Blockchain and cryptocurrency firms in Utah, United States may soon benefit if a new bill proposed to the state senate succeeds. The bill seeks to except blockchain firms from being classified under money transmitters and hence be free from the requirements of the Money Transmitter Act.
The bill, Senate Bill 213 (S.B.213) titled “Blockchain Technology Act” authored by Republican senator Daniel Hemmert was proposed to the state Senate last week.
“This bill defines and clarifies terms related to blockchain technology…exempts a person who facilitates the creation, exchange, or sale of certain blockchain technology-related products from Title 7, Chapter 25 Money Transmitter Act”
The bill is currently with the Senate committee on Transportation, Public Utilities, Energy, and Technology.
The Bill Seeks to create Blockchain-focused task Force
S.B.213, if assented will lead to the creation of a legislative task force known as “Blockchain Pilot Project Evaluation Task Force.” The group, according to the document will be tasked with responsibilities towards blockchain legislation in the State including studying the technology and making recommendations to the government.
The committee which will be composed of 12 members will first study the potential of the technology in government services. It will then review the current uses of blockchain technology by other states and countries and recommend a blockchain pilot for Utah.
Following the pilot, the task force will review commercial applications of blockchain technology for future economic development in the state and submit its report to the Senate Committee on Business and Labor as well as the Legislative Management Committee.
The Challenge of Money Transmitters
The Money Transmitter Act adds some added requirements for financial service providers directly involved in money transmission which S.B.213 defines as:
“the sale or issuance of a payment instrument or engaging in the business of receiving money for transmission or transmitting money within the United States or to locations abroad by any and all means, including payment instrument, wire, facsimile, or electronic transfer”
The bill concludes that “‘Money transmission’ does not include a blockchain token.”
As reported, Coinbase exchange has restricted some of its services from residents living in New York which has a strict policy for money transmitter license and Bitcoin License (BitLicense). Though the San Francisco-based exchange did not give any official reason for the limitation, enthusiasts believe it has to do with the policy.
In Pennsylvania, however, regulators moved to ease the burden for blockchain and cryptocurrency operators. As reported in January, Pennsylvania’s Department of Banking and Securities (DoBS) clarified that that crypto exchanges and crypto service providers do not require a money transmission license.
Utah could follow Pennsylvania’s cue but it could easily go the other way. North Carolina updated its Money Transmitters Act in 2016 to definitively include crypto-related service providers. This decision may be reviewed in the light of a better understanding of cryptocurrency following the heightened interest in 2017.