Legislature(2025 - 2026)BELTZ 105 (TSBldg)
03/05/2025 01:30 PM Senate LABOR & COMMERCE
Note: the audio ![]()
and video ![]()
recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.
| Audio | Topic |
|---|---|
| Start | |
| SB54 | |
| SB86 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 54 | TELECONFERENCED | |
| *+ | SB 86 | TELECONFERENCED | |
SB 86-MONEY TRANSMISSION; VIRTUAL CURRENCY
1:53:17 PM
CHAIR BJORKMAN reconvened the meeting and announced the
consideration of 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."
1:53:37 PM
SENATOR JESSE KIEHL, District B, Alaska State Legislature,
Juneau, Alaska, sponsor of SB 86 introduced the following
legislation and shared the history of virtual currency and money
transmission. He stated that the goal of a Model Law is to align
laws across all 50 states, making things easier for businesses
that operate in multiple states. This allows for more efficient
multi-state examinations. SB 86 updates and modernizes Alaska's
money transmission and virtual currency laws. He said a key
focus is improving efficiency, particularly in regulatory
processes.
1:58:18 PM
At ease. [sound went out]
1:58:57 PM
CHAIR BJORKMAN reconvened the meeting.
1:59:04 PM
SENATOR KIEHL continued the introduction of SB 86 and stating it
improves efficiency by using the Nationwide Multistate Licensing
System (NMLS) for background checks and reporting. SB 86 updates
the fee structure so large national companies pay more than
small Alaska startups, reflecting the oversight required. He
said SB 86 avoids double regulation by deferring to federal
agencies when applicable. SB 86 doesn't restrict what Alaskans
can buy, leaving choices like Bitcoin or Ethereum up to
consumers and the market. The goal is to lower barriers, ensure
companies safeguard customer assets, and prevent losses like
those seen in recent crypto collapses.
2:02:16 PM
SENATOR MERRICK asked how many states have implemented an
updated law to accommodate virtual currency.
2:02:28 PM
COLE OSOWSKI, Staff, Senator Jesse Kiehl, Alaska State
Legislature, Juneau, Alaska, provided the sectional analysis for
SB 86 and answered that 27 states have implemented updated laws.
2:02:51 PM
MR. OSOWSKI read the sectional analysis summary for SB 86:
[Original punctuation provided.]
Sectional Analysis
Sec. 1: Explains the purpose of the bill
Secs. 2 6: Amend language related to licensing
application and license renewal requirements. Adds
criminal background check report requirements for
senior management and those in control of the company.
Lets the department use the Nationwide Multi-State
Licensing System (NMLS or 'registry') for all aspects
of licensing.
2:03:19 PM
MR. OSOWSKI continued with the sectional analysis:
Sec. 7: Adds a new article, Virtual Currency Business
Activity, derived from the Model Law. Details what is
considered licensed activity for companies engaging in
VC business activity. Ensures that virtual currency is
not the property of the licensee, not a permissible
investment, and cannot be subject to the claims of the
licensee's creditors. Provides that virtual currency
must be held for the person entitled to it.
Sec. 8: Creates a requirement that a licensee adopt
policies and procedures consistent with applicable
state and federal law prior to contracting with and
using an authorized delegate.
Sec. 9: Updates unauthorized activities and liability
provisions that apply to persons engaging in Money
Services on behalf of an unlicensed person.
Sec. 10: Updates the department's powers with respect
to examination and supervision. Lets the department
accept examination reports from other states, the
federal government, or an independent accounting firm.
Requires licensees to pay all costs associated with
examinations, keeps the examination confidential, and
eliminates the requirement to notify a licensee 45
days prior to an examination.
Secs. 11 14: Requires quarterly reports of condition
for a licensee's activities and their authorized
delegates. Lets licensees use the NMLS for their
reports. Changes the term executive officer to key
individual to broaden the scope of those covered.
Sec. 15: Updates procedural and reporting requirements
for the acquisition or transfer of control of
licensees. Allows some exceptions for acquisition of
control and contains discretionary provisions for the
department for ease and flexibility of administration
and using the NMLS.
Secs. 16 22: Increases the record keeping
requirements of licensees from 3 years to 5 years.
Updates reporting rules so information goes to: "the
appropriate federal agency." Clarifies when a licensee
or authorized delegate may disclose financial
information provided to the licensee or authorized
delegate by a customer. Conforming language.
2:05:37 PM
MR. OSOWSKI continued with the sectional analysis:
Sec. 23: Allows non-confidential department records to
be made public upon request.
Sec. 24: Adds new sections from the Model Law. Details
when licensees are required to submit an annual
audited financial statement to the department. Grants
the department discretion to enter into agreements
with other state and federal agencies to improve
efficiencies and reduce regulatory burden and to adopt
rules and regulations. Lets the department recover its
costs through fees. Provides that in the event of an
inconsistency between state and federal law, the
federal law governs to the extent of the
inconsistency.
Secs. 25 29: Details the level of permissible
investments required. Provides details on what
specific investments can be held by licensees and adds
language to protect customers from actions by
creditors of licensees. Provides details regarding
Automated Clearing House, letters of credit, and
surety bonds. Expands minimum net worth requirements
for a licensee from a flat $25,000 to a new net worth
based on a tiered level of total assets held. Gives
the department limited flexibility to exempt
applicants from net worth requirements.
Secs. 30 36: Removes unnecessary language, inserts
new terms such as "key individual," and replaces
"services" with "transmission." Lets an authorized
delegate apply for relief from a suspension or
revocation of a license consistent with Model Law.
Sec. 37: Allows the department to assess costs and
expenses for investigation and prosecution.
2:07:14 PM
MR. OSOWSKI continued with the sectional analysis:
Secs. 38 42: Conforming language.
Secs. 43 and 44: Adds new exemption types, including
payroll processors, and lets the department add
additional exemptions if it is in the public interest
to create consistency from state to state. Lets the
department require a person who claims an exemption to
provide information and documentation demonstrating
the claimed exemption.
Secs. 45 48: Requires licensees and authorized
delegates to provide customers with notices of how to
file a complaint and allows the department to
establish the format and content required in the
notices. Defines and outlines receipt requirements.
Includes tools to determine whether a customer is in
Alaska and therefore subject to our state's laws.
Details receipt requirements.
Secs. 49 and 50: Requires licensees to forward money
received for transmission in accordance with the
agreement between the licensee and sender unless the
licensee determines there may be fraud involved or
another crime. The licensee must respond to inquiries
from the sender with the reason for the failure to
forward money unless doing so violates a state or
federal law. Provides information concerning refunds.
Secs. 51 and 52: Requires the department to set annual
renewal fees based on a licensee's total volume of
money transmitted in the state.
Secs. 53 61: Amends existing definitions and adds
new definitions. Changes include reducing the
threshold for control from 25 to 10 percent of the
voting shares and clarifying that gift cards and
loyalty rewards are not "stored value."
Sec. 62: Changes the chapter heading to the Alaska
Uniform Money Transmission Modernization Act.
Sec. 63: Allows applicants to submit fingerprints to
the registry.
2:09:07 PM
MR. OSOWSKI continued with the sectional analysis:
Sec. 64: Repeals several sections that are no longer
necessary or are replaced by other language in this
bill.
Sec. 65: Indirect court rule amendment to the Alaska
Rules of Civil procedure because Sec. 37 allows for
the collection of costs and expenses.
Secs. 66 and 67: Provide transitional language for
existing contracts and licenses.
Sec. 68: Specifies that Sec. 37 takes effect only if
the indirect court rule amendment receives the
necessary two-thirds vote.
Sec. 69: Provides for an effective date of January 1,
2026.
2:10:21 PM
ROB SCHMIDT, Director, Division of Banking and Securities (DBS),
Anchorage, Alaska, delivered a presentation on SB 86 and moved
to slide 2, What is Money Transmission. He explained the four
types of money transmissions that occur today:
[Original punctuation provided.]
What is Money Transmission?
There are four types of money transmission.
• Money Transmission (sending or wiring money) -
Originally money transmission was wiring money to
someone else using a business like Western Union
inside many grocery stores. But the majority of
sending money now is by mobile payment apps on your
phone, like Venmo and Cash App.
• Stored value is going into the grocery store to the
wall of gift cards and grabbing a loadable visa card
and exchanging $100 with the cashier for a visa card
that you can use as payment for goods or services.
• Cryptocurrency (Bitcoin, Ethereum, Ripple, Dogecoin,
etc.) is a digital representation of value that is
used as a medium of exchange, whether or not
denominated in money. Buying and transferring
cryptocurrency is money transmission.
• Payment instruments are a money order or travelers' checks
that allow money/value to be exchanged between a buyer and
a seller without using cash.
2:13:50 PM
MR. SCHMIDT moved to slide 3, Who Regulates Money Transmission,
and stated that money transmission is regulated by 53 U.S.
jurisdictions, but there is no single federal agency overseeing
money transmission entirely. The Consumer Financial Protection
Bureau (CFPB) once conducted broad enforcement and examinations,
but that activity has stopped. He stated that Alaska has
regulated money transmission since 2008.
2:14:30 PM
MR. SCHMIDT moved to slide 4, What Does This Bill do, and stated
that SB 86 is a generational update to Alaska's financial laws,
aligning the laws with the tech advancements of the last 20
years. He said SB 86 supports innovation and protects consumers
by modernizing licensing and exams. SB 86 strengthens consumer
protections, especially if a licensed money transmitter files
for bankruptcy. He spoke about an example of when Alaskans lost
millions in 2022 when Voyager and Celsius went bankrupt. Under
their user agreements, customers' cryptocurrency wasn't
protected and became part of the bankruptcy estate. He noted in
both cases, the primary asset in the proceedings was the
customers' cryptocurrency. Had SB 86 been in place in 2022, it
may have prevented those losses. SB 86 originated from
collaboration between regulators and the regulated through the
Conference of State Bank Supervisors. This legislation
establishes consistent national rules and helps Alaska align
with most other states.
2:17:00 PM
MR. SCHMIDT moved to slide 5, Money Transmission in Alaska, and
stated that the Division of Banking and Securities, under the
Department of Commerce, enforces Alaska's money transmission
laws and regulates industries like securities, banks, credit
unions, and lenders. Money transmissions, like Robinhood,
Paypal, Venmo, Cashapp and Gemini, are the most dynamic and
resource intensive of these sectors and causes the most concern.
2:17:48 PM
MR. SCHMIDT moved to slide 6, Money Transmission Volume, and
showed a graph representing the dollar amount of money sent or
received between 2020 and 2024. In 2024, Alaskans sent or
received $6.3 billion through four types of money transmission,
money transmission, payment instruments, stored value and
cryptocurrency. He stated that licensed transmitters report
aggregated, anonymous data quarterly, no personal or transaction
level info. He noted that since 2020, money transmission has
grown 224 percent, with a dip after 2021 due to declining crypto
use. Other methods, like mobile payment apps, have steadily
increased and are expected to keep growing.
2:19:09 PM
MR. SCHMIDT moved to slide 7, Alaska Money Transmission
Transactions, and showed a graph representing the number of
transactions during 2020 and 2024. He said in 2024, there were
over 28 million transactions, about 54 per minute. With the
growing use of mobile payment apps and cryptocurrency, the
division expects this number to keep rising.
2:19:52 PM
MR. SCHMIDT moved to slide 8, Money Transmission Licensees, and
showed a graph representing the number of licensees between 2019
and 2024. He noted that before 2019, no one would've expected
nearly 200 money transmitter licenses in Alaska. These
applications are complex and staff intensive. From 2019 to 2023,
licenses grew 60 percent, though there's been a slight dip due
to consolidation of companies. He said this trend may continue
as firms compete. Of 173 current transmitters, 30 handle
cryptocurrency. It's a growing sector, but not all transmitters
will last due to mergers or bankruptcies.
2:20:54 PM
MR. SCHMIDT moved to slide 9, Cryptocurrency Transmission Volume
in Alaska, and showed a graph representing the cryptocurrency
growth in Alaska between 2020 and 2024. He said the graph shows
the explosive growth and volatility of reported annual
cryptocurrency transmission in Alaska. The amounts are
aggregated data reported by companies licensed to conduct money
transmission in Alaska. No personal information is contained in
the data.
2:21:47 PM
MR. SCHMIDT moved to slide 10, What Types of Transmissions
Happen in Alaska, and showed a pie graph representing the usage
percentage of each type of transmission. Of all money
transmission in Alaska, 60 percent is traditional like Western
Union, MoneyGram, or mobile payments like Venmo, Cash App, Apple
Pay, and Google Pay. Cryptocurrency makes up 24 percent,
reloadable prepaid cards 14 percent, and payment instruments
like money orders just 2 percent. Nearly 80 percent now involves
mobile apps or crypto, both of which didn't exist when current
laws were written.
2:23:00 PM
MR. SCHMIDT moved to slide 11, Why Regulate Money Transmission
at All, and stated that Alaska already regulates money
transmission, and SB 86 updates and aligns our laws with other
states. SB 86 helps the industry with consistent rules and
improves efficiency for regulators. State oversight is crucial,
when Alaskans call with issues, the division can act quickly if
it's a state regulated business. He said DBS knows who to
contact and often resolves problems the same day. Fraud cases
have been reversed large and small because local businesses take
the divisions calls. Federal agencies don't offer that level of
responsiveness. He opined relying solely on them would sacrifice
Alaska's control and ability to protect its residents.
2:25:25 PM
MR. SCHMIDT moved to slide 12, Why is This Bill Important, and
stated that SB 86 offers strong protections for Alaska consumers
Because cryptocurrency is a highly volatile asset, the risk of
financial failure is greater, making consumer safeguards even
more important. He said if a major exchange files for bankruptcy
again, SB 86 ensures Alaskans are better protected and also
modernizes our system by aligning Alaska's laws with national
standards, making the state more welcoming to legitimate
businesses. He stated that staff spend around $200 dollars a
year doing manual background checks and SB 86 would automate
those through NMLS in just hours. Money transmission plays a
critical role in Alaska's economy and is used thousands of times
a day. He said by creating a uniform legal framework, SB 86
increases efficiency, reduces regulatory friction, and enhances
consumer protection. Whether its cash or cryptocurrency, the
Division of Banking and Securities ensures that Alaskans' money
gets where it's supposed to go, on time and securely.
2:26:58 PM
SENATOR DUNBAR stated that many people hold cryptocurrencies
like Bitcoin. He said Memecoins can't be used to buy things,
lack real value, often crash, and is a form of gambling. He
asked whether stable coins are treated differently from
memecoins and are meme coins legal in Alaska.
2:29:02 PM
MR. SCHMIDT answered that the division regulates the exchange
itself, the platform where people buy and sell assets like
Bitcoin, Ethereum, or speculative memecoins. He said the
division's oversight focuses on the dealer, not the individual
coins. While some tokens are clearly speculative, making risky
investments are legal, just like in the stock market. Alaskans
are allowed to invest in speculative assets of all kinds.
2:30:53 PM
SENATOR DUNBAR asked what the difference between memecoins and
betting on horses is. Neither are betting on something with no
intrinsic value that can't be used to purchase other things.
2:31:27 PM
MR. SCHMIDT answered that a dollar bill is backed by the full
faith and credit of the U.S. government, giving the dollar bill
value despite being just paper. Gold, by contrast, has intrinsic
value due to its physical properties like conductivity and
durability. He stated that Americans often dismiss
cryptocurrency more easily than those in countries where
avoiding central banks has clear benefits. He noted Bitcoin's
limited supply reflects its creator Satoshi's concern with
central banks printing money to pay debt. He said he is not pro
or anti-crypto, he just recognizes crypto exists and people use
it for a variety of reasons.
2:34:09 PM
SENATOR DUNBAR clarified that he wasn't questioning crypto
currency but wanted to state that many in the industry see
memecoins as harmful because they're clearly speculative and
damage the broader crypto space. He said eventually, regulators
or the country will need to distinguish between assets meant as
a store of value and those that function more like gambling. He
stated that he understands the division's role is to regulate
the exchange, not the coins themselves.
2:35:24 PM
CHAIR BJORKMAN asked how reloadable cards work and why
reloadable cards matter.
2:35:38 PM
MR. SCHMIDT responded that people use reloadable cards for many
reasons. He said for those without a bank account, reloadable
cards can be essential. People might cash their paycheck and
load the funds onto a card for everyday use. For some Alaskans,
this is a very important financial tool.
2:37:01 PM
CHAIR BJORKMAN asked where the money from the reloadable card is
kept and why the place holding the money isn't considered a
bank.
2:37:23 PM
MR. SCHMIDT answered that money transmission laws exist because
these companies aren't banks, even though the companies hold
your money. When a person loads a reloadable card, like at Fred
Meyer, Visa or MasterCard gets the money, both Visa and
MasterCard and the store take a fee. He said with services like
PayPal, the balance can be used like cash, but if transferred to
a PayPal-linked bank account, it's then held by an actual bank.
He said the money goes to the card issuer (like Visa or
MasterCard), not a bank, even though to a consumer the
transaction may look similar.
2:39:24 PM
CHAIR BJORKMAN asked how does Alaska deal with inactive,
unclaimed, errorless, assets.
2:40:16 PM
MR. SCHMIDT answered that he can't speak for the unclaimed
property section, but bank accounts, PayPal balances, and crypto
on platforms like Robinhood are subject to Alaska's unclaimed
property laws. If unclaimed after a set time, the funds
eventually go to the state.
2:40:51 PM
CHAIR BJORKMAN asked if policies regarding reloadable cards or
other accounts that are not banks need updating.
2:41:07 PM
MR. SCHMIDT answered that a reloadable card is physical cash, so
if unclaimed, it's just a card lying around. With PayPal,
Robinhood, or Western Union, updating Alaska's unclaimed
property laws might be needed.
CHAIR BJORKMAN stated that money on reloadable cards or in
crypto accounts has real value. If it's not covered by Alaska's
unclaimed property laws like bank funds are, that likely needs
updating, especially if big companies profit while consumers
lose out if a card is misplaced.
MR. SCHMIDT responded that he has dealt with one escheatment
case involving a bank account sent to the state. He opined that
the money transmitter should not be the beneficiary if someone
dies.
2:43:20 PM
CHAIR BJORKMAN held SB 86 in committee.