2019 -- H 5595

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LC000940

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2019

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A N   A C T

RELATING TO CORPORATIONS, ASSOCIATIONS, AND PARTNERSHIPS - RHODE

ISLAND UNIFORM SECURITIES ACT

     Introduced By: Representatives Place, Nardone, Roberts, Chippendale, and Lyle

     Date Introduced: February 27, 2019

     Referred To: House Finance

     It is enacted by the General Assembly as follows:

     SECTION 1. Chapter 7-11 of the General Laws entitled "Rhode Island Uniform

Securities Act" is hereby amended by adding thereto the following section:

     7-11-405. Open blockchain token exemption.

     (a) Except as otherwise provided by subsection (c) of this section, a developer or seller of

an open blockchain token shall not be deemed the issuer of a security and shall not be subject to

the provisions of chapter 7 of title 11 if all of the following are met:

     (1) 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, as specified in subsection (d) of this section;

     (2) 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

     (3) The developer or seller of the token did not sell the token to the initial buyer as a

financial investment. This subsection shall only be satisfied if:

     (i) The developer or seller did not market the token as a financial investment; and

     (ii) At least one of the following is true:

     (A) The developer or seller of the token reasonably believed that it sold the token to the

initial buyer for a consumptive purpose;

     (B) 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;

     (C) 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

     (D) The developer or seller takes other reasonable precautions to prevent buyers from

purchasing the token as a financial investment.

     (b) Except as otherwise provided by subsection (c) of this section, a person who

facilitates the exchange of an open blockchain token shall not be deemed a broker-dealer or a

person who otherwise deals in securities under this chapter and shall not be subject to the

provisions of this chapter if all of the following are met:

     (1) The person, or the registered agent of the person, files a notice of intent with the

secretary of state, as specified in subsection (d) of this section;

     (2) The person has a reasonable and good faith belief that a token subject to exchange

conforms to the requirements of subsections (a)(1), (2) and (3) of this section; and

     (3) The person takes reasonably prompt action to terminate the exchange of a token that

does not conform to the requirements of this subsection.

     (c) Notwithstanding any other provision of law, a developer, seller or a person who

facilitates the exchange of an open blockchain token is subject to the provisions of §§7-11-502

through 7-11-608 only to the extent necessary to carry out those sections. The secretary of state

shall have the authority to determine compliance with the provisions of this section, including

whether a person qualifies for the exemptions set forth in this section.

     (d) A developer, seller or a person who facilitates the exchange of an open blockchain

token, or the registered agent of the applicable person, shall electronically file a notice of intent

with the secretary of state before the person shall qualify for an exemption under this section. The

notice of intent shall contain the name of the person acting as a developer, seller or facilitator, the

contact information of the person or the registered agent of the person and specify whether the

person will be acting as a developer, seller or facilitator. A secure form shall be made available

by the office of the secretary of state on its Internet website for this purpose.

     (e) As used in this section, "open blockchain token" means a digital unit which is:

     (1) Created:

     (i) In response to the verification or collection of a specified number of transactions

relating to a digital ledger or database;

     (ii) By deploying computer code to a blockchain network that allows for the creation of

digital tokens or other units; or

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     (iii) Using any combination of the methods specified in subsections (e)(1) and (2) of this

section;

     (2) Recorded in a digital ledger or database which is chronological, consensus-based,

decentralized and mathematically verified in nature, especially relating to the supply of units and

their distribution; and

     (3) Capable of being traded or transferred between persons without an intermediary or

custodian of value.

     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO CORPORATIONS, ASSOCIATIONS, AND PARTNERSHIPS - RHODE

ISLAND UNIFORM SECURITIES ACT

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     This act would exempt a developer or seller of an open blockchain token from the

provisions of the Rhode Island Uniform Securities Act. A blockchain is a tool utilized in digital

currency.

     This act would take effect upon passage.

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LC000940

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