The New York Department of Financial Services (NYDFS) last month rolled out a proposal to regulate “virtual currency businesses” worldwide if the company had at least one customer within the Empire State. In response, the Intergalactic Bit License was created, with Davi Barker stating, “we can laminate stuff, too.”
Also in response to this proposal came model legislation – I know, not something you’re used to seeing on BNB. Though drafted specifically to be introduced in the New Hampshire Legislature, this model legislation can be used anywhere – the only modifications needed would be to the “new section” to be added, the location, and the agencies to be affected. A bit of irony is that the definitions used in this model legislation all came from the proposal by NYDFS. The NYDFS used these definitions as things that would require a special license; whereas, the intent of this proposal is to prevent regulatory agencies from implementing broad regulations over what should be self-regulated decentralized currencies.
Relative to Virtual Currencies
New section 383:9-k
The New Hampshire Banking Department, and the Bank Commissioner shall not have authority to regulate any Virtual Currency or Virtual Currency Business Activity as defined in this chapter.
Virtual Currency means any type of digital unit that is used as a medium of exchange or a form of digitally stored value or that is incorporated into payment system technology. Virtual Currency shall be broadly construed to include digital units of exchange that
(1) have a centralized repository or administrator;
(2) are decentralized and have no centralized repository or administrator; or
(3) may be created or obtained by computing or manufacturing effort.
Virtual Currency shall not be construed to include digital units that are used solely within online gaming platforms with no market or application outside of those gaming platforms, nor shall Virtual Currency be construed to include digital units that are used exclusively as part of a customer affinity or rewards program, and can be applied solely as payment for purchases with the issuer and/or other designated merchants, but cannot be converted into, or redeemed for, Fiat Currency;
Virtual Currency Business Activity means the conduct of any one of the following types of activities involving New Hampshire or a New Hampshire Resident:
(1) receiving Virtual Currency for transmission or transmitting the same;
(2) securing, storing, holding, or maintaining custody or control of Virtual Currency on behalf of others;
(3) buying and selling Virtual Currency as a customer business;
(4) performing retail conversion services, including the conversion or exchange of Fiat Currency or other value into Virtual Currency, the conversion or exchange of Virtual Currency into Fiat Currency or other value, or the conversion or exchange of one form of Virtual Currency into another form of Virtual Currency; or
(5) controlling, administering, or issuing a Virtual Currency.