Legislature(2023 - 2024)BARNES 124
03/08/2023 03:15 PM House LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| HB86 | |
| HB85 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 86 | TELECONFERENCED | |
| *+ | HB 85 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
March 8, 2023
3:15 p.m.
DRAFT
MEMBERS PRESENT
Representative Jesse Sumner, Chair
Representative Justin Ruffridge, Vice Chair
Representative Mike Prax
Representative Dan Saddler
Representative Stanley Wright
Representative Ashley Carrick
Representative Zack Fields
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 86
"An Act relating to the business of money transmission; relating
to money transmission licenses, licensure requirements, and
registration through the Nationwide Multistate Licensing System
and Registry; relating to the use of virtual currency for money
transmission; relating to authorized delegates of a licensee;
relating to acquisition of control of a license; relating to
record retention and reporting requirements; authorizing the
Department of Commerce, Community, and Economic Development to
cooperate with other states in the regulation of money
transmission; relating to permissible investments; relating to
violations and enforcement of money transmission laws; relating
to money transmission license exemptions; relating to payroll
processing services; repealing currency exchange licenses; and
providing for an effective date."
- HEARD & HELD
HOUSE BILL NO. 85
"An Act relating to professional licensing; relating to
temporary licenses for some professions; and providing for an
effective date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 86
SHORT TITLE: MONEY TRANSMISSION; VIRTUAL CURRENCY
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
02/27/23 (H) READ THE FIRST TIME - REFERRALS
02/27/23 (H) L&C, FIN
03/08/23 (H) L&C AT 3:15 PM BARNES 124
BILL: HB 85
SHORT TITLE: PROFESSIONAL LICENSING; TEMP PERMITS
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
02/27/23 (H) READ THE FIRST TIME - REFERRALS
02/27/23 (H) L&C, FIN
03/08/23 (H) L&C AT 3:15 PM BARNES 124
WITNESS REGISTER
ROBERT SCHMIDT, Director
Division of Banking and Securities
Department of Commerce, Community, and Economic Development
Juneau, Alaska
POSITION STATEMENT: Introduced HB 86 on behalf of the prime
sponsor, House Rules by request of the governor.
SYLVAN ROBB, Director
Division of Corporations, Business, and Professional Licensing
Department of Commerce, Community & Economic Development
Juneau, Alaska
POSITION STATEMENT: Introduced HB 85 on behalf of the prime
sponsor, House Rules by request of the governor.
ACTION NARRATIVE
3:15:54 PM
CHAIR JESSE SUMNER called the House Labor and Commerce Standing
Committee meeting to order at 3:15 p.m. Representatives Carrick,
Fields, Wright, Saddler, Ruffridge, and Sumner were present at
the call to order. Representative Prax arrived as the meeting
was in progress.
HB 86-MONEY TRANSMISSION; VIRTUAL CURRENCY
3:16:45 PM
CHAIR SUMNER announced that the first order of business would be
HOUSE BILL NO. 86, "An Act relating to the business of money
transmission; relating to money transmission licenses, licensure
requirements, and registration through the Nationwide Multistate
Licensing System and Registry; relating to the use of virtual
currency for money transmission; relating to authorized
delegates of a licensee; relating to acquisition of control of a
license; relating to record retention and reporting
requirements; authorizing the Department of Commerce, Community,
and Economic Development to cooperate with other states in the
regulation of money transmission; relating to permissible
investments; relating to violations and enforcement of money
transmission laws; relating to money transmission license
exemptions; relating to payroll processing services; repealing
currency exchange licenses; and providing for an effective
date."
3:17:00 PM
ROBERT SCHMIDT, Director, Division of Banking and Securities,
Department of Commerce, Community, & Economic Development, gave
a PowerPoint presentation to introduce HB 86 [hard copy included
in committee packet]. On slide 2, he stated that HB 86 would
modernize the Alaska Uniform Money Services Act(AS 06.55). He
added a brief summary of the history of money transfers.
MR. SCHMIDT continued to slides 3 and 4 and stated that the 2008
act included money transmitters, currency exchanges, stored
value cards, traveler's checks, and money orders. He gave the
definition of virtual currency, also known as cryptocurrency,
and explained how it has changed the way money is transferred.
3:19:53 PM
CHAIR SUMNER asked why cryptocurrency is not considered to be
money, as it can be exchanged for goods and services.
MR. SCHMIDT answered that cryptocurrency is not backed by any
government; a trait that is commonly used to determined the
definition of money.
3:21:17 PM
MR. SCHMIDT continued with slides 4 through 6 and stated that
cryptocurrencies were adopted in 2008 after the global financial
crisis to have a medium of exchange outside of the global
banking system and added that only a limited number of Bitcoins
can ever be "mined." He stated that there has been a 51 percent
increase in licensed money transmitters since 2008. He said
that the number of money transmission transactions has increased
from approximately 10.5 million in 2019 to 31 million in 2022.
3:24:04 PM
REPRESENTATIVE SADDLER asked for a definition of money
transmission transaction.
MR. SCHMIDT answered that an example would be buying something
from someone and using Venmo to pay them for it. In response to
a follow-up question, he said that the same transaction using
cash instead of Venmo would not be considered a money
transmission transaction.
3:25:34 PM
REPRESENTATIVE WRIGHT asked where the transaction would be
tracked for if someone were to travel out of state and use
Venmo.
MR. SCHMIDT answered that it would be tracked by both states
because the transaction involved people from both states.
3:26:25 PM
REPRESENTATIVE CARRICK asked for a definition of money
transmitter.
MR. SCHMIDT answered that a money transmitter is an organization
that sends money outside of the banking system. In response to
a follow-up question, he stated that a service such as Zelle is
not a money transmission service because it transfers directly
from bank to bank.
3:29:13 PM
MR. SCHMIDT continued to slide 7 and stated that the number of
cryptocurrency transactions in Alaska increased from
approximately 84,000 in 2019 to a peak of over 3.2 million in
2021. In 2022, that number was over 1.9 million.
3:29:53 PM
REPRESENTATIVE SADDLER asked what a cryptocurrency transaction
would look like.
MR. SCHMIDT answered that if two people agreed to buy and sell
something using Bitcoin instead of cash or a service such as
Venmo, that would be a cryptocurrency transaction. He added
that there are some countries with weaker currencies than the
U.S., and that using cryptocurrencies may be a preferable way to
send money for those people than the local currency.
3:31:18 PM
MR. SCHMIDT continued slide 7 and stated that some people buy
cryptocurrencies and treat it as a security that may see its
value increase over time, rather than using it to buy goods or
services.
MR. SCHMIDT continued to slides 8 and 9 and gave an overview of
money transmission volume, including cryptocurrency. He stated
that in 2021, money transmission to, from, and within the State
of Alaska reached a high of over 7.1 billion dollars. Just
under 2 billion dollars of those transactions were made using
cryptocurrency. He stated that the amount of money transferred
using those services, not including the cryptocurrency
transactions, is roughly equal to the amount of money being held
in chartered banks within the state.
3:34:23 PM
CHAIR SUMNER asked whether a breakdown of the specific
cryptocurrencies used is available.
MR. SCHMIDT answered no.
3:34:49 PM
REPRESENTATIVE SADDLER asked for the definitions of certain
transfer terms.
MR. SCHMIDT answered that "peer to peer" would be buying
something from a place such as Facebook marketplace; a "money
transfer instrument" would be something such as a traveler's
cheque; and a "stored value card" is another name for a gift
card for a place such as a restaurant.
3:35:57 PM
REPRESENTATIVE FIELDS asked who the biggest money transmitters
are.
MR. SCHMIDT answered that he has been asked not to name those
providers.
3:37:09 PM
MR. SCHMIDT continued to slide 10 and stated that there were
three major cryptocurrency bankruptcies in 2022. Over 2,000
accounts owned by Alaskans, worth approximately $19 million,
were affected by the Voyager and Celsius bankruptcies, although
no complaints were received by the Division of Banking and
Securities.
3:38:22 PM
REPRESENTATIVE SADDLER asked if using cryptocurrencies as an
investment is similar to other forms of currency speculation.
MR. SCHMIDT answered that they work in much the same way,
although the volatility of cryptocurrency is generally greater
than normal currency.
3:39:53 PM
MR.SCHMIDT continued to slides 11 through 13 and stated that
there is not yet reliable data available on how the FTX
bankruptcy affected Alaskans. The bill contains a fiscal note
to add five additional staff members to keep pace with the
increasing number of money transmission transactions. He stated
that the revenue generated from the bill will likely cover the
cost of the fiscal note. Services such as PayPal were very new
and cryptocurrency did not exist at the time of the original
bill's passing, highlighting the need to update certain aspects
of the original bill.
MR. SCHMIDT continued to slide 14 and stated that HB 86 would
harmonize Alaska's laws with those of other states, allowing for
better coordination with them on money transaction licensing,
regulation, and supervision. He stated that there is a
provision in the bill that says that the buyer of a
cryptocurrency, and not a holding service, owns the
cryptocurrency, in response to the recent cryptocurrency
bankruptcies.
3:46:08 PM
MR. SCHMIDT continued slide 14 and stated that the bill would
bring regulations in line with the FBI's requirements to have
automated background checks. The bill would strengthen the
regulations regarding those delegated to do business on behalf
of a money transmitting service. He said that the bill set
guidelines for permissible investments for money transmitters,
and would allow the Division of Banking and Securities to set
fees by regulation, rather than statute. He called HB 86 a
"model law" created with input from the industry and other
states.
3:51:26 PM
REPRESENTATIVE FIELDS asked if there were any differences
between the proposed legislation and what has been passed in
other states.
MR. SCHMIDT answered there would be some natural differences due
to variations in drafting standards between states. He added
that he is unsure about any changes being made comprehensively,
although for example some minor changes were made in the state
of Arizona.
3:52:51 PM
REPRESENTATIVE SADDLER asked for clarification on what
transactions would be covered by the bill.
MR. SCHMIDT answered that transactions within, to, and from
Alaska would be covered. In response to a follow-up question,
he stated that fees are collected from licenses from banks,
payday lenders, mortgage brokers, money transmitters, among
others.
[HB 86 was held over.]
HB 85-PROFESSIONAL LICENSING; TEMP PERMITS
3:55:51 PM
CHAIR SUMNER announced that the final order of business would be
HOUSE BILL NO. 85, "An Act relating to professional licensing;
relating to temporary licenses for some professions; and
providing for an effective date."
3:56:31 PM
SYLVAN ROB, Director, Division Of Corporations, Business, and
Professional Licensing, Department of Commerce, Community, &
Economic Development, gave a PowerPoint presentation [hard copy
included in committee packet] to introduced HB 85. On slides 2
and 3, she gave a brief overview of what universal temporary
licensure (UTL) is and what is needed to qualify for it. The
bill would allow the Department of Commerce, Community &
Economic Development to issue temporary licenses to individuals
with a license from another United States or Canada jurisdiction
that has similar requirements to those in the State of Alaska.
It would also allow the department to issue a temporary license
to an individual from a jurisdiction that does not require
licensure for a certain occupation, if that person demonstrates
that they are able to meet Alaska's licensure requirements, or
if they have military service or training in that area of
expertise. An individual still would need any relevant
background checks and could not have received any disciplinary
action related to their license.
4:00:35 PM
MS. ROBB continued to slide 4 and stated that temporary licenses
would be valid for 180 days, with a possible 180 extension at
the discretion of the department. Temporary licenses would not
be available for professions requiring Alaska-specific
knowledge, such as marine pilots, big game guides, and
occupations relating to engineering and architecture.
MS. ROBB continued to slide 5 and stated that temporary
licensure would help people in the state of Alaska get to work
faster and help reduce the workforce shortage. There has been a
64 percent increase in the number of professional licenses
needed in the last 10 years. She said that the Division of
Corporations, Business, and Professional Licensing has faced a
workforce shortage that has increased the challenges regarding
issuing licenses in a timely manner, although the number of
vacancies in the division is decreasing. She stated that
temporary licenses would be issued automatically to those who
meet the basic qualifications as the division processes their
licensure application in order to prevent a scenario in which
two applications are received by each person.
4:05:53 PM
MS. ROBB continued to slides 6 through 8 and gave an overview of
how UTL will help and the difference between UTL and interstate
licensure compacts. She stated that the Alaska State Medical
Board and Alaska Board of Nursing already have made temporary
licensure a part of the licensure process in Alaska. She said
that the primary difference between UTL and compacts is that the
former requires an individual to meet the requirements that
Alaska currently has, whereas the latter would streamline
Alaska's requirements with all other states that are a part of
the compact. There are currently 18 states that have enacted
temporary licensure legislation.
4:10:16 PM
REPRESENTATIVE SADDLER asked why there are many different
licensing boards instead of having the division process all
licenses.
MS. ROBB answered that the licensing boards help provide
expertise to the division for that profession. The temporary
licenses allow an individual to continue working while the
permanent license is reviewed by the respective board of their
profession. In response to a follow-up question, she said that
the biggest time-saving element in the bill is that the division
would no longer receive two different applications from every
person.
4:15:17 PM
REPRESENTATIVE FIELDS commented that he prefers UTL to licensure
compacts because he believes it encourages people to come to
Alaska but not to leave.
[HB 85 was held over.]
4:16:17 PM
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
4:16 p.m.