
Unclaimed Property Act to include
virtual currencies. (Signed by
Governor)
Wisconsin None enacted. None
Wyoming HB 1 (2021) created the University of Wyoming
Cryptocurrency Staking Program to operate and
maintain nodes and staking pools for not less
than three publicly tradable cryptocurrencies.
HB 43 (2021) amended the definition of “digital
asset,” amended provisions relating to the nature
of digital assets under commercial law, specified
the application of commercial law to specific
types of digital assets, and established that
certain digital asset provisions are consumer
protection statutes for commercial law purposes.
HB 133 (2021) authorized online sports wagering
and includes virtual currency in the definition of
“cash equivalent.”
SF 38 (2021) provided for the formation and
management of decentralized autonomous
organizations.
SB 47 (2020) modified the means to perfect a
security interest in virtual currency and digital
securities, specified location requirements for
digital assets used as collateral, amended the
requirements for banks providing custodial
services, and clarified the jurisdiction of Wyoming
courts to hear cases related to digital assets.
HB 27 (2020) established a select committee on
blockchain, financial technology, and digital
innovation technology.
SF 125 (2019) classified digital assets within
existing laws, specified that digital assets are
property within the Uniform Commercial Code,
established an opt-in framework for banks to
SF 68 amends statutory
provisions regulating
decentralized autonomous
organizations. (Signed by
Governor)
SF 106 would authorize the State
Treasurer to issue Wyoming
stable tokens. (Vetoed by
Governor)
Kansas Legislative Research Department 23 Cryptocurrency and Blockchain
Technology – May 26, 2022
State 2014-2021 Enacted Legislation 2022 Legislation
provide custodial services for digital asset
property, and clarified the jurisdiction of state
courts relating to digital assets.
HB 74 (2019) created Special Purpose
Depository Institutions as a new financial
institution and established procedures for
incorporation.
HB 70 (2019) authorized the Wyoming Secretary
of State to develop and implement a blockchain
filing system.
HB 62 (2019) established, among other things,
that open blockchain tokens with specified
consumptive characteristics are intangible
personal property and not subject to a securities
exemption, among other things.
HB 57 (2019), the Financial Technology Sandbox
Act, provided that a person who makes an
“innovative financial product or service” available
to consumers in the financial technology sandbox
may be granted a waiver of specified
requirements imposed by statute or rule if those
statutes do not permit the product or service to be
made available to consumers.
HB 70 (2018) provided that a person who
develops, sells, or facilitates the exchange of an
open blockchain token is not subject to specified
securities and money transmission laws.
HB 101 (2018) authorized corporations to use
electronic networks or databases for the creation
or maintenance of corporate records.
HB 19 (2018) amended the Wyoming Money
Transmitter Act to provide an exemption for virtual
currency.
SF 111 (2018) exempted virtual currencies from
state property taxes.
Kansas Legislative Research Department 24 Cryptocurrency and Blockchain
Technology – May 26, 2022
