04/11/2025 09:00 AM Senate FINANCE

SENATE BILL NO. 86                                                                                                            
                                                                                                                                
     "An   Act   relating   to   the   business   of   money                                                                    
     transmission;   relating   to    licenses   for   money                                                                    
     transmission, licensure  requirements, and registration                                                                    
     through  a  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 exemptions  to money transmission licensure                                                                    
     requirements; relating to  payroll processing services;                                                                    
     relating to currency  exchange licenses; amending Rules                                                                    
     79  and  82,  Alaska  Rules  of  Civil  Procedure;  and                                                                    
     providing for an effective date."                                                                                          
                                                                                                                                
9:23:25 AM                                                                                                                    
                                                                                                                                
Co-Chair Hoffman relayed that the committee had heard the                                                                       
bill on April 1, 2025, and had taken public testimony.                                                                          
                                                                                                                                
9:23:55 AM                                                                                                                    
                                                                                                                                
Senator Jesse Kiehl, Sponsor, offered a sponsor statement:                                                                      
                                                                                                                                
     Cryptocurrency  transactions  have exploded  in  number                                                                    
     and  value in  recent  years. While  many Alaskans  are                                                                    
     doing  well,  others  have lost  tens  of  millions  of                                                                    
     dollars'  worth  of   value  in  recent  cryptocurrency                                                                    
     exchange  collapses.   Alaska  has  basic   safety  and                                                                    
     soundness  laws  for  businesses  that  transmit  money                                                                    
     electronically, but  they were written in  2007, before                                                                    
     cryptocurrency existed.  So Alaskans today  don't often                                                                    
     know if a  business holding and moving  their assets is                                                                    
     one that  gets a  basic check-up by  the state,  or one                                                                    
     that can operate with no rules.                                                                                            
     SB 86 modernizes  our laws to protect  Alaskans, keep a                                                                    
     lid  on red  tape,  and let  our  state cooperate  with                                                                    
     others for maximum efficiency.                                                                                             
                                                                                                                                
     The  bill  transitions  Alaska   to  a  new  model  law                                                                    
     developed  jointly  by  the Conference  of  State  Bank                                                                    
     Supervisors and industry groups.  Already adopted by 26                                                                    
     states, it will apply to  both cash and crypto and will                                                                    
     1)   license   money   services  businesses   to   keep                                                                    
     fraudsters out of the corporate  office, 2) examine the                                                                    
     books to make sure they  have enough money or crypto to                                                                    
     cover what  customers entrust to  them, and  3) prevent                                                                    
     diversion of customers' assets.                                                                                            
                                                                                                                                
     The federal  government leaves this job  to the states,                                                                    
     so  SB  86  lets  Alaska  regulators  collaborate  with                                                                    
     colleagues from other states and  use modern tools like                                                                    
     the   Nationwide   Multistate  Licensing   System   and                                                                    
     Registry to  increase efficiency and reduce  costs. But                                                                    
                                                                                                                                
     it does  not doubleregulate   businesses like  banks or                                                                    
     brokerages that already have safety rules to follow.                                                                       
                                                                                                                                
     The   bill  also   updates  fees   for  money   service                                                                    
     businesses.  Today,  multinational  money  transmitters                                                                    
     and  Alaska  mom-and-pop  establishments pay  the  same                                                                    
     'one-size-fits all'  license fees. SB 86  will ramp the                                                                    
     charge  up  or down  based  on  volume  so it's  not  a                                                                    
     barrier to new businesses.  Importantly, SB 86 protects                                                                    
     Alaskans' assets  without regard to technology,  so the                                                                    
     next innovation  in value can  flourish just  as safely                                                                    
     as the ones we have today.                                                                                                 
                                                                                                                                
Co-Chair Stedman MOVED to ADOPT proposed committee                                                                              
substitute for SB 86, Work Draft 34-LS0305\T (Gunther,                                                                          
3/28/25).                                                                                                                       
                                                                                                                                
Co-Chair Hoffman OBJECTED for discussion.                                                                                       
                                                                                                                                
9:25:54 AM                                                                                                                    
                                                                                                                                
COLE OSOWSKI, INTERN, SENATOR JESSE KIEHL, discussed an                                                                         
Explanation of Changes document (copy on file):                                                                                 
                                                                                                                                
     The  following  changes were  made  from  Version I  to                                                                    
     Version T of Senate Bill 86:                                                                                               
     ? Page  9, line  21: Deleted  redundant language  "that                                                                    
     virtual currency is not money."                                                                                            
     ? Page 16, line 6: Replaced "all records the department                                                                    
     reasonably  requires" with  "records necessary  for the                                                                    
     department"  to  clarify  the   scope  of  the  records                                                                    
     subject to departmental examination.                                                                                       
     ?  Page  23,  line  13:  Replaced  "All  records"  with                                                                    
     "Records" for conciseness.                                                                                                 
     ? Page  23, line 15;  Inserted "only as  permitted" for                                                                    
     consistency  and  to  restrict   the  scope  of  record                                                                    
     inspections to those specified in statute.                                                                                 
     ?  Page 38,  line  22:  Increased daily  maximum  civil                                                                    
     penalty from  $1,000 to $10,000, to  conform with other                                                                    
     existing civil penalties like mortgage licensees.                                                                          
     ? Page  55, lines  6-11: Added  transitional regulatory                                                                    
     authority.                                                                                                                 
     ? Page 55,  lines 17-18: Updated the  effective date to                                                                    
     July   1,  2026   to  allow   enough   time  to   adopt                                                                    
     regulations.                                                                                                               
                                                                                                                                
                                                                                                                                
9:26:35 AM                                                                                                                    
                                                                                                                                
Co-Chair Stedman clarified that the CS was Version T.                                                                           
                                                                                                                                
Co-Chair Hoffman WITHDREW his OJBECTION. There being NO                                                                         
OBJECTION, it was so ordered.                                                                                                   
                                                                                                                                
Co-Chair  Stedman  MOVED  to  report  CSSB  86(FIN)  out  of                                                                    
Committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal notes.                                                                                                      
                                                                                                                                
There being NO OBJECTION, it was so ordered.                                                                                    
                                                                                                                                
CSSB 86(FIN)  was REPORTED  out of  committee with  four "do                                                                    
pass"   recommendations   and    two   "no   recommendation"                                                                    
recommendations,  and with  one previously  published fiscal                                                                    
impact note: FN 1(CED).                                                                                                         
                                                                                                                                
9:27:34 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:29:11 AM                                                                                                                    
RECONVENED