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.
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
Anchorage, Alaska
POSITION STATEMENT: On behalf of the sponsor, House Rules by
request of the governor, introduced HB 86 and gave a PowerPoint
presentation, titled "Alaska Uniform Money Transmission
Modernization Act House Bill 86."
SYLVAN ROBB, Director
Division of Corporations, Business, and Professional Licensing
Department of Commerce, Community and Economic Development
Juneau, Alaska
POSITION STATEMENT: On behalf of the sponsor, House Rules by
request of the governor, introduced HB 85 and gave a PowerPoint
presentation, titled "Universal Temporary Licensure."
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, and Economic Development, on
behalf of the sponsor, House Rules by request of the governor,
introduced HB 86 and gave a PowerPoint presentation, titled
"Alaska Uniform Money Transmission Modernization Act House Bill
86" [hard copy included in committee packet]. On slide 2, he
stated that HB 86 would modernize the Alaska Uniform Money
Services Act. He gave a summary of the history of money
transfers. He continued to slide 3 and slide 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 commonly used to determine the definition of
money.
3:21:17 PM
MR. SCHMIDT continued with slide 4 through slide 6. He stated
that to have a medium of exchange outside of the global banking
system, cryptocurrencies were adopted in 2008 after the global
financial crisis. He explained that only a limited number of
Bitcoins can be "mined." He stated that there has been a 51
percent increase in licensed money transmitters since 2008, and
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. 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
MR. SCHMIDT, in response to Representative Wright, answered that
if someone were to travel out of state and use Venmo, this
transaction would be tracked by both states, as it involves
people from both states.
3:26:25 PM
MR. SCHMIDT, in response to Representative Carrick, answered
that the definition of "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, the 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 agree to buy and sell
something using Bitcoin instead of cash or a service, such as
Venmo, this would be a cryptocurrency transaction. He added
that some countries have weaker currencies than the U.S. and
sending and receiving money outside this country may be
preferable using cryptocurrencies rather than the local
currency.
3:31:18 PM
MR. SCHMIDT continued slide 7 and stated that some people buy
cryptocurrencies not to buy goods or services but treat it as a
security where its value may increase over time. He continued
to slide 8 and slide 9 and gave an overview of money
transmission volume, including cryptocurrency. He stated that
in 2021, money transmission to, from, and within Alaska reached
a high of over 7.1 billion dollars. Just under 2 billion
dollars of these transactions were made using cryptocurrency.
He stated that the amount of money transferred using these
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
MR. SCHMIDT, in response to Chair Sumner, stated that a
breakdown of the specific cryptocurrencies used is not
available.
3:34:49 PM
MR. SCHMIDT, in response to a request from Representative
Saddler for definitions, explained 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
MR. SCHMIDT, in response to a question from Representative
Fields concerning the biggest money transmitters, stated that he
has been asked not to name these 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 cryptocurrencies 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 slide 11 through slide 13 and stated
that there is not yet reliable data available on how the FTX
bankruptcy affected Alaskans. He stated that HB 86 contains a
fiscal note which would 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. He stated
that at the time of the original bill's passing, services, such
as PayPal, were very new and cryptocurrency did not exist. He
highlighted 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 on money transaction licensing, regulation,
and supervision. In response to the recent cryptocurrency
bankruptcies, he pointed out the provision in the bill which
would provide that a buyer of a cryptocurrency, and not a
holding service, owns the cryptocurrency.
3:46:08 PM
MR. SCHMIDT continued that the proposed bill would bring
regulations in line with the FBI's requirements to have
automated background checks. He suggested that the bill would
strengthen the regulations regarding those delegated to do
business on behalf of a money transmitting service. Guidelines
would be set 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
because of the 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 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, and
others.
CHAIR SUMNER announced that 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 ROBB, Director, Division of Corporations, Business, and
Professional Licensing, Department of Commerce, Community, and
Economic Development, on behalf of the sponsor, House Rules by
request of the governor, introduced HB 85 and gave a PowerPoint
presentation, titled "Universal Temporary Licensure" [hard copy
included in the committee packet]. On slide 2 and slide 3, she
gave a brief overview of universal temporary licensure (UTL) and
what is needed to qualify for it. She explained that the
proposed legislation would allow the department to issue
temporary licenses with similar requirements to those in Alaska,
and this would be to individuals with a license from another
jurisdiction in the U.S. or Canada. If there are no
requirements for a license in a jurisdiction and the person
demonstrates the ability to meet Alaska's licensure
requirements, or if the person has military service or training
in the area of expertise, HB 85 would also allow the department
to issue a temporary license. This individual still would need
any relevant background checks and could not have received any
disciplinary action related to the 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-day 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 to begin working faster
and help reduce the workforce shortage. She advised that the
number of professional licenses needed in the last 10 years has
increased 64 percent. She said that the division has faced a
workforce shortage which has increased the challenges regarding
issuing licenses in a timely manner, although the number of
vacancies in the division is decreasing. Per the proposed
legislation, for professionals looking for permanent licensure,
the division would issue a temporary license automatically to
those who meet the basic qualifications, and instead of
receiving two applications for this person seeking permanent
licensure, the division would process only one application for
this. She added that this would help the division's workload.
4:05:53 PM
MS. ROBB continued to slide 6 through slide 8 and gave an
overview of how UTL would help, and she explained the difference
between UTL and interstate licensure compacts. She stated that
the Alaska State Medical Board and Alaska Board of Nursing have
already made temporary licensure a part of the licensure process
in Alaska. She said that the primary difference between UTL and
compacts is UTL would require an individual to meet Alaska's
current requirements, while compacts would streamline Alaska's
requirements with all other states in the compact. She stated
that 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 each profession. The temporary
licenses allow an individual to continue working while the
permanent license is reviewed by the respective professional
board. In response to a follow-up question, she said that the
biggest time-saving element in the proposed legislation 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. He expressed the belief that this would encourage
people to come to Alaska and not 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.