Louisiana amends virtual currency licensing

Licensing State Issues Digital Assets Fintech Virtual Currency State Legislation Louisiana

On June 13, the Louisiana governor signed SB 185 (the “Act”), which amends provisions relating to the regulation and licensure of virtual currency businesses and is effective immediately. The Act adds and amends several definitions, including “acting in concert,” “affiliate,” “blockchain,” “mining,” “non-fungible token,” “responsible individual,” “unsafe or unsound act or practice” “virtual currency business activity,” and “virtual currency network.” With respect to licensure, the Act now requires applicants to provide a copy of their business plan, detailing, among other things, the anticipated volume of virtual currency business activities in the state, the expected number of virtual currency locations (including kiosks) in the state, and information on surety bonds and tangible net worth. Applicants must also provide audited financial statements and certificates of coverage for each liability, casualty, business interruption, and cybersecurity insurance policies (applicable policies for affiliates, agents, and control persons are required as well) with respect to an applicant’s virtual currency business activities. The Act also adds numerous licensing conditions and includes new requirements relating to background checks/criminal records/character fitness and fees and costs. Applicants will now be required to provide their financial services-related regulatory history, including information concerning money transmission, securities, banking, insurance, and mortgage-related industries. The Act extended the time that the state’s office of financial institutions has after the completion of an application to notify an applicant of its decision from 30 days to 60 days. If the office denies a license application, an advanced change of control notice, or an advanced change of responsible individual notice, an applicant has 30 days to appeal. Information on submitting annual licensing renewal applications, as well as guidance on providing appropriate disclosures is also included.

Furthermore, the Act outlines provisions to protect residents’ assets, including prohibitions on selling, transferring, and assigning virtual currency and commingling assets belonging to a resident with assets belonging to a licensee. Also stipulated within the Act are authorities granted to the commission relating to examinations, investigations, and enforcement activity, as well as the authority to coordinate and share information and conduct joint examinations with other state regulators of virtual currency business activities.