Legislature(2023 - 2024)BELTZ 105 (TSBldg)

03/06/2023 01:30 PM Senate LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
-- Public Testimony <Time Limit May Be Set> --
Heard & Held
-- Public Testimony <Time Limit May Be Set> --
**Streamed live on AKL.tv**
                  SB  84-MONEY TRANSMISSION; VIRTUAL CURRENCY                                                               
1:32:16 PM                                                                                                                    
CHAIR    BJORKMAN     announced      the   consideration        of   SENATE    BILL    NO.   84                                 
"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."                                                                                               
1:32:38 PM                                                                                                                    
ROBERT     SCHMIDT,       Director,      Division       of   Banking      and    Securities                                     
(DBS),       Department         of      Commerce,        Community         and      Economic                                    
Development       (DCCED),      Anchorage,      Alaska,     introduced       SB   84   with   a                                 
presentation        on    money     transmission         and    virtual      currency.       He                                 
advanced to slide 2 and began the presentation:                                                                                 
       This     legislation        amends      and    modernizes        the     Alaska                                        
       Uniform       Money     Services       Act    (AS    06.55)      and     adopts                                        
       pertinent       sections      of   the    Uniform     Money     Transmission                                           
       Modernization Act (Model Law).                                                                                         
       •   In    2008,     money     transmission         was    sending      a    wire                                         
           transfer     at   your   local    grocery     store    or   purchasing      a                                        
           money order or traveler's checks at the bank.                                                                        
       •   This    bill   will    modernize     Alaska's      money    transmission                                             
           laws      to     include       cryptocurrency           (aka      "virtual                                           
           currency,"       Bitcoin,     Ethereum,       DogeCoin).      Six    states                                          
           have    adopted     the   Model    Law   in   some   form    so  far   with                                          
           12    more     introducing        bills      this     year.     Effective                                            
           1/1/23     DBS   adopted     regulations       to   include     crypto    in                                         
           current law as an interim solution.                                                                                  
       •   Cryptocurrency        remains     one   of   the   key   tools    of  rogue                                          
           actors.       "North      Korea      stole     more      cryptocurrency                                              
           assets     in  2022    than    in  any   other     year[.]"     (Reuters,                                            
1:32:48 PM                                                                                                                    
MR. SCHMIDT stated the following:                                                                                               
       Thank     you    for    holding      this     hearing      to   discuss      the                                         
       Money      Transmission        Modernization         Act.     I    understand                                            
       that     50+   page    legislation        on   the    financial       industry                                           
       may     not    sound     exciting.       But    this     bill    impacts      an                                         
       industry      that    most   Alaskans      carry    in   their    pocket     and                                         
       is   used    thousands       of   times    an   hour    by    our   residents                                            
       involving       billions       of    dollars      each    year.     And    last                                          
       year,      the    unregulated        underbelly        of    this     industry                                           
       resulted       in    thousands       of    Alaskans       losing      tens    of                                         
       millions of dollars.                                                                                                     
       This    presentation        will    have    two   parts.     First,     I  will                                          
       discuss      what    money    transmission        is   (think     PayPal),      I                                        
       will     discuss      the     utilization        of    cryptocurrency         by                                         
       Alaskans,          the      Alaska        impact       of      the       crypto                                          
       bankruptcies,          and     the     explosive       growth       of    money                                          
       transmission         in    Alaska.       Then     I   will      discuss      the                                         
       modernization act and how it will benefit Alaskans.                                                                      
       Money     transmission       dates    back    to   the   middle     ages   when                                          
       the    Knights     Templar      established       a   system     for   persons                                           
       to   deposit      gold   and    silver     in  Europe     and    withdraw     it                                         
       in   Jerusalem.      In   America,     money     transmission       took   hold                                          
       with     the     western      expansion        of    the     country,      with                                          
       entities      such    as   Western     Union    accepting      money    on   the                                         
       east    coast,     then   sending     a   telegram     to   an   office    near                                          
       the    intended      recipient,       instructing       the    local     office                                          
       to   give    the   money    to   the   intended      recipient.      For   over                                          
       100    years,    this    was   the    pattern     of  money     transmission                                             
       in   America         the    sender     physically       going    to   a   money                                          
       transmitter's         office,     instructing        an   amount     of   money                                          
       to    be    sent      to    the    recipient,        and     the    recipient                                            
       physically       going     into    the    local    branch     of   the    money                                          
       transmitter       to   receive     the    money.    Alaskans      can   and   do                                         
       still      send     money     by    physically       going      to    a   money                                          
       transmitter.        But    the   industry      has   grown     into    so  much                                          
       As    we   will     discuss,      smartphones       have     revolutionized                                              
       the    sending     and    receiving      of   money.     Alaskans     now    use                                         
       their     smartphones       tens   of   millions      of  times    a   year   to                                         
       send billions of dollars.                                                                                                
1:34:45 PM                                                                                                                    
SENATOR GRAY-JACKSON joined the meeting.                                                                                        
MR. SCHMIDT continued speaking:                                                                                                 
       The    Division      of   Banking      and    Securities       enforces      the                                         
       Alaska     Uniform     Money    Services     Act   (AS   06.55)     which    was                                         
       passed     by   the    Legislature       in   2007    and   implemented       in                                         
       When    passed     in   2007,    cryptocurrency        did   not    exist    and                                         
       mobile      money     transmission        was    in   its    infancy.      This                                          
       legislation        updates     the   licensing,       recordkeeping,         and                                         
       enforcement         provisions        to     support       these      business                                           
       activities and protect Alaska consumers.                                                                                 
       This    bill    is   based     on   the   Uniform     Money     Transmission                                             
       Modernization        Act    (Model    Law),     which    was   developed      by                                         
       state      regulators,         the     Conference         of    State      Bank                                          
       Supervisors        (CSBS),     with    input    and   participation        from                                          
       industry stakeholders.                                                                                                   
1:35:29 PM                                                                                                                    
MR.    SCHMIDT     reviewed      the    purpose      of   the    Alaska     Uniform     Money                                   
Services      Act   of   2008    on   slide    3.   He   said    the   Act    provides     the                                  
legal     framework        for    money     transmission         functions,       including                                     
currency      exchange,      transfer     or   wiring     of  money,     and   loading     and                                  
reloading       payment      instruments,         including       stored-value         cards.                                   
Slide 3 reads:                                                                                                                  
       What is covered by the 2008 Act?                                                                                       
       • Money transmitters (wiring of funds)                                                                                   
       •   Issuers      of    traveler's        checks,       money     orders,      or                                         
           stored valued cards                                                                                                  
       •   Sellers      or   redeemers       of    traveler's       checks,      money                                          
           orders, or stored value cards                                                                                        
       • Currency dealers or exchangers                                                                                         
1:36:04 PM                                                                                                                    
MR.    SCHMIDT      reviewed      slide     4,   stating      SB   84    defines     virtual                                    
currency      in    statute      and   adds     it   to    the    definition       of   money                                   
transmission requiring licensure and supervision:                                                                               
       Virtual Currency and Money Transmission                                                                                
       Definition        of     virtual      currency:        Cryptocurrency         or                                         
       virtual      currency       means     a   digital      representation         of                                         
       value     that    is   used    as   a  medium     of   exchange,      unit    of                                         
       account,      or   store    of   value;    and   is   not   money,     whether                                           
       or not denominated in money. AS 06.55.990(45)                                                                            
MR. SCHMIDT said:                                                                                                               
       Cryptocurrency         was   invented     by   the   online    community      in                                         
       response      to  the   2008    financial      crisis.     It  is   a  digital                                           
       representation         of    value,     i.e.,    money,      that    does    not                                         
       pass    through      the   banking      system,     is   not    backed     by   a                                        
       government,        that    by   design     has    a  limited      quantity                                               
       only    so    many    bitcoin     can    ever    be   available       (federal                                           
       banks       cannot      just      print      more),       and     relies      on                                         
       decentralized public ledgers to verify transactions.                                                                     
       Many     people      are     surprised       when     they     learn      about                                          
       cryptocurrency,         that    it   sounds     like    "Monopoly      money.                                            
       How    can   there     be   a  currency      that    is   not   issued     by   a                                        
       government       and   is  outside     the   banking     system?     I  am   not                                         
       here    as  an   advocate      for   or  against     cryptocurrency,         but                                         
       I     want     to     show      you     that      Alaskans        are     using                                          
       cryptocurrency, and they are using a lot of it.                                                                          
1:36:53 PM                                                                                                                    
MR. SCHMIDT spoke to the chart on slide 5, "Money Transmission                                                                  
Licensees." He said:                                                                                                            
       Money     transmission       keeps     on   growing.      In   2018,    we   had                                         
       111    licensed      money     transmitters.        As    of   December      31,                                         
       2022,     Alaska    had    168   money    transmitter       licenses.      Over                                          
       the    past    five    (5)   years,     money     transmission        licenses                                           
       have increased 51 percent.                                                                                               
       Today     online    transactions        conducted      by   smartphone       and                                         
       virtual      currency     such    as   Bitcoin     are   now   common     means                                          
       of    exchanging       or   transferring        payment      or   value.     The                                         
       proposed       legislation        is    necessary       to    appropriately                                              
       supervise       and   regulate      money     transmitters        to   protect                                           
       Alaskans.       The   eight    largest     money     transmitters       in   the                                         
       state     of   Alaska     all   conduct     over    $100,000,000        a  year                                          
       of   business      to,    from,    and   within     Alaska.      The   largest                                           
       two   each    conduct     over   $1   billion     of   business     to,   from,                                          
       and within the state.                                                                                                    
1:37:50 PM                                                                                                                    
MR.   SCHMIDT     spoke    to   slides     6  and   7,   "Alaska     Money    Transmission                                      
Transactions."          He   reviewed       the     bar    graph     on    slide     6    that                                  
illustrates       the    total     number     of   money    transactions        in   Alaska,                                    
including      all    money     transmissions,        payment      instruments,        stored                                   
value, and virtual currency from 2019 through 2022. He said:                                                                    
       This     graph     shows     the    explosive       growth      in    Alaskans                                           
       using     money     transmission.        This    graph     shows     how   many                                          
       times    transactions        were   used;    this    graph    does   not   show                                          
       dollars.      In   three    years,     the   number     of   money-serviced                                              
       transactions        has   tripled     from    over    10   million     in  2019                                          
       to    over    31   million     transactions        last    year.     In   2022,                                          
       Alaskans       used    money      transmission        on    average,      3,540                                          
       times per hour, 24 hours a day, 365 days a year.                                                                         
1:38:35 PM                                                                                                                    
SENATOR      BISHOP     asked     whether      the    cited     numbers      exceed     daily                                   
credit card transactions.                                                                                                       
MR.   SCHMIDT     answered     yes,    they   do.   He   clarified      that   credit     card                                  
transactions         are     not     a    money      service       end-to-end        payment                                    
transmission;        for   example,      a   PayPal    transmission        of   money    or   a                                 
cash    app   transmission       of   money.     These    transmissions        of   money    do                                 
not include debit or credit cards.                                                                                              
SENATOR     BISHOP    said    the   prepared     statement      he   is  reading     from    is                                 
fascinating.        He   requested      a  copy    for    distribution       to   committee                                     
members with the chair's permission.                                                                                            
MR.   SCHMIDT     replied     that    it  is   not   his   decision      to   make,    but   he                                 
hopes to share it.                                                                                                              
1:39:43 PM                                                                                                                    
SENATOR        GRAY-JACKSON           asked       if      Zelle       and      Venmo       are                                  
MR.      SCHMIDT       replied        that      cryptocurrency           is     a    digital                                    
representation         of  value     and   has   its    own   name.    For    example,     the                                  
most     widely      recognized        name     in    cryptocurrency          is    Bitcoin.                                    
Cryptocurrency        is   also    known    as   virtual     currency.      An   example     of                                 
real    money    is  U.S.    dollars.      An  individual       might    find   an   item    on                                 
the   Facebook      marketplace       that    costs     $20.    That    individual      sends                                   
$20    by   PayPal     or   Meta    Pay.     Those    are    real    U.S.    cash    dollars                                    
deposited      into    a  bank   account      and   withdrawn      by  a   debit    card.    An                                 
individual       could     also    elect     to   use   cryptocurrency         to    buy   the                                  
item.     He    said    that     cryptocurrency         is    so   simple      that    it    is                                 
confounding        because      of   our    ideas     about      money,     but    it    is   a                                 
digital representation of value.                                                                                                
SENATOR      GRAY-JACKSON        interrupted,        stating      it    sounds     like    the                                  
answer to her question is no.                                                                                                   
MR.   SCHMIDT      replied     that    cryptocurrency         and   cash    are   different                                     
1:41:28 PM                                                                                                                    
MR.    SCHMIDT     continued       his    commentary       on   slide    6,    stating     the                                  
growth     in    the    money     transmission        industry       is   driven      by   two                                  
factors.      The   first    is   mobile    payment     apps    on   smartphones.       These                                   
are apps such as PayPal, Meta Pay, etc.                                                                                         
1:41:30 PM                                                                                                                    
MR. SCHMIDT reviewed the bar graph on slide 7:                                                                                  
       The   second     factor    driving     money     transmission       growth    is                                         
       the      emergence         of     cryptocurrency.            Cryptocurrency                                              
       exploded      in   the   last    two   years    largely     for    investment                                            
       reasons            people      bought      crypto      hoping       it    would                                          
       increase       in    value.      But    crypto      is    now    being     used                                          
       increasingly        for    its    original      purpose      of    exchanging                                            
       value.     People    are   using    crypto     in  place    of   cash   to   pay                                         
       for things.                                                                                                              
1:42:00 PM                                                                                                                    
SENATOR BISHOP asked if that was because it is off-book.                                                                        
MR.     SCHMIDT       replied       that      it     is    and      is    not     off-book.                                     
Cryptocurrency        does    not   pass   through     the   banking     system,     but   the                                  
transactions        are    available       on   publicly       viewable      ledgers.      The                                  
ledgers     look    encrypted      unless     an  individual's        wallet     address     is                                 
known;      then,     it    is    publicly       traceable.       The     wallet     address                                    
comprises       about      30    letters,       commas,      and     other      characters.                                     
Cryptocurrency        does    not   pass    through     the   banking     system,      is  not                                  
subject     to   suspicious       activity      reporting,       and    knowing     customer                                    
requirements        is   not   always     necessary.       It   lacks    that    regulation                                     
but, in some ways, is more public than most people realize.                                                                     
MR. SCHMIDT continued his commentary of slide 7, stating:                                                                       
       In   2019,    there    were    84,719    cryptocurrency         transactions                                             
       in    Alaska.      In    2021,     the    heyday      of   cryptocurrency,                                               
       there      were     3,283,291       individual       transactions.         Last                                          
       year,      even      with      all     the     bankruptcies,          Alaskans                                           
       transacted         1,956,704       times.      The     key     takeaway       is                                         
       whether      we  understand       it   fully    or   not,    or   like    it  or                                         
       not,    it   is   a   reality     that    it   is   here    and   being    used                                          
       at-scale by Alaskans.                                                                                                    
1:43:37 PM                                                                                                                    
MR.     SCHMIDT       reviewed       the     bar     graph     on     slide      8,    "Money                                   
Transmission Volume." He said:                                                                                                  
       In    2019,    the    volume     of   money    transmission        in    Alaska                                          
       was    $1.6   million.      In  2021,     it  was   over    $7   billion.     In                                         
       2022,     it   went    down     slightly      to   $5.8    billion      due   to                                         
       cryptocurrency         bankruptcies.         This    is   not   entirely      an                                         
       apples-to-apples           comparison,         but     if    you     were     to                                         
       compare     the   volume     of  money    transmission        to  the    assets                                          
       of   the    Alaska     state-chartered         financial      institutions,                                              
       they    are    about    the    same.    That    is   to   say,    this    is  an                                         
       awful     lot   of   money     and    it   is   a  very    common     way    for                                         
       Alaskans to conduct their business.                                                                                      
1:44:27 PM                                                                                                                    
MR. SCHMIDT reviewed the bar graph on slide 9, "Money                                                                           
Transmission Volume - Virtual Currency." He said:                                                                               
       This    graph    shows    the   jaw-dropper       of  them    all.   In   2019,                                          
       Alaska      went     from      $33.6     million       in    cryptocurrency                                              
       transactions        to,    from,    and    within     the    state    to   $1.9                                          
       billion      in   2021.     That    is   a   growth     of   5,789     percent                                           
       from 2019 to 2021, 24 months.                                                                                            
       Virtual      currency       transmission        in    Alaska     grew     2,120                                          
       percent      in   2021    alone.     Virtual      currency      transactions                                             
       have     fundamentally          changed      the     financial        services                                           
       world.     This    bill    will   add    virtual     currency      activities                                            
       to   the   definition       of   money    transmission       in   statute     to                                         
       allow    DBS   to   regulate      this   activity     that    accounted      for                                         
       nearly      one-third        of    the     total     money      transmission                                             
       volume     in   Alaska    in   2021.    The   dollar     amount     of   volume                                          
       dipped     in   2022    due   to   the   crypto     company     bankruptcies                                             
       and    market    crash.     But   Alaskan's       utilization       of   crypto                                          
       remains far above its 2020 level.                                                                                        
       Alaska      did     not    regulate       virtual      currency       activity                                           
       until     this    year.     A   very    limited      regulations       package                                           
       became       effective       on     January      1st,      adding      virtual                                           
       currency      to  the    definition      of   money    transmission       under                                          
       the    current     statute     and   requiring      additional      companies                                            
       to become licensed.                                                                                                      
1:45:53 PM                                                                                                                    
MR. SCHMIDT advanced to slide 10, "2022 Crypto Bankruptcies -                                                                   
Alaska Consumer Harm:"                                                                                                          
       VOYAGER DIGITAL:                                                                                                       
       • 1,879 Alaskan Accounts                                                                                                 
       • $4.96 million in Alaska accounts frozen                                                                                
       CELSIUS NETWORK:                                                                                                       
       • 526 Alaskan Accounts                                                                                                   
       • $13.9 million in Alaska accounts frozen                                                                                
       CONSUMER COMPLAINTS RECEIVED: 0                                                                                          
MR. SCHMIDT reviewed slide 10:                                                                                                  
       Of   course,     we   cannot    talk    about    cryptocurrency        without                                           
       discussing        its    tumultuous       year    in    2022.     This    slide                                          
       captures      one   of   the    biggest     stories     that    you    did   not                                         
       hear    about    in   2022,     and   that    is   the   Alaska     impact    on                                         
       crypto-bankruptcies.             There     were     three     main     crypto-                                           
       bankruptcies         in    2022.     The     first     two    were     Voyager                                           
       Digital       and     Celsius       Network.       Twenty-four         hundred                                           
       Alaska      accounts      valued      at    almost     $20    million      were                                          
       frozen     in   those    two    bankruptcies.        That    is   to   say,   on                                         
       day   one   of   the   first    bankruptcy,       and   on  day   one   of   the                                         
       second     bankruptcy,        Alaska     assets     at   $20   million     were                                          
       frozen.      It   is  unclear      if,   when,    or   how    much    impacted                                           
       Alaskans        might      get      back      as    these       bankruptcies                                             
       The     impact      of   the     crypto-bankruptcies            on    Alaskans                                           
       makes       these      bankruptcies         an     exceptionally          large                                          
       consumer      loss.     Yet    DBS    received      zero    complaints.       We                                         
       often    find    that   victims     of   financial      harm   often     suffer                                          
       in    silence,      but   that    silence      does    not   mean     Alaskans                                           
       are    not   impacted.       This    is   not   the    sort    of   situation                                            
       where    you    want   to   wait    for   a  squeaky     wheel    because     we                                         
       had   this    massive     event,    thousands      of   Alaskans,      tens   of                                         
       millions       of    dollars,       and    no    one    has     really     said                                          
       anything.      This    does    not   mean    that   it   is   not   having    an                                         
1:47:16 PM                                                                                                                    
MR. SCHMIDT advanced to slide 11, which outlined the biggest                                                                    
bankruptcy of 2022:                                                                                                             
       FTX Trading - Alaskan Consumer Harm                                                                                    
       FTX     -   Bankruptcy       in    November      2022;     largest       crypto                                        
       bankruptcy        yet;    former      CEO    facing      federal      criminal                                           
                        $$$ ? ? ? ALASKA IMPACT UNKNOWN                                                                       
                "Never in my career have I seen such a complete                                                                 
               failure of corporate controls and such a complete                                                                
                absence of trustworthy financial information as                                                                 
                                occurred here."                                                                                 
       -FTX CEO-in-bankruptcy John Jay Ray III                                                                                  
       (Mr. Ray was the CEO-in-bankruptcy of Enron)                                                                             
MR. SCHMIDT spoke about the 2022 FTX bankruptcy:                                                                                
       The     biggest       crypto       bankruptcy        of     2022     was     the                                         
       spectacular       collapse      of  FTX.    DBS   is   closely     monitoring                                            
       this    bankruptcy,       but   we   have    yet   to   get   reliable     data                                          
       on   the    Alaska     impact     of   this    bankruptcy.       What    we   do                                         
       know    is   that   FTX    was   bigger     than   Voyager     and    Celsius.                                           
       Because      of   that,    we   expect     the   impact     on   Alaskans     to                                         
       be   greater.      FTX's     former     CEO,    Sam   Bankman-Fried,         has                                         
       been     charged      with     financial       crimes.      Some    of    FTX's                                          
       senior     management      has   pled    guilty    to   financial      crimes.                                           
       DBS     believes      that     Alaskans       lost     many     millions      of                                         
       dollars       to    FTX,     and    the     chance      of    any     recovery                                           
       currently looks remote.                                                                                                  
1:47:59 PM                                                                                                                    
MR. SCHMIDT advanced to slide 12 to discuss the fiscal impact of                                                                
SB 84:                                                                                                                          
       Fiscal Impact                                                                                                          
       •   Receipts      in   FY2012     were    $12.4     million.      The    FY2012                                          
           budget was $3.5 million.                                                                                             
       •   Receipts      in    FY2022     were     $22    million.      The     FY2022                                          
           budget was $4.3 million.                                                                                             
1:47:57 PM                                                                                                                    
MR. SCHMIDT said:                                                                                                               
       This     bill    contains      a   fiscal     note.    Division       receipts                                           
       have     grown     77%    from    FY2012      to   FY2022.      Receipts      in                                         
       FY2022     were    $22    million     against     a   division      budget    of                                         
       $4.3 million.                                                                                                            
       The   division      will   require     additional       staff    and   support                                           
       costs      to    respond      to    the    growth      in    money     service                                           
       activities,       the   complexity       of  new   business      models,     and                                         
       use    of    third-party       partnerships.         The    positions      will                                          
       allow       the     division       to     implement        the     new     law,                                          
       incorporate          changes       in     the      operation        of     NMLS                                          
       [Nationwide         Multistate         Licensing        System],       develop                                           
       proficiency        in  the    examination       of   electronic       systems,                                           
       and    assessment       of   cybersecurity         measures      in   a   high-                                          
       risk environment.                                                                                                        
       New    program     receipt     revenue     is   estimated      to  be   at   the                                         
       low   end,    with   a   minimum    of   $110,000     for   35   new   license                                           
       applications        by   FY2025.     It   is   difficult      to   anticipate                                            
       the     number       of     new     applications,          annual      renewal                                           
       fees/assessments,           and     resulting       revenue      for     future                                          
       years.      However,       the    division       expects      to    adopt     an                                         
       assessment        fee    model      through      new    regulations        that                                          
       would      ensure      actual      costs     of    supervision         of    the                                         
       industry       would      be    covered       through      annual      program                                           
       receipts       and   is    expected      to   range     between      $750K    to                                         
       $1.2 million.                                                                                                            
MR.   SCHMIDT     described      this   as   an  industry      of  minnows     and   whales.                                    
Alaska has:                                                                                                                     
- Two top money-service businesses over $1 billion each,                                                                        
- Eight money-service businesses over $100 million each, and                                                                    
-   At   least     one    locally     owned,      smaller     money-service         business                                    
    that all pay the same fees.                                                                                                 
MR.    SCHMIDT     said    that    the    fees    are   inappropriately         scaled     for                                  
each    business.      SB   84    allows     for   a   volume-based       assessment,        so                                 
the    larger,     higher-risk        operations       pay    more    than     the   locally                                    
owned, smaller business.                                                                                                        
1:49:58 PM                                                                                                                    
SENATOR      MERRICK      asked    if    he   could     disclose       who   the    top    two                                  
operators are.                                                                                                                  
MR.    SCHMIDT     answered      probably      not,     but   those     names     would    not                                  
surprise anyone. They are widely known.                                                                                         
SENATOR      DUNBAR     brought      up   Venmo     that    is   owned     by   PayPal.      He                                 
asked    if   they    would     pay   a   fee   of   some    kind    under    SB   84's    new                                  
regulatory       package     and,    if  so,    how   would    the   state     get   them    to                                 
pay and collect the fee.                                                                                                        
MR.   SCHMIDT      replied     that    all   the    data   is   self-reported        through                                    
the   Nationwide       Multistate       Licensing      System    (NMLS),      an  automated                                     
system     used    to   regulate      the   financial      services      industry.      Venmo                                   
and   PayPal     would    report    their     data,    and   the   state    would    adopt    a                                 
formula     based    on   fractions      of   a  percent.     They    would    pay   through                                    
MNLS    and   pay   the   state    annually      instead     of  a   $3,000    license     fee                                  
which is an annual renewal.                                                                                                     
SENATOR      DUNBAR      sought      confirmation        that     the     fraction      of    a                                 
percent      is    so   small     that     the    consumer      would     not    notice      an                                 
increase in transaction fees.                                                                                                   
MR.    SCHMIDT      replied      that     the    consumer       would     not    notice      an                                 
increase      in   fees.    He   said    he   intends     to   discuss      later    how   the                                  
fee    model    would     benefit     consumers.       The   change     in   the    proposed                                    
fee model would have no impact on the consumer.                                                                                 
1:52:11 PM                                                                                                                    
MR. SCHMIDT reviewed slide 13:                                                                                                  
       Why do we need to change the Act?                                                                                      
             • The current law has not kept up with the industry's                                                              
           explosive growth and innovation.                                                                                     
           Consumer protection is insufficient; cryptocurrency                                                                  
           is currently one of the top risks for consumer                                                                       
               • Reduce wasting staff time, increase automation,                                                                
           harmonize Alaska laws to encourage business, reduce                                                                  
           regulatory burden.                                                                                                   
1:52:39 PM                                                                                                                    
MR.   SCHMIDT      advanced     to   slide     14.   He   said    SB   84   would    let   the                                  
Division     of   Banking     and   Securities      (DBS)    leverage      the   Nationwide                                     
Multistate        Licensing       System      (NMLS)      registry       for     submitting                                     
license      applications,        filing      documents,       reporting,       and    paying                                   
fees.    The    bill    removes     the    currency      exchange      license     type    and                                  
adds    currency     exchange      to   the   definition       of  money     transmission,                                      
so only one license is needed. He summarized slide 14:                                                                          
       What does this bill do?                                                                                                
              • Reduces regulatory burden by streamlining initial                                                               
           licensing and license renewal                                                                                        
               • Protects Alaska consumers by conducting criminal                                                               
           background checks through the Nationwide Multistate                                                                  
           Licensing System (NMLS)                                                                                              
1:53:05 PM                                                                                                                    
MR.    SCHMIDT     said    he    has   a   staff     member     who    spends     about    400                                  
hours    per   year    doing    manual     background      checks     because     NMLS    does                                  
not allow the division to do automated background checks under                                                                  
current statute.                                                                                                                
       •   Ensures      regulatory       costs    of    supervision       keep    pace                                          
           with growth                                                                                                          
       •   Broadens      the    definition       of   money     transmission        and                                         
           defines virtual currency activities                                                                                  
       •   Requires       licensees       to   comply      with     federal      laws,                                          
           including suspicious activity reporting                                                                              
       •   Updates     enforcement       provisions      by   allowing     a  broader                                           
           spectrum of orders to be issued                                                                                    
       •   Ensures     DBS   can   coordinate       with    other    states    in   all                                         
           areas of regulation, licensing, and supervision to                                                                   
           reduce regulatory burden on the industry and more                                                                    
           effectively utilize regulator resources                                                                            
MR. SCHMIDT continued paraphrasing his statement below:                                                                         
       The    bill    allows     the   implementation         of   a   volume-based                                             
       annual      assessment.         Licensees       will     be    required       to                                         
       report      money    transmission         volume,     which     will     ensure                                          
       licensees       are    treated     fairly     and    equitably       based    on                                         
       the    level     of    volume     and    business       conducted      in    the                                         
       state.     He  said    it  does    not   make   sense    for   a  guy   who   is                                         
       doing     a   couple     of    million      dollars     to    pay    the   same                                          
       couple of grand as someone who is doing billions.                                                                        
       The    bill     includes      virtual      currency      transactions        and                                         
       other    methods     of   moving     or  transferring        monetary     value                                          
       to    better     protect     Alaskans.       Six    states     have    adopted                                           
       some    version     of   the   Model    Law   so   far,    and   twelve    have                                          
       introduced bills this legislative session.                                                                               
1:54:03 PM                                                                                                                    
MR.   SCHMIDT     said    thank    you   for   the   opportunity       to   testify     on   SB
84.    He   expressed      his    hope    that     he   communicated        how   expansive                                     
this    field    of   the   Alaska     economy     is,   the    importance      of   it,   and                                  
the   silent     revolution       and   payment      systems     happening      out    there.                                   
He hoped the committee would view the bill favorably.                                                                           
SENATOR DUNBAR asked which states adopted some version of the                                                                   
Model Law.                                                                                                                      
MR.   SCHMIDT     replied      that   Arizona     adopted      it,   essentially       fully.                                   
Connecticut,        Georgia,       South     Dakota,      Utah,     and    West     Virginia                                    
partially      adopted     it.    He  pointed      out   that    one   of   the   things     he                                 
likes     about     SB   84    is   it    has    support      from    the    industry      and                                  
support       from      consumer        rights       advocates.        Politically         and                                  
geographically         diverse      states     and    urban     and    rural     areas     are                                  
adopting it. The Model Law has been well received nationwide.                                                                   
1:55:24 PM                                                                                                                    
SENATOR     BJORKMAN     recalled      that   the   director      had   said   there    is   an                                 
unregulated       financial      transaction       underbelly.       He   asked     if  there                                   
are   people     who    endanger     the    financial      security      of   Alaskans     and                                  
whether      SB   84   has   the    penalties       and   measures      that    punish     bad                                  
MR.    SCHMIDT     replied      yes.    Before      January     1   of   this     year,    the                                  
division's      approach      was   cryptocurrency        was   not   money;     therefore,                                     
DBS   did    not   regulate      it.   Cryptocurrency         in   Alaska     was   entirely                                    
unregulated        by   the    state.      The    exception       was    that    DBS    could                                   
regulate      anything     to   the    extent    that    it   was   an   investment,       but                                  
it   could    not   regulate      money    transmissions.        SB   84   was   introduced                                     
last    year     and   made     good    progress,       but    it   did    not    pass.    The                                  
division        prioritized         passing       a    regulations          package       that                                  
clarified      that    DBS   could    regulate      cryptocurrency         under    existing                                    
statutes.      The    division      applied      a  temporary       fix   under     existing                                    
statute, including:                                                                                                             
-   enforcement       provisions       that    allow     DBS   to   enter     enforcements                                      
    orders, and                                                                                                                 
- revoke licenses to assess civil penalties.                                                                                    
MR. SCHMIDT said underbellies should be well regulated.                                                                         
1:57:16 PM                                                                                                                    
CHAIR     BJORKMAN       invited       Tracy     Reno     of    DBS     to    present      the                                  
sectional analysis.                                                                                                             
1:57:29 PM                                                                                                                    
TRACY     RENO,     Chief     of    Examinations,         Division       of   Banking      and                                  
Securities,        Department        of    Commerce,        Community       and     Economic                                    
Development        (DCCED),       Anchorage,        Alaska     stated      the    sectional                                     
analysis      is  available      on   BASIS    under    the   SB   84   "Documents"       tab.                                  
She    presented      a   shortened      version,      and    the   following       excerpts                                    
show the points she highlighted:                                                                                                
                               Sectional Analysis                                                                             
                                SB 84 version A                                                                               
                 An Act Relating to Money Transmission; Virtual                                                                 
       The     proposed        bill     is    not     a    simple       repeal      and                                         
       reenactment       of   AS  06.55.     Instead,     it   is   a  line-by-line                                             
       overhaul      of    the   Act    carefully       considering       the    Model                                          
       Law      and     selectively         adopting        and     revising        the                                         
       statutes.        The    bill      repeals      the     currency       exchange                                           
       license      and   includes      that    activity      in   the    definition                                            
       of   money    transmission       so   only   one   license     type    will   be                                         
       required in AS 06.55 going forward.                                                                                      
       Section     1.   Adds   a   section     of  uncodified       law   explaining                                          
       the purpose of the bill.                                                                                                 
       Section      2.   Amends     AS   06.05.101(a)        requires      a  license                                         
       to   engage     in   the   business     of   money    transmission        (MT).                                          
       The     amendment      inserts       a   citation      to    the    exemption                                            
       statute,        AS     06.55.802,         and      clarifies        that      an                                         
       authorized        delegate       may    not    engage      in    MT    if    the                                         
       actions taken are outside the scope of the exemption.                                                                    
       Section       3.    Repeals      and     reenacts       AS    06.55.102       to                                       
       conform       with     the     Model     Law     providing       application                                             
       requirements          for     a    MT     license       and     allows       the                                         
       Department         of     Commerce,        Community,        and      Economic                                           
       Development        (DCCED     or    the    department)        to   change     or                                         
       update      the     forms     to    be    consistent       with     licensing                                            
       requirements          in    NMLS      [also      referred       to    as     the                                         
1:58:35 PM                                                                                                                    
       Section      7.    Amends     AS   06.55     to   add    new    sections      to                                       
       Article      1A    concerning       virtual     currency       derived     from                                          
       the   Model    Law.    Virtual     Currency      (VC)   Business      Activity                                           
       replaces      Currency     Exchange      Licenses     as   the   heading     for                                         
       Article       1A.    AS    06.55.150           06.55.170        provide      the                                         
       details       of    what     is     considered        and    what      is    not                                         
       considered       licensed     activity      for   companies      engaging     in                                         
       VC   business      activity.       The   bill    will    allow     regulation                                            
       and     supervision        of   persons      that     issue     VC    or   that                                          
       provide      services       that    allow     others     to    transfer      VC,                                         
       provide      exchange      services     to   the    public,     or   offer    to                                         
       take custody of VC for other persons.                                                                                    
           AS   06.55.150      provides      that    VC   business      activity     is                                         
           MT   and    unless     exempt,      the   activity       requires      a  MT                                         
           AS   06.55.155      concerns      required     disclosures        granting                                           
           the     department       discretion        to    require       additional                                            
           disclosures        and     to    regulate       the    time     and    form                                          
           required for disclosure.                                                                                             
           AS   06.55.160      requires     VC   business      with   control     over                                          
           VC    to    maintain       an    amount      of    each     type    of    VC                                         
           sufficient       to  satisfy      the   aggregate      entitlements       of                                         
           the    persons     to    each    type    of   VC   ensuring       consumer                                           
           protection       and    reducing       regulatory       burden     on    the                                         
              licensee without increasing net worth requirements.                                                               
           AS    06.55.165        allows      a    licensee       engaged      in    VC                                         
           business      activity     to   include     VC   in  its   tangible      net                                         
           worth      calculation          and     details       record       keeping                                           
           requirements specific to VC businesses.                                                                              
           AS   06.55.170      contains     a   list   of   exempted      activities                                            
           and   provides      an   exemption      for    business      activity     of                                         
           $5,000 or less.                                                                                                      
1:59:10 PM                                                                                                                    
       Section        10.      Amends       AS      06.55.401        relating        to                                       
       supervision        and   the    department's        powers     with    respect                                           
       to    examination.        It    allows     the    department       to    accept                                          
       examination        reports      from     other     states     [for     network                                           
       supervision],            the      federal        government,          or      an                                         
       independent         accounting       firm.     This     section       requires                                           
       licensees         to      pay      all      costs       associated         with                                          
       examinations,        references       confidentiality         requirements,                                              
       and    eliminates       the    existing      requirement       to    notify     a                                        
       licensee 45 days prior to an examination.                                                                                
1:59:41 PM                                                                                                                    
       Sections       11    -   14.    Repeals      and    reenacts       or    amends                                        
       subsections        of   AS   06.55.403      for    consistency       with    the                                         
       Model     Law.   It   requires      quarterly      reports     of   condition                                            
       for     a    licensee's        activities       and     their      authorized                                            
       delegates.        It     maintains       existing       requirements         for                                         
       immediate       reporting      knowledge       of   filing     a   bankruptcy                                            
       petition,      a   proceeding      to   revoke     or   suspend     a  license                                           
       in    another      state     or   country,      bond     cancellation        and                                         
       criminal      charges.     Allows     the   department      to   utilize     the                                         
       NMLS for reporting required by AS 06.55.403.                                                                             
MS. RENO said this section change would help the division                                                                       
regulate virtual currency companies it did not previously                                                                       
       Section        15.     Repeals       and      reenacts       AS     06.55.404                                          
       regarding       acquisition        of    control      of    a   MT    licensee                                           
       containing       procedural        and   reporting       requirements        for                                         
       the    acquisition       or   transfer      of   control      of   licensees.                                            
       It    allows     exceptions       for    acquisition       of   control      and                                         
       contains       discretionary        provisions       for    the    department                                            
       for    ease     and    flexibility       of    administration         and    the                                         
       utilization         of     the     NMLS.      It     adds      details       for                                         
       aggregation         of    interest        of    ownership        for     family                                          
       members for consistency with the Model Law.                                                                              
       Sections      16  and   17.   Amends     AS   06.55.405(a)       and   (d)   for                                       
       consistency        with     the    Model     Law.     It   details       record                                          
       keeping      obligations       of   licensees,      increasing       the   time                                          
       period     from     3  years     to   5   years    [to    follow     the   Bank                                          
       Secrecy Act], and makes conforming language changes.                                                                     
       Section     23.    Adds   a   new   subsection      (f)    to  AS   06.55.407                                          
       stating     when    department      records     may   be   made   public     and                                         
       what information is confidential.                                                                                        
2:00:58 PM                                                                                                                    
       Section      24.    Amends     AS   06.55     to   add    new   sections      to                                       
       Article 4 from the Model Law                                                                                             
           AS   06.55.408      requires     licensees      to   submit     an   annual                                          
           audited     financial      statement      to  the   department       within                                          
           90 days after the end of the licensee's fiscal year.                                                                 
           AS   06.55.409(a)       grants     the   department       discretion      to                                         
           enter    into    agreements       with    other    state     and   federal                                           
           agencies        to     improve        efficiencies          and      reduce                                          
           regulatory burden.                                                                                                   
           AS     06.55.409(b)          grants       the      department         broad                                          
           discretion      to   administer,       interpret,      and   enforce     the                                         
           chapter,      to    adopt     rules     and    regulations,        and    to                                         
           recover     its   costs     through     imposition      and    collection                                            
           of fees.                                                                                                             
           AS    06.55.410      expands      the    department's         ability     to                                         
           participate       in  multistate       supervisory       processes     such                                          
           as joint investigations.                                                                                             
           AS    06.55.411       provides       that    in    the    event      of   an                                         
           inconsistency         between      state     and    federal     law,     the                                         
           federal       law      governs       to     the      extent       of     the                                         
           AS      06.55.412        contains         the      requirements          and                                         
           procedures        applicable        when     a    licensee       adds     or                                         
           replaces     a  key   individual       allowing     the   department      to                                         
           disapprove      a  change     of  key   individual       due   to  certain                                           
2:01:06 PM                                                                                                                    
             Sections 27 and 28. Amends subsections (a) and (b) of                                                            
              AS 06.55.502 concerning permissible investments for                                                               
       consistency with the Model Law.                                                                                          
           Subsection (a) does the following:                                                                                   
           1.  Incorporates        ACH    items     in   transit      to    licensees      and                                  
               payees,     cash   in   transit     via   armored     car,   cash    in  smart                                   
               safes,     etc.    ACH   funds     are   in   the    banking     system     and                                  
               the   Model     Law    defines     cash    in   transit      via   ACH    as   a                                 
               permissible investment;                                                                                          
           2.  allows    letters      of  credit     as   a  permissible        investment;                                     
           3.  allows      excess     bonding       as   a    permissible        investment                                     
2:01:32 PM                                                                                                                    
              Section 29. Amends AS 06.55 to add a new section to                                                             
       Article 5.                                                                                                               
           AS   06.55.503       contains      the    requirements        for    letters      of                                 
           credit to align with the Model Law                                                                                   
               Amends AS 06.55 to add new sections to Article 5.                                                                
           AS   06.55.505       proposes      applicable       forms    of   security      (AS                                  
           06.55.104)       and    is   a   hybrid      of   the    Model     Law   and    the                                  
           existing      Act.   It   requires      a  licensee      to   hold    a  security                                    
           bond   or   with   the   department's        approval,     a  deposit,      with   a                                 
           maximum      amount     of   $1,000,000       and    be   maintained       for    no                                 
           less    than    5  years     with   the    details     to   be   determined       by                                 
           the department in regulation or order.                                                                               
           AS    06.55.506      provides       a   significant        expansion       of   net                                  
           worth    requirements        from   $25,000     to   a  new   net   worth    based                                   
           on    a   tiered     level     of   total     assets      held,    requiring       a                                 
           licensee     to   demonstrate       net   worth    at  application.       It   also                                  
           allows     the   department       to   exempt     applicants       or  licensees                                     
           from net worth requirements.                                                                                         
       Section      30.   Amends     AS   06.55.601       for   consistency        with                                       
       the    Model    Law   regarding      the    suspension      and    revocation                                            
       of    a   license      by    deleting      unnecessary        language       and                                         
       inserting       new    terms     such    as   key    individual       and    the                                         
       replacement of transmission for services.                                                                                
2:02:11 PM                                                                                                                    
       Section       37.     Amends      AS     06.55.605       regarding        civil                                        
       penalties       allowing     the   department       to   assess     its   costs                                          
       and expenses for investigation.                                                                                          
2:02:21 PM                                                                                                                    
       Sections      40  and   41.    Amends    subsections       of  AS   06.55.607                                          
       to     remove      citations        to     AS    06.55.201,        which      is                                         
       repealed.        The    existing       AS     06.55.201       contains       the                                         
       currency        exchange        license       requirements         and     this                                          
       license      is   being    eliminated       in   the    bill    in   favor    of                                         
       one     license      type    including       currency       exchange      as    a                                        
       money transmission activity.                                                                                             
       Section      43.   Amends     AS   06.55.802       for   consistency        with                                       
       the     Model      Law     revising       licensing        exclusions        and                                         
       renames       the     section      to     exemptions.        It     adds     new                                         
       exemption      types     and   would    allow    the    department      to   add                                         
       additional       exemptions       if  it   is   in   the   public     interest                                           
       creating      consistency       from   state-to-state.         It   also   adds                                          
       the     term     federally        insurance       depository        financial                                            
       institution        for    consistency        with    other     statutes      the                                         
       division regulates under AS 06.60.990(9).                                                                                
MS. RENO said that SB 84 gives payroll processors an exemption                                                                  
at the request of industry.                                                                                                     
2:03:06 PM                                                                                                                    
       Section       46.    Amends      AS    06.55.810       by    adding      a   new                                       
       subsection       (d)   that    requires      licensees      and    authorized                                            
       delegates       include     on   a   receipt     or   through      disclosure                                            
       on   the    licensee's       website     or   mobile     application,        the                                         
       name      and    phone      number      of    the     department        and     a                                        
       statement       on  how    customers      can   contact     the    department                                            
       with questions or complaints.                                                                                            
2:03:27 PM                                                                                                                    
SENATOR     BISHOP     sought     confirmation        that    payroll     processors       are                                  
third parties that run payroll for a small mom-and-pop business.                                                                
MR.    SCHMIDT     clarified       that    payroll     processors       run    payroll     for                                  
small    and    large    businesses.       The    division     found     that    except    for                                  
one    multi-state       licensed      payroll     processor,       DBS   never     required                                    
payroll      processors        to    license       their     operations.         There     was                                  
concern     about    imposing      a  $2,000     regulatory       requirement       on  them.                                   
The    division     decided      that,    given     the   past    practice,       DBS   would                                   
exempt them from this version of the legislation.                                                                               
SENATOR     BISHOP    asked    if   there    are   many   payroll     processors       in  the                                  
MR. SCHMIDT replied he expects there are over 100.                                                                              
2:05:01 PM                                                                                                                    
MS.    RENO     continued       highlighting        excerpts       from    the    sectional                                     
       Section       46.    Amends      AS    06.55.810       by    adding      a   new                                       
       subsection       (d)   that    requires      licensees      and    authorized                                            
       delegates       include     on   a   receipt     or   through      disclosure                                            
       on   the    licensee's       website     or   mobile     application,        the                                         
       name      and    phone      number      of    the     department        and     a                                        
       statement       on  how    customers      can   contact     the    department                                            
       with questions or complaints.                                                                                            
       Section        48.     Repeals       and      reenacts       AS     06.55.830                                          
       regarding      receipts      for   consistency       with   the   Model    Law.                                          
       Subsections         (a)        (b)     include      content      and     format                                          
       requirements          for     transaction        receipts        and     define                                          
       receipt.      Receipts      are    required      to   be   in   English      and                                         
       any   other    language      principally       used   by   the   licensee     or                                         
       authorized         delegate        to    negotiate        a     transaction.                                             
       Subsection        (c)    describes       exceptions       to    the    receipt                                           
       requirement         including       stored     value.      Subsection        (d)                                         
       provides a definition of receipt.                                                                                        
       Section       53.    Amends      AS    06.55.850       by    adding      a   new                                       
       subsection       (f)   that    states     an  annual     renewal     fee   must                                          
       be    based      on    a    licensee's       total      volume      of    money                                          
       transmission        in   the   state    with    the   annual     renewal     fee                                         
       to    be   determined       by   the   department       by   regulation       or                                         
MS.   RENO    said    the   division     is   sensitive      to   small    businesses      but                                  
acknowledges         the     risk     of     large,      multi-state         international                                      
companies.      So,   the    administration        proposes     tiers    based    on   volume                                   
to address annual renewal fees in this section.                                                                                 
2:05:56 PM                                                                                                                    
       Sections       54    -   61.    Amends      definitions        found     in   AS                                       
       06.55.990       for   consistency       with    the   Model    Law.    Changes                                           
       include      the   incorporation        of   the    words    in   this    state                                          
       to    ensure      AS    06.55     protects       Alaska      consumers       and                                         
       ensuring      revisions      are    made    to   align    the    language     of                                         
       the     Act    with    the     model     law.    It    also     includes      an                                         
       exception        for    a    loyalty      reward      card,      amends      the                                         
       definition        of    control      to    at    least     25    percent      of                                         
       ownership and amends the definition of stored value.                                                                     
2:06:27 PM                                                                                                                    
       Section      62.    Amends     AS   06.55.990      to   renumber      and    add                                       
       definitions        for    terms      introduced       by    the    Model     Law                                         
       including the following terms:                                                                                           
       1.      Accredited state                                                                                                 
       2.      Acting in concert                                                                                                
       3.      Average daily money transmission liability                                                                       
       4.      Bank Secrecy Act                                                                                                 
       5.      Closed loop stored value                                                                                         
       6.      Control of virtual currency                                                                                      
       7.      Dollar equivalent                                                                                                
       8.      Eligible rating                                                                                                  
       9.      Eligible rating service                                                                                          
       10.     Federally           insured           depository            financial                                            
       11. In this state                                                                                                        
       12. Individual                                                                                                           
       13. Key individual                                                                                                       
       14. Passive investor                                                                                                     
       15. Payroll processing services                                                                                          
       16. Registry                                                                                                             
       17. Tangible net worth                                                                                                   
       18. Virtual currency                                                                                                     
2:06:41 PM                                                                                                                    
       Section     63.   Amends     AS  06.55.995      to   refer    to  the   Act   or                                       
       Chapter       as    the     Alaska      Uniform      Money      Transmission                                             
       Modernization        Act    instead     of   the   Alaska     Uniform     Money                                          
       Services Act.                                                                                                            
2:06:53 PM                                                                                                                    
       Section      64.    Amends     AS   12.62.400(b)        to    read    that    an                                       
       applicant       under     AS   06.55     may   submit     fingerprints        to                                         
       the registry.                                                                                                            
2:07:04 PM                                                                                                                    
       Section      65.   Repeals     several      sections      in   AS   06.55.    AS                                       
       06.55.104       and   AS   06.55.107      are   repealed      and   reenacted                                            
       in    Article       5   concerning        prudential       standards.        All                                         
       statutes       in    Article      2    regarding       currency       exchange                                           
       licenses      are   repealed     as   the   activity     was   added    to   the                                         
       definition       of   money    transmission.        AS   06.55.890      and   AS                                         
       06.55.990        contains      definitions        that     are     no    longer                                          
2:07:30 PM                                                                                                                    
       Section      66      68.   are   transitional        provisions       amending                                         
       uncodified        law    to    avoid     interference        with     existing                                           
       contracts,       to   allow    a  transitional        period     for   holders                                           
       of    existing      money    services      licenses       and   for    payroll                                           
       processors,          to     allow       adoption        of      transitional                                             
       regulations        by   DCCED,    and    to   instruct      the   revisor     of                                         
       statutes to amend certain headings.                                                                                      
2:07:36 PM                                                                                                                    
       Section      69.   provides      for    an   immediate      effective      date                                        
       for    sec.     68,   which     would     allow     DCCED     to   begin     the                                         
       regulation promulgation process.                                                                                         
       Section      70   provides     for    an   effective      date    of   January                                         
       1, 2024.                                                                                                                 
2:07:55 PM                                                                                                                    
SENATOR      BISHOP     remarked       that    the    administration         is   proposing                                     
many    statutory      changes     and   repeals.      He   sought    confirmation        that                                  
the    goal     of   SB    84    is   to    weed     out    bad    actors     and    protect                                    
MR. SCHMIDT replied that this is one of the goals.                                                                              
SENATOR     BISHOP     drew   attention      to   Section     64,    which    states,     "...                                  
an    applicant      under     AS    06.55     may    submit     fingerprints         to   the                                  
registry."        He   asked     why     the    proposed      change      does     not    read                                  
"shall"     rather     than   "may"    since     one   of  the    bill's    objectives       is                                 
to weed out bad actors.                                                                                                         
2:08:27     PM                                                                                                                
MS.   RENO    replied    that    the   bill   uses    "may"    rather    than    "shall"     to                                 
give    DBS   the    flexibility       of   choosing     a   different      licensing      and                                  
regulation system.                                                                                                              
MR.     SCHMIDT       added      that      an    applicant        must      submit      their                                   
fingerprints; one way an applicant may do it is through NMLS.                                                                   
2:09:12     PM                                                                                                                
SENATOR      GRAY-JACKSON        said    she    would     like    to    meet    offline      to                                 
understand SB 84 better.                                                                                                        
MR. SCHMIDT replied that he is in Juneau all week.                                                                              
2:09:45     PM                                                                                                                
CHAIR    BJORKMAN      opened     public     testimony      on   SB   84;   finding     none,                                   
he stated he would hold public testimony open.                                                                                  
CHAIR BJORKMAN held SB 84 in committee.                                                                                         

Document Name Date/Time Subjects
SB 83 ver A.PDF SL&C 3/6/2023 1:30:00 PM
SB 83
SB 83 Sectional Analysis 02.27.2023.pdf SL&C 3/6/2023 1:30:00 PM
SB 83
SB 83 Transmittal Letter 02.23.23.pdf SL&C 3/6/2023 1:30:00 PM
SB 83
SB 83 Hearing Request Memo 02.27.2023.pdf SL&C 3/6/2023 1:30:00 PM
SB 83
SB 83 Fiscal Note-DCCED-CBPL-02-17-23.pdf SL&C 3/6/2023 1:30:00 PM
SB 83
Statutes Repealed by SB 83.pdf SL&C 3/6/2023 1:30:00 PM
SB 83
SB 84 ver A.PDF SL&C 3/6/2023 1:30:00 PM
SL&C 3/27/2023 1:30:00 PM
SB 84
SB 84 Sectional Analysis Ver A 02.24.2023.pdf SL&C 3/6/2023 1:30:00 PM
SL&C 3/27/2023 1:30:00 PM
SB 84
SB 84 Transmittal Letter 02.27.23.pdf SL&C 3/6/2023 1:30:00 PM
SL&C 3/27/2023 1:30:00 PM
SB 84
SB 84 Hearing Request Memo 02.27.2023.pdf SL&C 3/6/2023 1:30:00 PM
SL&C 3/27/2023 1:30:00 PM
SB 84
SB 84 Fiscal Note-DCCED-DBS-02-16-23.pdf SL&C 3/6/2023 1:30:00 PM
SL&C 3/27/2023 1:30:00 PM
SB 84
Statutes Repealed by SB 84.pdf SL&C 3/6/2023 1:30:00 PM
SL&C 3/27/2023 1:30:00 PM
SB 84
SB 84 Presentation_DCCED-DBS 03.06.23.pdf SL&C 3/6/2023 1:30:00 PM
SL&C 3/27/2023 1:30:00 PM
SB 84
SB 84 Supporting Documents-DCCED-DBS White Paper 03.03.23.pdf SL&C 3/6/2023 1:30:00 PM
SL&C 3/27/2023 1:30:00 PM
SB 84
SB 83 Presentation_DCCED-CBPL 03.06.23.pdf SL&C 3/6/2023 1:30:00 PM
SB 83
SB 83 Supporting Documents-DCCED-CBPL White Paper 03.06.23.pdf SL&C 3/6/2023 1:30:00 PM
SB 83
SB 83 Supporting Documents-Letter of Support_Fresenius Medical Care.pdf SL&C 3/6/2023 1:30:00 PM
SB 83