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First State Moratorium on Blockchain Taxes in Nevada
On June 5, the governor of Nevada signed into law legislation (SB 398) that prohibits local governments from taxing or establishing restrictions on blockchain use—making it the first state to outlaw blockchain taxes. In addition to taxes, the new law prohibits requiring a license, permit, or certificate or any other condition on the use of blockchain. The bill also states that blockchain data can now be submitted in situations where the law requires a record to be in writing.
Colorado Extends Fair Debt Collection Practices Act Through 2028
On June 1, Colorado Governor John Hickenlooper enacted legislation (SB 17-216) executing recommendations from the Department of Regulatory Agencies’ 2016 Sunset Report, and extending the Colorado Fair Debt Collection Practices Act (Act) an additional 11 years through September 1, 2028. The Act was originally set to be repealed on July 1, 2017. Specifically, the legislation will implement the following points:
- defines a “debt buyer” as an individual who “engages in the business of purchasing delinquent or defaulted debt for collection purposes,” regardless of whether the debt is collected by the debt buyer, a third-party, or through litigation. The Act applies to debt buyers who purchase consumer debts sold or resold on or after January 1, 2018;
- states that debt collectors or collection agencies that bring legal actions on debts must follow outlined requirements;
- defines collection agency expectations for the purchase, sale or attempted collection of a purchased debt;
- sets the statute of limitations for public actions brought by the administrator of the Act to two years and sets the limit to one year for private actions;
- requires the administrator to prepare a biannual report to address enforcement actions, complaint processing statistics, and significant legal filings, among other things, in addition to hosting biannual meetings to disseminate the findings.
SB 17-216 went into effect June 1, 2017 with the exception of certain provisions governing debt buyers, documentation for legal actions, and Uniform Consumer Credit Code Administrator reporting requirements that take effect January 1, 2018.
South Carolina Governor Amends Mortgage Lender, Broker Licensing Requirements
On May 19, South Carolina Governor Henry McMaster signed into law amendments (S 366) to the state’s Mortgage Lending Act, Mortgage Broker Act, and related laws to revise a variety of mortgage lending definitions, licensing procedures and requirements, and disclosure obligations. The legislation also adds license requirements for mortgage lenders who act as mortgage brokers on the majority of their mortgage loans. The amendments take effect September 16, 2017.
Washington State Enacts Law Defining Licensing Requirements for Transmitters of Money and Virtual Currency
On April 17, Washington Governor Jay Inslee signed into law a new piece of legislation (SSB 5031), which formally adds virtual currency to its money transmitter law. The legislation—introduced at the request of the Washington Department of Financial Institutions (DFI)—amends the definition of money transmission to include virtual currency, which is defined as “a digital representation of value used as a medium of exchange, a unit of account, or a store of value, but does not have legal tender status as recognized by the United States government.” The definition of virtual currency does not, however, include “the software or protocols governing the transfer of the digital representation of value or other uses of virtual distributed ledger systems to verify ownership or authenticity in a digital capacity when the virtual currency is not used as a medium of exchange.” The new law requires that applicants for a money transmitter license with business models that store virtual currency on behalf of others must provide a third-party security audit of all electronic information and data systems acceptable to DFI. Furthermore, licensees transmitting virtual currencies must now hold “like-kind virtual currencies” of the same volume as that held by the licensee but which is obligated to consumers in lieu of permissible investments. Among other disclosures, virtual currency licensees must disclose to consumers a schedule of fees and charges, whether the product or service is insured, that the transfer is irrevocable, and the licensee's liability for mistakes. Among other provisions, the law:
- outlines new bond requirements for online currency exchange licensees;
- expands supervisory powers allowing DFI to participate in joint or concurrent examinations with other state or federal agencies;
- mandates that licensees report all licensee branch locations and all authorized delegates to the nationwide licensing system within 30 days of the contractual agreement with the licensee to provide money services in the state;
- makes civil penalties $100 per violation per day for each day a violation is outstanding; and
- excludes from its definition of “money transmission” the “provision solely of connection services to the internet, telecommunications services, or network access; units of value that are issued in affinity or rewards programs that cannot be redeemed for either money or virtual currencies; and units of value that are used solely within online gaming platforms that have no market or application outside of the gaming platforms.”
The law goes into effect July 23, 2017.
Arizona Governor Signs Blockchain Records Bill
On March 29, Arizona Governor Doug Ducey signed H.B. 2417, which recognizes blockchain signatures and smart contracts under state law. H.B. 2417 amends Title 44, Chapter 26, of the Arizona Revised Statutes, and defines “blockchain technology” as “distributed ledger technology . . . protected with cryptography . . . [that] provides an uncensored truth.” The amendment, cleared by the Senate in a 28-1 vote on March 23, addresses signatures and records and states “a signature that is secured through blockchain technology is considered to be in an electronic form and to be an electronic signature.” Furthermore, the amendment also discusses the legality and enforceability of a smart contract, defined by the bill as an “event-driven program, with state, that runs on a distributed, decentralized, shared and replicated ledger . . . that can take custody over and instruct transfer of assets on that ledger.” Smart contracts, therefore, “may exist in commerce . . . and may not be denied legal effect, validity or enforceability,” thus presenting a new option of delivering information via blockchain.