Legislature(2023 - 2024)BARNES 124
04/10/2023 03:15 PM House LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| HB60 | |
| HB112 | |
| HB87 | |
| HB86 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 86 | TELECONFERENCED | |
| += | HB 88 | TELECONFERENCED | |
| + | HB 60 | TELECONFERENCED | |
| *+ | HB 100 | TELECONFERENCED | |
| *+ | HB 147 | TELECONFERENCED | |
| += | HB 73 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| *+ | HB 112 | TELECONFERENCED | |
| += | HB 87 | TELECONFERENCED | |
HB 86-MONEY TRANSMISSION; VIRTUAL CURRENCY
4:10:33 PM
CHAIR SUMNER announced that the final order of business would be
HOUSE BILL NO. 86, "An Act relating to the business of money
transmission; relating to money transmission licenses, licensure
requirements, and registration through the Nationwide Multistate
Licensing System and Registry; relating to the use of virtual
currency for money transmission; relating to authorized
delegates of a licensee; relating to acquisition of control of a
license; relating to record retention and reporting
requirements; authorizing the Department of Commerce, Community,
and Economic Development to cooperate with other states in the
regulation of money transmission; relating to permissible
investments; relating to violations and enforcement of money
transmission laws; relating to money transmission license
exemptions; relating to payroll processing services; repealing
currency exchange licenses; and providing for an effective
date."
4:10:58 PM
CHAIR SUMNER gave a quick synopsis of HB 86. He summarized that
the proposed legislation would repeal the current law which
requires currency exchange businesses to obtain a license from
the Department of Commerce, Community, and Economic Development
(DCCED) and create a new law which would require money
transmission businesses to obtain a license. He continued that
the proposed legislation would define money transmission
businesses and virtual currency, require money transmission
businesses to register with the nationwide-multistate licensing
system, and set fees for obtaining a money transmission license.
He stated that the proposed legislation would also authorize
money transmission businesses to appoint delegates to conduct
money transmission on their behalf, require money transmission
businesses to maintain a minimum net worth of $100,000, and
require money transmission businesses to maintain an equal
balance to its outstanding payments. The proposed legislation
would define permissible investments, require money transmission
businesses to file annual or quarterly reports, and require
records of transactions to be kept for at least three years. It
would authorize the DCCED to enforce regulations on money
transmission businesses, requiring these businesses to cooperate
with other states. It would also establish civil penalties and
criminal offenses for violations and provide for an effective
date.
4:13:22 PM
CHAIR SUMNER opened public testimony on HB 86.
4:13:49 PM
LAHKA PEACOCK, Owner, QuyanaCard, testified in support of HB 86.
He shared that QuyanaCard is based in Nome, and it provides
services to remote villages that do not have access to
traditional banking services. He referenced the reduction of
fees in the proposed legislation for such services, in
comparison with other money services. He explained that the
current law requires QuyanaCard to pay the expenses for
examiners who must fly to Nome from the Lower 48. He pointed
out that the examiner is the same examiner for larger
businesses, such as Google Pay, and he expressed concern that
smaller businesses have to provide the same documents and pay
the same fees as these larger businesses. He pointed out the
difficulty in starting a small business in rural Alaska with the
same requirements as larger businesses. He reiterated support
for the proposed legislation and urged the committee to support
it as well.
4:16:31 PM
REPRESENTATIVE PRAX expressed the understanding that Mr. Peacock
is operating a money transfer service.
MR. PEACOCK, in response to Representative Prax, stated that
QuyanaCard is not a bank, but a money service providing
reloadable prepaid debit cards. He stated that QuyanaCard has
partnered with local stores so individuals can deposit money on
their card in these stores. He added that QuyanaCard does not
provide loans or other types of these services.
REPRESENTATIVE PRAX expressed the understanding that QuyanaCard
is currently under banking regulations, and he suggested that
the proposed legislation would clarify that this is not a bank.
MR. PEACOCK responded that the business is regulated under the
Division of Banking and Securities. He expressed the
understanding that the requirements for banks and money
transmission services, like prepaid debit cards, are the same.
4:19:16 PM
CHAIR SUMNER, after ascertaining that there was no one else who
wished to testify, closed public testimony on HB 86, and then he
reopened public testimony.
4:19:54 PM
ADAM FLEISHER, The Money Services Roundtable, Washington, D.C.,
testified in support of HB 86, on behalf of the Money Services
Roundtable. He stated that the Money Services Roundtable is a
money transmission service group with members being some of the
larger money transmission companies in the U.S., such as Western
Union, MoneyGram, and American Express. He stated that the
Money Services Roundtable was involved in the development of the
model for the Money Transmission Modernization Act (MTMA), and
this had informed the drafting of the proposed legislation. He
explained that the idea behind MTMA is to make money
transmission companies, both large and small, uniform,
reflecting the modernized services today. He advised that money
transmission companies are not banks and cannot take consumers'
deposits; however, these companies are able to provide financial
services to customers who are often in locations not served by
banks. He pointed out that HB 86 is scaled in terms of size,
and this would address the risks and concerns of companies with
a significant amount of volume.
4:23:13 PM
CHAIR SUMNER, after ascertaining there was no one else who
wished to testify, closed public testimony on HB 86.
4:23:34 PM
REPRESENTATIVE PRAX, concerning the proposed legislation,
requested clarification between banking and money transfers. He
expressed the understanding that there is a significant
regulatory burden for money services under the banking clause.
4:24:13 PM
ROB SCHMIDT, Director, Alaska Division of Banking and
Securities, Department of Commerce, Community, and Economic
Development, answered that Mr. Peacock operates a small local
money transfer business, and it has a disadvantage to larger
money transmitters. He added that this business, along with the
larger money transfer businesses, such as PayPal and Venmo, are
not banks, rather it involves the transmission of money from one
institution to another.
CHAIR SUMNER requested a definition of "bank."
MR. SCHMIDT stated that the division regulates financial
institutions in two categories. The first category is
depository financial institutions, such as banks and credit
unions, where paychecks can be deposited, and loans can be
obtained. He continued that the second category is non-
depository, such as payday and mortgage lenders and money
transmission businesses that do not take deposits, hold money,
or make loans. He stated that two-thirds of money transmission
involves sending money from one person to another via a business
facilitating this. This transfer can be anything from a gift to
a purchase. He stated that the other third of this type of
transmission is through prepaid cards. He gave the example of
Visa cards which can be purchased in a store. These cards have
a prepaid amount that can be used for anything Visa cards can be
used for. He stated that these services are not banks, rather
they are in the business of getting money from one person to
another. He noted that this industry has exploded in the last
five years.
4:27:30 PM
CHAIR SUMNER expressed the understanding that Venmo or PayPal
can hold account balances for individuals. He requested
clarification on the difference between this and balances in a
bank. He expressed the understanding that banks hold money as a
loan to themselves from individuals.
MR. SCHMIDT concurred. He stated that these institutions are
also subject to different regulations. He added that banks and
credit unions would have insurance, while money service
businesses do not. He stated that "we are starting to get into
the deep waters and complexities of the modern financial
system." He continued that some money service businesses are
partnering with banks to hold funds, and this is mostly in
regard to payment applications on smart phones. He noted that
this has revolutionized the business.
4:29:37 PM
REPRESENTATIVE PRAX pointed out the proposed legislation
references cryptocurrency, but not as legal tender. He
requested an explanation.
MR. SCHMIDT responded that currently the law states that money
is issued by the government; however, money transmission can
include both money and monetary value. He stated that monetary
value is described under the current statue as being a broader
representation of a value that does not necessarily have to be
money. He stated that it is through this distinction that the
division has recently adopted that money transmission includes
cryptocurrency, even though it is not issued by the government.
He stated that the proposed legislation would require certain
disclosures for cryptocurrency exchanges, and it would require a
financial liquidity standard, along with other standards
concerning consumer protections.
4:31:56 PM
[HB 86 was held over.]
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 60 Expanation of Changes Version A to Verson S (3-23-23).pdf |
HL&C 4/10/2023 3:15:00 PM |
HB 60 |
| LL0343-3-DFCS-CO-1-31-2023.pdf |
HL&C 4/10/2023 3:15:00 PM |
HB 60 |
| LL0343-3-DOH-CO-1-31-2023.pdf |
HL&C 4/10/2023 3:15:00 PM |
HB 60 |
| CSHB60(HSS).PDF |
HL&C 4/10/2023 3:15:00 PM |
HB 60 |
| HB 60 Sectional Analysis (Version S) 3-23-23.pdf |
HL&C 4/10/2023 3:15:00 PM |
HB 60 |
| 02.02.23 Imp. EO 121 TL House.pdf |
HL&C 4/10/2023 3:15:00 PM |
HB 60 |
| HB0112A.PDF |
HL&C 4/10/2023 3:15:00 PM |
HB 112 |
| HB 112 Sponsor Statement Version B.pdf |
HL&C 4/10/2023 3:15:00 PM |
HB 112 |
| HB112 HSS Hearing slides 3.23.23.pdf |
HL&C 4/10/2023 3:15:00 PM |
HB 112 |
| HB 112 Sectional Analysis .pdf |
HL&C 4/10/2023 3:15:00 PM |
HB 112 |
| HB 112 Support as of 3_21 Redacted.pdf |
HL&C 4/10/2023 3:15:00 PM |
HB 112 |
| Slides - HB112 L&C Hearing 4.5.23.pdf |
HL&C 4/10/2023 3:15:00 PM |
HB 112 |
| CS H 87 Summary of Changes Chart.pdf |
HL&C 4/10/2023 3:15:00 PM |
HB 87 |
| HB 87 CS (HL&C).pdf |
HL&C 4/10/2023 3:15:00 PM |
HB 87 |
| CS HB 87 Sectional Analysis Version S.pdf |
HL&C 4/10/2023 3:15:00 PM |
HB 87 |
| Model Output 50% POMV PFD_20230329.pdf |
HL&C 4/10/2023 3:15:00 PM |
HB 87 |
| ANTHC HB112 BOP LOS 4-6-23.pdf |
HL&C 4/10/2023 3:15:00 PM |
HB 112 |