State Approaches to Cryptocurrencies and Blockchain technology

1. State Approaches to Cryptocurrencies and Blockchain technology

2. Florida State law • Money Transmission: • In Re: Moon, In re: Coinflip • State v. Espinoza • s. 560, Fla. Stat. • Money Laundering • s. 896, Fla. Stat. • Florida Blockchain Task Force- SB 1024

3. In Re: Petition for Declaratory Statement Moon, Inc.,Docket No. 59166, 2015 WL 3776331 (FL Off. Fin. Reg) (2015) • Asking if a bitcoin kiosk network utilizing an existing Florida licensed money services business that will process the bitcoin transactions is money transmission that requires the kiosk operator to obtain a money transmission license. • 1) Customer/user initiates a transaction by asking the MSB employee (“cashier”) for a personal identification number (“PIN”) generated by the MSB/processor's system; • 2) Customer/user gives U.S. dollars to the cashier; • 3) The cashier gives the customer/user a PIN along with a payment receipt; • 4) The customer/user enters the PIN into Moon's website/mobile application; • 5) Upon PIN redemption, Petitioner will instantly announce to the bitcoin network a transfer of bitcoins from an address owned by Petitioner to the customer/user's address. The decentralized bitcoin network ensures that the transfer is executed. The MSB/processor pays Petitioner after the PIN is redeemed. • …its proposed business activities do not fall within Florida's money transmitting licensing statutes because Petitioner does not receive currency, monetary value, or payment instruments for the purpose of transmitting the same. Petitioner merely facilitates the transfer of bitcoin through the use of a licensed money services business.

4. In Re: Petition for Declaratory Statement GPD HOLDINGS LLC d/b/a COINFLIP, Docket No. 91660, (FL Off. Fin. Reg 2018) • Asking if a bitcoin kiosk network utilizing the following flow of funds requires licensure: • "Bitcoin ATMs", used to facilitate transfers of cryptocurrency for cash and cash for cryptocurrency between Petitioner and a consumer. • Petitioner buys cryptocurrency via U.S. dollar wire transfer from a liquidity provider; • Cryptocurrency is moved to Petitioner's wallet that is connected to all its ATMs; • Customer inserts cash and immediately receives cryptocurrency owned by Petitioner; • Cash is then taken to the bank via armored car, and is used to purchase more cryptocurrency via U.S. dollar wire transfer. • Petitioner does not promise to make the cryptocurrency available at a later date, but instead makes it immediately available from its own supply upon receiving cash. • …Because Petitioner's transactions occur directly between Petitioner and a customer with no third parties involved, and Petitioner has complete control over the transactions, Petitioner is never receiving, "currency, monetary value, or payment instruments for the purpose of transmitting the same". Consequently, Petitioner is not acting as a "money transmitter", and licensure for these activities is not required under Chapter 560, Florida Statutes.

5. State of Florida v. Espinoza, Case No. F14-2923 (Fla. 11th Cir. July 22, 2016). • Michell Espinoza sold bitcoin using localbitcoins.com to an undercover agent working with a joint task force of the Secret Service and Miami Beach Police Department. • Sold bitcoin for cash 3x and met up for a large cash sale that was not completed. • Undercover agent told Espinoza he sold stolen credit card numbers, offered to pay with credit card numbers. Espinoza did not transact in credit card numbers. • Espinoza met in a public place for a $30k buy, buyer insinuating that the bitcoins were to be later used for acquiring stolen credit cards, noted that the bank roll offered was fake, and without engaging in the transaction Espinoza was arrested & charged with : • Unlawfully engaging in the business of a money transmitter and/or a payment instrument seller without being registered with the State of Florida in violation of section 560.125, Florida Statutes (2013), • Counts 2 and 3 — money laundering in violation of section 896.101, Florida Statutes (2014).

6. State of Florida v. Espinoza, Case No. F14-2923 (Fla. 11th Cir. July 22, 2016). Trial court dismissed the charges against Espinoza As to Count I, unlicensed money services business: • Was charged with acting as a money transmitter and as a payment instrument seller • A “money transmitter” is defined in part as someone that “received currency, monetary value, or payment instruments for the purpose of transmitting the same.” (Fla. Stat. § 560.103(23).) • The Court ruled that the defendant did not receive currency for the purpose of transmitting it to a third party but instead was seller of property. • Florida law also requires that a money transmitter charge a fee for the transaction in order to be a crime—here, the Court said, the defendant did not charge a fee but simply earned a profit. • “Payment instrument” is defined as “a check, draft, warrant, money order, travelers check, electronic instrument, or other instrument, payment of money, or monetary value whether or not negotiable.” (Fla. Stat. § 560.103(29)). • The Court pointed out that the definition did not expressly include “virtual currency” and that Bitcoin did not “fit into one of the defined categories listed.” • The Court also noted that the IRS treats virtual currency as property, not currency, for federal tax law purposes.

7. State of Florida v. Espinoza, Case No. F14-2923 (Fla. 11th Cir. July 22, 2016). • As to Counts 2 and 3, charging violations of money laundering statutes: • “Monetary instrument” is defined as “coin or currency of the United States or any other country, travelers’ checks, personal checks, bank checks, money orders, investment securities in bearer form or otherwise in such form that title thereto passes upon delivery.” (Fla. Stat. § 896.101(2)(e).) • Similar to the “payment instrument” analysis above, the Court found that virtual currency “is not separately included as a category in that definition, nor does Bitcoin fall under any of the existing categories listed.” • Found no facts to suggest that sale was made in furtherance of an illegal transaction or to promote, incite, or encourage any illegal activity: • “There is unquestionably no evidence that the Defendant did anything wrong, other than sell his Bitcoin to an investigator who wanted to make a case.”

8. State’s Response: • The definition of “monetary instruments,” which itself is used in the definition of “financial transaction,” was amended by the Legislature to include the term “virtual currency,” effective on July 1, 2017. See § 896.101(2)(f), Fla. Stat. (2017). • Appealed trial court dismissal

9. State of Florida v. Espinoza, -- So. 3d --, 2019 WL 361893 (Fla. 3d DCA 2019). • 3rd DCA Reverses and remands: • Expanded definition of “money transmission” under the statute to include selling bitcoin for fiat. • Concluded that Espinoza was a “payment instrument seller” defined as an entity that sells a “payment instrument.” • Looked at the definition of “payment instrument” which includes “payment of money, or monetary value whether or not negotiable.” • looked at the term “monetary value,” which is defined as “a medium of exchange, whether or not redeemable in currency.” • Held that cryptocurrencies are a “medium of exchange” • Money transmission does not require the presence of a third party • Qualified for transmission because he exchanged fiat for bitcoin

10. State of Florida v. Espinoza, -- So. 3d --, 2019 WL 361893 (Fla. 3d DCA 2019). • Arguments against this outcome: • Espinoza did not receive money for the purpose of transmitting it. • He sold property for the purpose of obtaining money. • Irrational expansion of ‘transmission” to the sale of property, which would greatly expand the scope of ch. 560. • OFR has said in a 2014 consumer alert that they do not regulate “[v]irtual currency and the organizations using them “are not regulated by the OFR.” • OFR again in January 2018, OFR released another consumer alert regarding stating that “[cryptocurrencies] are subject to little or no regulation,” which further indicates OFR does not interpret the money transmission law to cover cryptocurrencies. • Court pointed to Coinbase declaratory opinion where Coinbase was required to obtain a license to sell bitcoin, but did not mention that Coinbase also engaged in the receipt and transmission of fiat money as well.

11. State of Florida v. Espinoza, -- So. 3d --, 2019 WL 361893 (Fla. 3d DCA 2019). • Where does this leave us? • Regulator tasked with enforcement has stated they do not believe they regulate these assets. • Declaratory Statements suggest this conduct if operated by a person via machine does not require licensure. • Third District Court of Appeal suggests the same conduct in person does require licensure. • Aka….in need of legislative clarification.

12. New Florida State Law • Florida Blockchain Task Force- SB 1024 • Creates 13-person task force to advise government & prepare a report addressing the following: 1. Opportunities and risks associated with using blockchain and distributed ledger technology for state and local governments. 2. Different types of blockchains, both public and private, and different consensus algorithms. 3. Projects and cases currently under development in other states and local governments, and how these cases could be applied in this state. 4. Ways the Legislature can modify general law to support secure paperless recordkeeping, increase cybersecurity, improve interactions with citizens, and encourage blockchain innovation for businesses in the state. 5. Identifying potential economic incentives for companies investing in blockchain technologies in collaboration with the state. 6. Recommending projects for potential blockchain solutions, including, but not limited to, use cases for state agencies that would improve services for citizens or businesses. 7. Identifying the technical skills necessary to develop blockchain technology and ensuring that instruction in such skills is available at secondary and postsecondary educational institutions in this state.

13. Other State laws: • Recognizing technology • Defining technology • Money Transmission • Securities • Utility Tokens • State tax treatment • Uniform Electronic Transaction Act • Escheatement/unclaimed property act • Study technology • Specialized corporate form • Evidentiary rules • Studying Technology/use of technology • Exempting cryptoassets/technology from taxes • Campaign Finance • Exceptional States: Wyoming, New York New Mexico

14. Recognizing Technology • Arizona Statute § 44-7061 makes signatures, records, and contracts secured through blockchain technology legally valid. "A contract relating to a transaction may not be denied legal effect, validity or enforceability solely because that contract contains a smart contract term.“ • Tennessee law recognizes the legal authority to use blockchain technology and smart contracts in conducting electronic transactions. S.B. 1662, 110th Ge. Ass. 2nd Reg. Sess. (Tenn. 2017). The bill also recognizes smart contracts as having legal power. S.B. 1662, 110th Ge. Ass. 2nd Reg. Sess. (Tenn. 2017).

15. Defining Technology • Arkansas, Arizona, California, Illinois, Iowa, Georgia, Minnesota, Missouri, Montana, Nebraska, Nevada, New Mexico, Oklahoma, Oregon, Rhode Island, South Carolina, Tennessee, Texas, Utah, Vermont, Washington, West Virginia, Wyoming • Bad definition: Ariz. Rev. Stat. Ann §44-7061 (2017) “blockchain distributed ledger technology” is “securely protected with cryptography, immutable, auditable, and [best of all] provides an uncensored truth.” • Bad definition: Nevada Blockchain” means an electronic record of transactions or other data which is: 1. Uniformly ordered; 2. Redundantly maintained or processed by one or more computers or machines to guarantee the consistency or nonrepudiation of the recorded transactions or other data; and 3. Validated by the use of cryptography.

16. Defining “Blockchain” or “Smart Contract” • Bad Definition: Arkansas Act 1061. "Blockchain distributed ledger technology" means technology that uses a distributed, decentralized, shared, and replicated ledger that is (A) Either: (i) Public; or (ii) Private; (B) Either: (i) Permissioned; or (ii) Permissionless; and (C) Contains data that is: (i) Securely protected with cryptography; (ii) Immutable; (iii) Auditable; and (iv) Provides an uncensored truth; "Blockchain technology" means a shared, immutable ledger that facilitates the process of recording one (1) or more transactions and tracking one (1) or more tangible or intangible assets in a business network; “Smart contract" means: (A) Business logic that runs on a blockchain; or (B) A software program that stores rules on a shared and replicated ledger and uses the stored rules for: (i) Negotiating the terms of a contract; (ii) Automatically verifying the contract; and (iii) Executing the terms of a contract. (b) A signature that is secured through blockchain technology shall be considered to be in electronic form and an electronic signature. (c) A record or contract that is secured through blockchain technology shall be considered to be in electronic form and an electronic record. (d)(1) A smart contract shall be considered a commercial contract. (2) A contract that contains a smart contract term and relates to a transaction shall not be denied legal effect, validity, or enforceability.

17. Defining “Blockchain” or “Smart Contract” • Arkansas, Arizona, California, Illinois, Iowa, Georgia, Minnesota, Missouri, Montana, Nebraska, Nevada, New Mexico, Oklahoma, Oregon, Rhode Island, South Carolina, Tennessee, Texas, Utah, Vermont, Washington, West Virginia, Wyoming • Example of perhaps a good better definition: West Virginia “Blockchain” means a digital ledger or database which is chronological, consensus based, decentralized and mathematically verified in nature. • These are dangerous, short sighted, and create more problems than benefits.

18. Money Transmission • Alabama, Colorado, Connecticut, Georgia, Idaho, Virginia, Washington include virtual currency in their Money Transmission Acts and require those who engage in monetary transmission to obtain a license from the state. • Alaska- virtual currency is outside of regulator’s jurisdiction and not subject to State Money Transmission Statute. • Florida- contradiction between 3rd DCA precedent in Espinoza and historical interpretations of 560 and Declaratory Opinions of OFR. Unclear how this will be handled/addressed. • Hawaii has previously classified crypto exchanges as money transmitters but has reversed its classification. Hawaii is now considering a bill to adopt provisions of the Uniform Law Commission's Regulation of Virtual Currency Businesses Act. • Illinois considers transactions solely conducted in virtual currency to be outside the purview of its money transmitter statute, but some transactions of fiat for currency may be within its purview.

19. Money Transmission, continued • Kansas requires those who exchange of virtual currency for sovereign currency through a third-party exchanger to be licensed money transmitters but does not consider virtual currency to be within the scope of its money transmission law. • New Hampshire has amended its Money Transmitter statute (NH St. § 399-G:3) to exempt "persons who engage in the business of selling or issuing payment instruments or stored value solely in the form of convertible virtual currency or receive convertible virtual currency for transactions to another location" from the state's money transmission regulation. • North Carolina has expanded its Money Transmitters Act to define virtual currency traders as money transmitters and requires they obtain a license, address cybersecurity risks. 2017 North Carolina Laws S.L. 2017-102 (H.B. 229). • Pennsylvania Dept of Banking Svcs. published guidance in Jan 2019 clarifying that, generally, virtual currency trading platforms are not money transmitters under state law. Similarly, entities operating virtual currency kiosks, ATMs, and vending machines are not considered money transmitters because "there is no transfer of money to any third party."  • Tennessee does not consider virtual currency to be money under its Money Transmitter Act and therefore, no license is required. Memo, Tenn. Dep't of Fin. Inst., Regulatory Treatment of Virtual Currencies under the Tennessee Money Transmitter Act (Dec. 16, 2015).

20. Money Transmission, continued • Texas first state to release an official position on bitcoin with Memorandum 1037 - no money transmitter's license is required to sell Bitcoin. Bitcoin & other virtual currencies will not be treated as legal money in Texas. Memo, Tx. Dep't of Banking, Regulatory Treatment of Virtual Currencies Under the Texas Money Services Act (April 3, 2014). • Wisconsin at the time of publication. Despite the lack of guidance, the state has refused to issue money transmitter licenses to virtual currency businesses and requires an agreement if a company deals in virtual currency stating that the company will not use virtual currency to transmit money. See the State of Wis. Dep't of Fin. Inst., Sellers of Checks, available at https://www.wdfi.org/ fi/lfs/soc/ (last visited 10/02/2017) • Vermont applies its money transmitter law to virtual currencies, and allows licensees to hold virtual currencies as permsisible. • The Virginia Bureau of Financial Institutions requires companies that deal in virtual currencies to obtain a money transmission license. Va. Code Ann. § 6.2-1900. • Washington includes virtual currency within its definition of money transmission in its Uniform Money Services Act. H.B. 1327, 63rd Leg., Reg. Sess. (Wash. 2013). In July 2017, the state adopted more stringent regulations of virtual currency, which places virtual currency exchange operators under the state's money transmitter rules and requires them to comply with the same licensing requirements as traditional money transmitters. • https://www.carltonfields.com/insights/publications/2018/state-regulations-on-virtual-currency-and-blockchain-technologies

21. Securities Securities: California, Colorado, Delaware, Missouri, Rhode Island, South Carolina, & Wyoming • Permit incorporated entities to track ownership of corporate shares or maintain corporate records via blockchain technology • Must be ale to quickly output into paper form • Permits issuers to offer capital stock in token • Access governance enhancements • In re Dole Food Co., Inc. No. CV 8703-VCL, 2015 WL 5052214 (Del. Ch. Aug. 27, 2015). • - In re Appraisal of Dell Inc. (Dell Continuous Ownership), 2015 WL 4313206 (Del. Ch. July 30, 2015)

22. Securities Enforcement • North American Securities Administrators Association ("NASAA"), which represents state and local securities regulators launched "Operation Cryptosweep" • 40 participating jurisdictions, including Canadian provinces • 70 investigations and 34 pending or completed enforcement actions as of early June 2018. • More than 200 active investigations.

23. Utility Tokens: Recognizing Utility Tokens under circumstances: CO, IA, MT, OK, RI, WY • “Digital tokens” (CO) or “open network tokens” (WY) “utility token” (MT) “a digital unit with specified characteristics, secured through a decentralized ledger or database, exchangeable for goods or services, and capable of being traded or transferred between persons without an intermediary or custodian of value.” Must have primarily a “consumptive purpose.” Typically requires an existing operating system • Exempt from state securities laws. • Limited impact- Incompatible with SEC laws

24. Uniform Electronic Transactions Act • The Uniform Electronic Transactions Act (UETA) enacted to help ensure the validity of electronic contracts and the defensibility of electronic signatures for business, commercial and commercial matters. •  UETA gives states a framework for determining the legality of an electronic signature in both commercial and government transactions. • ESIGN Act is federal UETA is state by state- 47 states have adopted (NY, IL, WA) • States modified UETA to include signatures on a blockchain or smart contract: CT, DE, IA, IL, KY, MN, NV, NY, ND, OH, OK, SC, SD, UT, TN, VT, WA • Problems: • Integrates problematic definitions • If a blockchain as defined doesn’t exist, then doesn’t include any existing blockchain embedded signatures • Amendments are not necessary.

25. Uniform Unclaimed Property Act/Escheatment • The Uniform Disposition of Unclaimed Property Act : a consumer protection law to safeguard the owner’s property and provide a means for reuniting the owner with their property. • State acts as custodian of the property until claimed by the owner. • Goal- to reunite citizens with property. • All states, Guam, USVI, DC, PR all have enacted a version. • Unclaimed property is generally defined as any financial asset that has been left inactive by the owner. • The most common types are savings and checking accounts, un-cashed bank checks, certificates of deposit, and safe deposit box contents. • By law, most accounts become unclaimed when there is no owner contact with the holder or no clientinitiated activity for a specific period of time (typically three to five years) but vary by state and type of property. •  UETA gives states a framework for determining the legality of an electronic signature in both commercial and government transactions. • States modified UUPA to include virtual currency assets: CO, IL, ID, KY, MN, NV, NY, SC, UT, VT, WA • Problems: • How to distinguish long term hold from abandonment • Which types of intermediaries can be reached? • Relies upon intermediaries to identify escheatable property • What’s reasonable notice of escheat? • What about DEX’s?

26. Evidentiary Matters in Litigation • Nevada: "if a law requires a record to be in writing, submission of a blockchain which electronically contains the record satisfies the law" N.R.S. SB 398 § 1. • Vermont: blockchain technology records to be governed under the authentication, admissibility and presumptions requirements of the Vermont Rules of Evidence. Vt. Stat. Ann. tit. 12, § 1913, a fact or record verified through blockchain technology is "authentic" for use in court proceedings. H.B. 868, 2016

27. Study/Work Groups • Florida- Ken Lawson appointed by Chief Financial Officer J. Patronis, Fla. SB 1024. • Colorado- 12 member advisory committee appointed- on their 2nd term • Hawaii’s House Bill 1481 - establish a working group "consisting of representation from the public and private sectors to examine, educate, and promote best practices for enabling blockchain technology to benefit local industries, residents, and the State of Hawaii." H.B. 1481, 29th Leg., Reg. Sess. (Haw. 2017). • New Jersey bills pending that would establish "the New Jersey Blockchain Initiative Task Force to study whether State, county, and municipal governments can benefit from a transition to a blockchain-based system for record keeping and service delivery.“ (N.J. General Assembly (A.B. 3613) & the Senate (S.B. 2297)) • A Virginia Joint House Resolution was introduced that, if enacted, would establish a one-year joint subcommittee consisting of seven legislative and five non-legislative members to study the potential implementation of blockchain in state recordkeeping. H.J.R. 153, 2018 Reg. Sess. (Va. 2018). • In March 2017, the Hawaiian Senate introduced Senate Bill 949 which establishes a Decentralized Virtual Currency Working Group within the state's Department of Commerce and Consumer affairs to study whether virtual currencies should be regulated under the act. • The Vermont Department of Financial Regulation - The bill also calls for a study—due before January 15, 2019—into the technology's use in insurance and banking and how state officials can clear the way for such applications within the state's economy. S.B. 269, 2017–18 Leg., Reg. Sess. (Vt. 2017). • Colorado- on its second state committee.

28. NY’s Bitlicense- the only comprehensive state law governing virtual currency

29. Wyoming passes a slate of crypto focused laws • "Utility Token Bill" exempts "Utility Tokens" from the state's securities laws provided the issued token and its issuer meet the following requirements: • (i) The developer or seller of the token, or the registered agent of the developer or seller, files a notice of intent with the secretary of state[;] • (ii) The purpose of the token is for a consumptive purpose, which shall only be exchangeable for, or provided for the receipt of, goods, services or content, including rights of access to goods, services or content; and • (iii) The developer or seller of the token did not sell the token to the initial buyer as a financial investment. • Under the statute, the part (iii) requirement is only met if: • The developer or seller did not market the token as a financial investment; and either: • (I) The developer or seller of the token reasonably believed that it sold the token to the initial buyer for a consumptive purpose; • (II) The token has a consumptive purpose that is available at the time of sale and can be used at or near the time of sale for use for a consumptive purpose; • (III) If the token does not have a consumptive purpose available at the time of sale, the initial buyer of the token is prevented from reselling the token until the token is available for use for a consumptive purpose; or • (IV) The developer or seller takes other reasonable precautions to prevent buyers from purchasing the token as a financial investment. • Authorizes corporations to create Blockchains to store corporate records, including authorizing share ledgers to maintain records by crypto public keys; • Exempts virtual currency from its Money Transmitter Act • Exempts cryptocurrencies from state property taxes.

30. Wyoming passes a slate of crypto focused laws, part 2 • Created a Blockchain Task Force meant to identify governance issues related to blockchain technology. • Amended its Business Corporations Act to permit the creation of “Series LLCs.” • Recognizes direct property rights for individual owners of digital assets of all types (virtual currencies, digital securities and utility tokens) and applies the super-negotiability rules of commercial law to virtual currencies—which foster their liquidity—by applying the very same rules that apply to money.; • Creates a fintech sandbox to provide regulatory relief to financial innovators from existing laws for up to 3 years. • Authorizes a new type of state-chartered depository institution to provide basic banking services to blockchain and other businesses. The bank is required to have 100% reserves, cannot lend, is for business depositors only, and FDIC insurance is optional. Such banks could be operating as soon as March 31, 2020; • Authorizes the first true “qualified custodian” for digital assets which is a bank. Wyoming banks can start such operations as soon as September 1, 2019. Will permit direct ownership, with custodian taking possession pursuant to a bailment.

31. New Mexico HB 649- Proposed “ICO license” • “Internet Business Development & Innovations” • Defines "cryptovalue“: tokens, coins or cryptocurrencies that are math-based, decentralized and convertible virtual currencies, protected by cryptography, and that rely on cryptographic techniques to achieve validity consensus but that are neither issued nor guaranteed by any public authority; do not have the legal status of fiat currency; and are accepted or used on a voluntary basis • New Licensure requirement distinct from its MSB licensure. • $100 fee. • Must include on its board a licensed NM attorney • Must have an attorney as registered agent for process in NM • License doesn't permit not authorize the licensee to transact equity sales engage in portfolio management investment, long or short sales or margin trading or engage in other traditional stock market exchange functions." • Expressly bars licensee from issuing its own capital stock via cryptovalue • "may issue creative and innovative" cryptovalue, w/o reg /licensing as a NM security • Any issuances by a licensee must be marked "This cryptovalue has not been examined, regulated or endorsed by the State of New Mexico. As such, any purchaser hereof understands and accepts the potentially high risk associated with this product.” • "Funds generated by a [licensed cryptovalue exchange] shall be kept in a financial institution doing business in New Mexico, which institution is either state or federally chartered. A financial institution chartered in New Mexico is expressly permitted to accept such deposits.“ • Licensee must be incorporated in NM.

32. New Corporate Form • On May 30, 2018, Governor Phil Scott signed S.B. 269, which allowed for the creation of so-called "blockchain-based limited liability companies." S.B. 269, 2017–18 Leg., Reg. Sess. (Vt. 2017). The bill describes these businesses as "limited liability company[ies] organized … for the purpose of operating a business that utilizes blockchain technology for a material portion of its business activities." S.B. 269, 2017–18 Leg., Reg. Sess. (Vt. 2017). In order to set up a blockchain-based company, applicants must "specify whether the decentralized consensus ledger or database utilized or enabled by the BBLLC will be fully decentralized or partially decentralized and whether such ledger or database will be fully or partially public or private." S.B. 269, 2017–18 Leg., Reg. Sess. (Vt. 2017).

33. Miscellaneous • Cal. Stat. § 320.6, which makes it unlawful to sell or exchange raffle ticket for any kind of cryptocurrency • In February 2018, the Illinois House introduced the Blockchain Technology Act. H.B. 5553, 100th Gen. Ass. 2nd Reg. Sess. (Ill. 2018) which prohibits local governments from imposing taxes on the use of blockchain, from requiring any person or entity to obtain a permit to use blockchain technology, or from imposing any other requirement relating to the use of blockchain. H.B. 5553, 100th Gen. Ass. 2nd Reg. Sess. (Ill. 2018). • Arizona Statute § 13-3122, and Missouri (proposed a bill) makes it illegal to use blockchain to store or track firearm owner data in the state. • Montana is the first government to take a financial stake in a Bitcoin mining operation when it granted Project Spokane, LLC, a data center that provides blockchain security services for the Bitcoin network, a grant of $416,000. • New Jersey recently enacted statute that expressly authorizes an estate's executor to manage digital assets, including virtual currencies, of a decedent. N.J.S.A. 3B: 14-61.1.

34. Miscellaneous • Ohio has amended the state's Liquor Control Law to ban on the use of virtual currencies for the purchase of alcohol. • Oklahoma revised its UCC to indicate that (a) Bitcoin transferees are not afforded the same protections as those afforded to the transferees of money. Okla. Stat. Ann. § 1-9-332. and (b) that a seller who accepts bitcoin does not take the cryptocurrency free of an existing security interest. Okla. Stat. Ann. § 1-9-332. • On April 9, 2018, Governor Haslam signed Tennessee Senate Bill S.B. 2508, which prohibits trustees of any defined contribution plan or related investment vehicle established as a health benefit by the state insurance company from investing in any cryptocurrency. S.B. 2508, 110th Gen. Ass. 2nd Reg. Sess. (Tenn. 2017). • On May 30, 2018, Governor Phil Scott signed S.B. 269, which allowed for the creation of so-called "blockchain-based limited liability companies." S.B. 269, 2017–18 Leg., Reg. Sess. (Vt. 2017). The bill describes these businesses as "limited liability company[ies] organized … for the purpose of operating a business that utilizes blockchain technology for a material portion of its business activities." S.B. 269, 2017–18 Leg., Reg. Sess. (Vt. 2017). In order to set up a blockchain-based company, applicants must "specify whether the decentralized consensus ledger or database utilized or enabled by the BBLLC will be fully decentralized or partially decentralized and whether such ledger or database will be fully or partially public or private." S.B. 269, 2017–18 Leg., Reg. Sess. (Vt. 2017).