Legislature(2021 - 2022)BARNES 124
05/11/2022 03:15 PM House LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| HB344 | |
| SB185 | |
| HB408 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 344 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 408 | TELECONFERENCED | |
| += | SB 185 | TELECONFERENCED | |
HB 408-MONEY TRANSMISSION; VIRTUAL CURRENCY
3:38:02 PM
CO-CHAIR FIELDS announced that the final order of business would
be HOUSE BILL NO. 408, "An Act relating to the business of money
transmission; relating to money transmission licenses, licensure
requirements, and registration through the Nationwide Multistate
Licensing System; 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."
3:38:22 PM
CO-CHAIR SPOHNHOLZ stated that the Dunleavy Administration
introduced this legislation to update Alaska statute to get more
visibility into the utilization of virtual currency in the
state. Given the original bill's large size, she said, it took
about two weeks to get back the requested updated language.
Although there is no confidence that the language is where it
needs to be, she explained, the adoption of a committee
substitute today will get the work done to date into the public
sphere to enable future legislatures to build on that work. She
recounted that in his [4/22/22 testimony], Robert Schmidt,
Director of the Division of Banking and Securities, stated that
significant growth has occurred in the utilization of
cryptocurrency in Alaska and that this growth was way out of
proportion to what other states have been seeing. This serious
issue needs to be done right, she stressed. Multiple issues
still need to be addressed before the legislation is ready to be
adopted in final, including a series of definitions, she added.
This committee, Co-Chair Spohnholz stated, is the only policy
committee doing a deep dive into understanding the way that
virtual currency can and should be overseen. The bill is not
going to be ready for final consideration before the end of
session next week, she pointed out, but the committee wanted to
get the newest version of the bill into the public sphere so
people can provide feedback to the division and to members of
the legislature. She requested Ms. Ward-Waller to provide a
summary of the [proposed] changes to HB 408.
3:40:43 PM
CHELSEA WARD-WALLER, Staff, Representative Ivy Spohnholz, Alaska
State Legislature, at the request of Co-Chair Spohnholz,
provided a summary of changes in the proposed committee
substitute (CS) for HB 408, Version 32-GH2312\B, Bannister,
5/10/22 (Version B). She qualified that she did her best to
highlight the most significant and substantial changes that were
made. She spoke from the four-page written document in the
committee packet titled "Summary of Changes CSHB 408(L&C)
Version A to Version B", which read [original punctuation
provided]:
Technical changes were made throughout the CS to bring
the bill in line with the legislature's drafting style
and for clarity. Examples include replacing "any" with
"an", "a" with "the", a plural word with the singular,
and reordering phrases for clarity. Under AS
01.10.050, which applies to all statutes, the singular
includes the plural, and the plural includes the
singular. References to private organizations have
been replaced with organizations that the department
selects as directed by the bill. Substantive changes
are addressed below.
Page 1, line 10; added "amending Rules 79 and 82,
Alaska Rules of Civil Procedure" to the title of the
bill.
Section 1
Page 2, line 8; adds "for money transmission" to the
end of the purpose of the act.
Section 2
Page 2, line 14; replaces "of a person who holds a
license" by "licensee".
Page 2, line 19; includes section (b) of AS 06.55.101,
that a license is not transferrable or assignable.
Section 3
Page 2, lines 23-26; combines subsections (1) and (2)
regarding the form, medium, and content of an
application as determined by the department.
Page 3, line 1; the department is not allowed to waive
subsection (5) "a surety bond or other security as
required by AS 06.55.505" or permit other information
in place of this information in the application.
Page 3, line 3; AS 06.55.102 subsection (c) is removed
because the department already has the authority to
establish the application form and to require other
information.
Section 4
Page 4, line 14; add clarifying language that appeals
should be directed to the department.
Page 4, lines 23-24; inserts a new subsection (h) that
the applicant must meet the requirements of the
chapter.
Section 6
Page 5, lines 9-13; technical changes were made to
clarify that a licensee shall always meet the
requirements of the chapter. If not, the department
may suspend or revoke the license in accordance with
this chapter or other applicable law.
Page 5, line 14 page 6, line 9; Section 06.55.109
has been reorganized for clarity. Criminal background
check language in subsection (a)(1), page 5, lines 18-
20, has been adjusted to the more usual way to handle
fingerprinting. The background check has been added to
AS 12.62.400(a), included in Section 63 of this bill
on page 53, line 1 page 54, line 31.
Page 5, line 31; replaces when an individual must
additionally provide an investigative background
report if they have resided outside the U.S. from "at
any time in" to "for four or more of" the last ten
years.
Section 7
Page 7, line 15 page 13, line 11; updates and
reorganizes sections under AS 06.55, including
Section 06.55.150, previously 06.55.206
Section 06.55.155, previously 06.55.207
Section 06.55.160, previously 06.55.208
Section 06.55.165, previously 06.55.209
Section 06.55.170, previously 06.55.205
Page 9, lines 20-22; adds additional disclaimers that
"persons are not required to take payment in virtual
currency, the value of virtual currency can change,
and that virtual currency may not be backed by a
government agency."
Page 10, line 17; for permissible investments
considered under subsection (4), replaces "this
chapter" with "AS 06.55.502".
Page 11, line 15; clarifies that licensees are
required to maintain a record of the reports submitted
under AS 06.55.403.
Page 13, line 11; definitions for "virtual currency",
"virtual currency business activity", and "virtual
currency exchange" that were previously included in
this section have been added to the definitions
section under AS 06.55.990 or more appropriate
locations in the bill.
Section 8
Page 15, lines 2-3; adds a new subsection (f) that
subdelegates cannot be used to conduct money
transmission on behalf of a licensee and renumbers the
next subsection.
Section 10
Page 15, line 18; adds "examination; investigation" to
the subsection title.
Section 11
Page 16, line 20; replaces "the fiscal quarter" with
"each quarter of the calendar year".
Section 12
Page 17, line 2; replaces "the fiscal quarter" with
"each quarter of the calendar year".
3:46:13 PM
Section 13
Page 17, line 27; clarifies Bankruptcy Code as 11
U.S.C 101-112.
Section 15
Page 18, line 17; replaces subsection title
"Acquisition of control" with "Control; acquisition;
passive investor."
Page 19, lines 9-10; updates language to clarify the
period referenced is "for approving or denying an
application under (d) of this section."
Page 21, lines 23 and 26; replaces "AS 06.55.506" with
"AS 06.55.510" due to reorganization of the bill. The
content of the referenced subsection remains the same.
Page 22, lines 11-23; inserts language that a passive
investor is not considered to have control under this
chapter and defines a passive investor, which was
previously included in the definitions section at the
end of the bill.
Section 18
Page 23, line 15; directs reports to be filed to the
"appropriate federal agency".
Section 19
Page 22, line 22; adds subsection (f) as an exemption
to confidential information.
Section 24
Page 25, lines 12 and 14; replaces "fiscal" with
"calendar."
Section 29
Page 33, line 6; deletes a subsection related to
requirements for a letter of credit.
Page 33, line 30 page 34, line 6; adds definitions
for "eligible rating" and "eligible rating service",
which were previously in the definitions section at
the end of the bill.
Section 30
Page 35, line 5; lowers the minimum net worth that
licensees are required to maintain to $35,000.
Section 39
Page 38, line 11; removes changes to AS 06.55.606
subsection (a) from the bill to avoid the use of the
word "such" and instead use more specific wording.
Section 44
Page 39, lines 27-30; inserts additional institutions
that are exempt from the chapter.
Section 47
Page 43, line 31 page 44, line 1; inserts a
definition for "mobile application".
Section 48
Page 44, lines 3-9; inserts a new section on
determining whether the person requesting the
transaction is in this state.
Section 49
Page 44, line 27: adds a new subsection (9) to include
an exchange rate on the receipt.
Page 45, line 2: removes subsection (d)(1), such that
the section does apply to money received for
transmission subject to 12 C.F.R. Part 1005, Subpart
B.
Section 51
Page 46, line 17; removes previous section 50 that
amended AS 06.55.845 related to disclosure for payroll
processing services.
Section 54
Page 47, lines 3-7; adjust the definition of "control"
to avoid having the defined term in the definition and
to clarify the definition.
Section 55
Page 47, lines 22-23, inserts "engaging in virtual
currency exchange" and "engaging in virtual currency
business activity" under the definition of "money
transmission."
Page 47, line 26; removes previous section 55, which
changed the definition of "money transmission license"
Section 61
This section is reorganized to list new definitions
alphabetically.
Page 50, line 10; inserts a definition for "license"
Page 50, lines 12-14; inserts a definition for "money
received for transmission"
Page 51, line 3; removes the definitions for "payroll
processing services" and "receiving money for
transmission"
Section 63
Page 53, line 1 page 54, line 31; adds a new section
related to the criminal background check required for
licenses under AS 06.55.
Section 64
Page 55, lines 2-4; adds AS 06.55.406(b),
06.55.990(16), and 06.55.990(17) to the list of
repealed statutes in this bill.
Section 65
Page 55, lines 5-9, adds a new section regarding
indirect court rule amendment. The change to AS
06.55.605 changes Rules 79 and 82, Alaska Rules of
Civil Procedure, relating to the award of court costs
and attorney fees.
Section 67
Page 55, line 24; removes previous section 66 related
to payroll processors.
Section 68
Page 55, line 30; removes revisor's instructions.
Section 69
Page 55, line 31 page 56, line 4; adds the
conditional effect related to court rules change under
section 65.
3:51:29 PM
MS. WARD-WALLER, in response to Representative McCarty,
clarified that the change under Section 7, page 9, relates to
lines 20-22 [of the bill].
3:53:00 PM
CO-CHAIR SPOHNHOLZ moved to adopt the proposed CS for HB 408,
Version 32-GH2312\B, Bannister, 5/10/22, as the working
document. There being no objection, Version B was before the
committee.
3:53:16 PM
CO-CHAIR FIELDS announced that HB 408 was held over.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 344 Sectional Analysis 5.11.22.pdf |
HL&C 5/11/2022 3:15:00 PM |
HB 344 |
| HB 344 Fiscal Note - DOLWD-WH 5.6.22.pdf |
HL&C 5/11/2022 3:15:00 PM |
HB 344 |
| HB 344 Sponsor Statement 5.11.22.pdf |
HL&C 5/11/2022 3:15:00 PM |
HB 344 |
| HB 344 ver A 2.17.22.PDF |
HL&C 5/11/2022 3:15:00 PM |
HB 344 |
| HB 408 ver B 5.10.22.pdf |
HL&C 5/11/2022 3:15:00 PM |
HB 408 |
| SB 185 CS ver E 5.11.22.pdf |
HL&C 5/11/2022 3:15:00 PM |
SB 185 |
| CS HB 408 (L&C) v. B Summary of Changes_5.11.22.pdf |
HL&C 5/11/2022 3:15:00 PM |
HB 408 |