2019 -- H 5776

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LC001438

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2019

____________

A N   A C T

RELATING TO STATE AFFAIRS AND GOVERNMENT - DEPARTMENT OF BUSINESS

REGULATION - VIRTUAL CURRENCY

     Introduced By: Representative Stephen R. Ucci

     Date Introduced: February 28, 2019

     Referred To: House Finance

     It is enacted by the General Assembly as follows:

     SECTION 1. Title 42 of the General Laws entitled "STATE AFFAIRS AND

GOVERNMENT" is hereby amended by adding thereto the following chapter:

CHAPTER 14.7

DEPARTMENT OF BUSINESS REGULATION - VIRTUAL CURRENCY

     42-14.7-1. Short title.

     This chapter shall be known and may be cited as the "Digital Assets Business Act."

     42-14.7-2. Definitions.

     As used in this chapter, the following terms shall have the following meanings:

     (1) "Applicant" means a person that applies for a license pursuant to this chapter.

     (2) "Bank" means a federally chartered or state-chartered depository institution or holder

of charter granted by the office of the comptroller of the currency to a person engaged in the

business of banking other than deposit taking. The term does not include:

     (i) An industrial loan company, state-chartered trust company, or a limited purpose trust

company unless the department has authorized the company to engage in virtual currency

business activity; or

     (ii) A trust company or limited-purpose trust company chartered by a state with which

this state does not have a reciprocity agreement governing trust-company activities.

     (3) "Control" means:

     (i) When used in reference to a transaction or relationship involving virtual currency,

power to execute unilaterally or prevent indefinitely a virtual currency transaction; and

     (ii) When used in reference to a person, the direct or indirect power to direct the

management, operations, or policies of the person through legal or beneficial ownership of voting

power of the person or under a contract, arrangement, or understanding.

     (4) "Department" means the department of business regulation.

     (5) "Exchange", used as a verb, means to assume control of virtual currency from or on

behalf of a resident, at least momentarily, to sell, trade, or convert:

     (i) Virtual currency for legal tender, bank credit, or one or more forms of virtual

currency; or

     (ii) Legal tender or bank credit for one or more forms of virtual currency.

     (6) "Executive officer" means an individual who is a director, officer, manager, managing

member, partner, or trustee of a person that is not an individual.

     (7) "Insolvent" means:

     (i) Having generally ceased to pay debts in the ordinary course of business other than as a

result of a bona fide dispute;

     (ii) Being unable to pay debts as they become due; or

     (iii) Being insolvent within the meaning of federal bankruptcy law.

     (8) "Legal tender" means a medium of exchange or unit of value, including the coin or

paper money of the United States, issued by the United States.

     (9) "Licensee" means a person licensed under this chapter.

     (10) "Person" means an individual, partnership, estate, business or nonprofit entity,

public corporation, government or governmental subdivision, agency, or instrumentality or other

legal entity.

     (11) "Reciprocity agreement" means an arrangement between the department and the

appropriate licensing agency of another state which permits a licensee operating under a license

granted by the other state to engage in virtual currency business activity with or on behalf of a

resident in compliance with the provisions of this chapter.

     (12) "Record" means information that is inscribed on a tangible medium or that is stored

in an electronic or other medium and is retrievable in perceivable form.

     (13) "Registrant" means a person that has been licensed with this state to conduct virtual

currency business activity.

     (14) "Registration" means to provide the necessary application, information

documentation and fees for issuance of a license by the department pursuant to the provisions of

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this chapter.

     (15) "Registry" means the Nationwide Multistate Licensing System and Registry.

     (16) "Resident" means:

     (i) A person that:

     (A) Is domiciled in this state;

     (B) Is physically located in this state for more than one hundred eighty-three (183) days

of the previous three hundred sixty-five (365) days; or

     (C) Has a place of business in this state; and

     (ii) Includes a legal representative of a person that satisfies subsection (i) of this section.

     (17) "Responsible individual" means an individual who has managerial authority with

respect to a licensee's or registrant's virtual currency business activity with or on behalf of a

resident.

     (18) "Sign" means, with present intent to authenticate or adopt a record:

     (i) To execute or adopt a tangible symbol; or

     (ii) To attach to or logically associate with the record an electronic symbol, sound, or

process.

     (19) "State" means a state of the United States, the District of Columbia, Puerto Rico, the

United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of

the United States.

     (20) "Store", except in the phrase store of value, means to maintain control of virtual

currency on behalf of a resident by a person other than the resident. Storage and storing have

corresponding meanings.

     (21) "Transfer" means to assume control of virtual currency from or on behalf of a

resident and to:

     (i) Credit the virtual currency to the account of another person;

     (ii) Move the virtual currency from one account of a resident to another account of the

same resident; or

     (iii) Relinquish control of virtual currency to another person.

     (22) "U.S. dollar equivalent of virtual currency" means the equivalent value of a

particular virtual currency in United States dollars shown on a virtual currency exchange based in

the United States for a particular date or period.

     (23) "Virtual currency" means:

     (i) A digital representation of value that:

     (A) Is used as a medium of exchange, unit of account, or store of value; and

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     (B) Is not legal tender, whether or not denominated in legal tender; and

     (ii) Does not include:

     (A) A transaction in which a merchant grants, as part of an affinity or rewards program,

value that cannot be taken from or exchanged with the merchant for legal tender, bank credit, or

virtual currency; or

     (B) A digital representation of value issued by or on behalf of a publisher and used solely

within an online game, game platform, or family of games sold by the same publisher or offered

on the same game platform.

     (24) "Virtual currency administration" means issuing virtual currency with the authority

to redeem the currency for legal tender, bank credit, or other virtual currency.

     (25) "Virtual currency business activity" means:

     (i) Exchanging, transferring, or storing virtual currency or engaging in virtual currency

administration, whether directly or through an agreement with a virtual currency control-services

vendor;

     (ii) Holding electronic precious metals or electronic certificates representing interests in

precious metals on behalf of another person or issuing shares or electronic certificates

representing interests in precious metals; or

     (iii) Exchanging one or more digital representations of value used within one or more

online games, game platforms, or family of games for:

     (A) Virtual currency offered by or on behalf of the same publisher from which the

original digital representation of value was received; or

     (B) Legal tender or bank credit outside the online game, game platform, or family of

games offered by or on behalf of the same publisher from which the original digital

representation of value was received.

     (26) "Virtual currency control-services vendor" means a person that has control of virtual

currency solely under an agreement with a person that, on behalf of another person, assumes

control of virtual currency.

     42-14.7-3. Virtual-currency business activity.

     (a) Except as otherwise provided in subsection (b) or (c) of this section the provisions of

this chapter govern the virtual currency business activity of a person, wherever located, that

engages in or holds itself out as engaging in the activity with or on behalf of a resident.

     (b) This chapter does not apply to the exchange, transfer, or storage of virtual currency or

to virtual currency administration to the extent the Electronic Fund Transfer Act, 15 U.S.C. 1693

to 1693r, the Securities Exchange Act of 1934, 15 U.S.C. 78a to 78oo, the Commodity Exchange

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Act, 7 U.S.C. 1 to 27f, as such sections existed on the effective date of this chapter, and does not

apply to activity by:

     (1) The United States, a state, political subdivision of a state, agency or instrumentality of

federal, state, or local government, or a foreign government or a subdivision, department, agency

or instrumentality of a foreign government;

     (2) A bank;

     (3) A person engaged in money transmission to a federal or state governmental

subdivision, department or agency:

     (4) A person whose participation in a payment system is limited to providing processing,

clearing, or performing settlement services solely for transactions between or among persons that

are exempt from the licensing requirements of this chapter;

     (5) A person engaged in the business of dealing in foreign exchange to the extent the

person’s activity meets the definition in 31 C.F.R. 1010.605(f)(1)(iv), as such rule existed on the

effective date of this chapter;

     (6) A person that:

     (i) Contributes only connectivity software or computing power to a decentralized virtual

currency, or to a protocol governing transfer of the digital representation of value;

     (ii) Provides only data storage or security services for a business engaged in virtual

currency business activity and does not otherwise engage in virtual currency business activity on

behalf of another person; or

     (iii) Provides only to a person otherwise exempt from this chapter virtual currency as one

or more enterprise solutions used solely among each other and has no agreement or relationship

with a resident that is an end-user of virtual currency;

     (7) A person using virtual currency, including creating, investing, buying or selling, or

obtaining virtual currency as payment for the purchase or sale of goods or services, solely:

     (i) On his or her own behalf;

     (ii) For personal, family, or household purposes; or

     (iii) For academic purposes;

     (8) A person whose virtual currency business activity with or on behalf of residents is

reasonably expected to be valued, in the aggregate, on an annual basis at five thousand dollars

($5,000) or less, measured by the U.S. dollar equivalent of virtual currency;

     (9) An attorney to the extent of providing escrow services to a resident;

     (10) A title insurance company to the extent of providing escrow services to a resident;

     (11) A securities intermediary, as defined in § 6A-8-102 or a commodity intermediary, as

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defined in § 6A-9-102 that:

     (i) Does not engage in the ordinary course of business in virtual currency business

activity with or on behalf of a resident in addition to maintaining securities accounts or

commodities accounts and is regulated as a securities intermediary or commodity intermediary

under federal law, law of this state other than this chapter or law of another state; and

     (ii) Affords a resident protections comparable to those set forth in § 42-14.7-28 of this

section;

     (12) A secured creditor pursuant to chapter 9 of title 6A or under Article 9, Uniform

Commercial Code, of any state or a creditor with a judicial lien or lien arising by operation of law

on collateral that is virtual currency, if the virtual currency business activity of the creditor is

limited to enforcement of the security interest in compliance with Article 9, Uniform Commercial

Code, or lien in compliance with the law applicable to the lien;

     (13) A virtual currency control-services vendor; or

     (14) A person that:

     (i) Does not receive compensation from a resident for:

     (A) Providing virtual currency products or services; or

     (B) Conducting virtual currency business activity; or

     (ii) Is engaged in testing products or services with the person's own funds.

     (c) The department may determine that a person or class of persons, given facts particular

to the person or class, should be exempt from the provisions of this chapter, whether or not the

person or class is covered by requirements imposed under federal law on a money-service

business.

     42-14.7-4. License requirement.

     A person may not engage in virtual currency business activity, or hold themselves out as

being able to engage in virtual currency business activity, with or on behalf of a resident, unless

the person is:

     (1) Licensed in this state by the department pursuant to the terms of this chapter;

     (2) Licensed in another state to conduct virtual currency business activity by a state with

which this state has a reciprocity agreement and has qualified under § 14-14.7-6;

     (3) Registered with the department and operating in compliance with § 42-14.7-10; or

     (4) Exempt from licensure under § 42-14.7-3.

     42-14.7-5. Standard application for license.

     (a) Except as otherwise provided an application for a license:

     (1) Must be made in a form and medium prescribed by the department;

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     (2) Except as otherwise provided in subsection (b) of this section, must provide the

following information relevant to the applicant's proposed virtual currency business activity:

     (i) The legal name of the applicant, each current or proposed business United States

Postal Service address of the applicant, and any fictitious or trade name the applicant uses or

plans to use in conducting its virtual currency business activity with or on behalf of a resident;

     (ii) The legal name, any former or fictitious name, and the residential and business United

States Postal Service address of each executive officer and responsible individual of the applicant,

and each person that has control of the applicant;

     (iii) A description of the current and former business of the applicant for the five (5)

years before the application is submitted or if the business has operated for less than five (5)

years, for the time the business has operated, including its products and services, associated

website addresses and social media pages, principal place of business, projected user base, and

specific marketing targets;

     (iv) The name, United States Postal Service address, and telephone number of a person

that manages each server the applicant expects to use in conducting its virtual currency business

activity with or on behalf of a resident and a copy of any agreement with that person;

     (v) A list of:

     (A) Each money-service or money-transmitter license the applicant holds in another state;

     (B) The date the license expires; and

     (C) Any license revocation, license suspension, or other disciplinary action taken against

the applicant in another state and any license applications rejected by another state;

     (vi) A list of any criminal conviction, deferred prosecution agreement, and pending

criminal proceeding in any jurisdiction against:

     (A) The applicant;

     (B) Each executive officer of the applicant;

     (C) Each responsible individual of the applicant;

     (D) Each person that has control over the applicant; and

     (E) Each person over which the applicant has control;

     (vii) A list of any litigation, arbitration, or administrative proceeding in any jurisdiction

in which the applicant, or an executive officer or a responsible individual of the applicant, has

been a party for the five (5) years before the application is submitted, determined to be material in

accordance with generally accepted accounting principles and, to the extent the applicant would

be required to disclose the litigation, arbitration, or administrative proceeding in the applicant’s

audited financial statements, reports to equity owners, and similar statements or reports;

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     (viii) A list of any bankruptcy or receivership proceeding in any jurisdiction for the ten

(10) years before the application is submitted in which any of the following was a debtor:

     (A) The applicant;

     (B) An executive officer of the applicant;

     (C) A responsible individual of the applicant;

     (D) A person that has control over the applicant; and

     (E) A person over which the applicant has control;

     (ix) The name and United States Postal Service address of each bank in which the

applicant plans to deposit funds obtained by its virtual currency business activity;

     (x) The source of funds and credit to be used by the applicant to conduct virtual currency

business activity with or on behalf of a resident and documentation demonstrating that the

applicant has the net worth and reserves required by § 42-14.7-7;

     (xi) The United States Postal Service address and electronic mail address to which

communications from the department may be sent;

     (xii) The name, United States Postal Service address, and electronic mail address of the

registered agent of the applicant in this state;

     (xiii) A copy of the certificate, or a detailed summary acceptable to the department, of

coverage for each liability, casualty, business-interruption, or cyber security insurance policy

maintained by the applicant for itself, an executive officer, a responsible individual, or the

applicant's users;

     (xiv) If applicable, the date on which and the state where the applicant is formed and a

copy of a current certificate of good standing issued by that state;

     (xv) If a person has control of the applicant and the person's equity interests are publicly

traded in the United States, a copy of the audited financial statement of the person for the most

recent fiscal year or most recent report of the person filed under section 13 of the Securities

Exchange Act of 1934, 15 U.S.C. 78m, as such section existed on the effective date of this

chapter;

     (xvi) If a person has control of the applicant and the person's equity interests are publicly

traded outside the United States, a copy of the audited financial statement of the person for the

most recent fiscal year of the person or a copy of the most recent documentation similar to that

required in subsection (a)(2)(xv) of this section filed with the foreign regulator in the domicile of

the person;

     (xvii) If the applicant is a partnership or a member-managed limited-liability company,

the names and United States Postal Service addresses of general partners or members;

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     (xviii) If the applicant is required to register with the Financial Crimes Enforcement

Network of the United States Department of the Treasury as a money-service business, evidence

of the registration;

     (xix) A set of fingerprints for each executive officer and responsible individual of the

applicant;

     (xx) If available, for each executive officer and responsible individual of the applicant,

for the five (5) years before the application is submitted:

     (A) Employment history; and

     (B) History of any investigation of the individual or legal proceeding to which the

individual was a party;

     (xxi) The plans through which the applicant will meet its obligations under §§ 42-14.7-29

and 42-14.7-30; and

     (xxii) Other information the department reasonably requires by rule or regulation; and

     (3) Must be accompanied by a nonrefundable fee in the amount of one thousand dollars

($1,000).

     (b) For good cause, the department may waive a requirement of subsection (a) of this

section or permit the applicant to submit other information instead of the required information.

     (c) An application for a license under this section is not complete until the department

receives all information required by this chapter and completes its investigation under subsection

(d) of this section.

     (d) On receipt of a completed application:

     (1) The department shall investigate:

     (i) The financial condition and responsibility of the applicant;

     (ii) The relevant financial and business experience, character, and general fitness of the

applicant; and

     (iii) The competence, experience, character, and general fitness of each executive officer,

each responsible individual, and any person that has control of the applicant; and

     (2) The department may conduct an investigation of the business premises of an

applicant.

     (e) Not later than thirty (30) days after an application is complete, the department shall

send the applicant notice of its decision to approve, conditionally approve, or deny the

application. If the department does not send the applicant notice of its decision within thirty-one

(31) days of completion of the application, the application is deemed denied. If the department

does not receive notice from the applicant that the applicant accepts conditions specified by the

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department within thirty-one (31) days following the department’s notice of the conditions, the

application is deemed denied.

     (f) A license takes effect on the later of:

     (1) The date on which the department issues the license; or

     (2) The date the licensee provides the security required by § 42-14.7-7.

     (g) An applicant shall pay the reasonable costs of the department's investigation under

this section.

     42-14.7-6. Reciprocity license.

     (a) Instead of an application required by § 14-14.7-5, a person licensed by another state

which has a reciprocity agreement with Rhode Island may file with the department a reciprocity

license application in compliance with regulations promulgated by the department.

     (b) When an application under this section is filed the applicant shall submit to the

department:

     (1) A certification of license history from the agency responsible for issuing a license in

each state in which the applicant has been licensed to conduct virtual currency business activity;

     (2) A nonrefundable reciprocal licensing application fee in the amount of one thousand

dollars ($1,000);

     (3) Documentation demonstrating that the applicant complies with the security and net

worth reserve requirements of § 42-14.7-7; and

     (4) A certification signed by an executive officer of the applicant affirming that the

applicant will conduct its virtual currency business activity with or on behalf of a resident in

compliance with the provisions of this chapter and the implementing regulations.

     (c) The department may issue a reciprocity license to conduct virtual currency business

activity by an applicant that complies with this section.

     42-14.7-7. Satisfactory security.

     (a) Before a license is issued under this chapter:

     (1) An applicant must deposit with the department funds or investment property, a letter

of credit, a surety bond, or other security satisfactory to the department that:

     (i) Secures the applicant's faithful performance of its duties under this chapter; and

     (ii) Is in an amount the department specifies based on the nature and extent of risks in the

applicant's virtual currency business model;

     (2) The department may not require a surety bond as security under this chapter unless a

surety bond is generally available in the state at a commercially reasonable cost;

     (3) Security deposited under this section must be payable to the state of Rhode Island for

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the benefit of a claim against the licensee on account of the licensee’s virtual currency business

activity with or on behalf of a resident;

     (4) Security deposited under this section must cover claims for the period the department

specifies by rule or regulation and for an additional period the department specifies after the

licensee ceases to engage in virtual currency business activity with or on behalf of a resident;

     (5) For good cause, the department may require the licensee to increase the amount of

security deposited under this section, and the licensee shall deposit the additional security not

later than fifteen (15) days after the licensee receives notice in a record of the required increase;

     (6) For good cause, the department may permit a licensee to substitute or deposit an

alternate form of security satisfactory to the department if the licensee at all times complies with

this section;

     (7) A claimant does not have a direct right to recover against security deposited under

this section; and

     (8) Only the department may recover against the security, and the department may retain

the recovery for no longer than five (5) years and may process claims and distribute recoveries to

claimants in accordance with rules and regulations adopted and promulgated by the department.

     (b) In addition to the security required under subsection (a) of this section, an applicant at

the time of the application for a license under this chapter, shall submit to the department

evidence of and maintain after issuance of a license:

     (1) A minimum net worth of twenty-five thousand dollars ($25,000); and

     (2) Sufficient unencumbered reserves for winding down the licensee's operations as

agreed to by the department considering the nature and size of expected virtual currency business

activity with or on behalf of residents.

     (c) A licensee may include in its calculation of net worth virtual currency, measured by

the average value of the virtual currency in U.S. dollar equivalent over the prior six (6) months,

other than the virtual currency over which it has control for a resident entitled to the protections

under § 42-14.7-28.

     (d) For good cause, the department may require a licensee to increase the net worth or

reserves required under this section. The licensee shall submit to the department evidence that it

has the additional net worth or reserves not later than fifteen (15) days after the licensee receives

notice in a record of the required increase.

     42-14.7-8. Issuance of license.

     (a) Absent good cause, the department shall issue a license to an applicant if the applicant

complies with the provisions of this chapter and pays the costs of the investigation and the initial

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licensee fee under § 42-14.7-5.

     (b) An applicant may appeal a denial of its application under §§ 42-14.7-5 or 42-14.7-6

under chapter 35 of title 42 the (administrative procedures act) not later than thirty (30) days

after:

     (1) The department notifies the applicant of the denial; or

     (2) The application is deemed denied.

     42-14.7-9. License renewal.

     (a) Subject to subsection (g) of this section, not later than fifteen (15) days before the

anniversary date of issuance of its license under this chapter, a licensee may apply for renewal of

the license by:

     (1) Paying a renewal fee of one thousand dollars ($1,000); and

     (2) Submitting to the department a renewal report under subsection (b) of this section.

     (b) A renewal report required by subsection (a)(2) of this section must be submitted in a

form and medium prescribed by the department. The report must contain:

     (1) A copy of the licensee's most recent:

     (i) Reviewed annual financial statement if the licensee's virtual currency business activity

in this state was fifty thousand dollars ($50,000) or less for the fiscal year ending before the

anniversary date of issuance of its license under the act; or

     (ii) Audited annual financial statement if the licensee's virtual currency business activity

in this state amounted to more than fifty thousand dollars ($50,000) for the fiscal year ending

before the anniversary date;

     (2) If a person other than an individual has control of the licensee, a copy of the person's

most recent:

     (i) Reviewed annual financial statement if the person's gross revenue was fifty thousand

dollars ($50,000) or less in the previous fiscal year, measured as of the anniversary date of

issuance of its license under this chapter; or

     (ii) Audited consolidated annual financial statement if the person's gross revenue was

more than fifty thousand dollars ($50,000) in the previous fiscal year, measured as of the

anniversary date of issuance of its license under this chapter;

     (3) A description of any:

     (i) Material change in the financial condition of the licensee;

     (ii) Material litigation involving the licensee or an executive officer or responsible

individual of the licensee;

     (iii) License suspension or revocation proceeding commenced, or other action taken,

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involving a license to conduct virtual currency business activity issued by another state on which

reciprocal licensing is based;

     (iv) Federal or state investigation involving the licensee; and

     (v) Data security breach involving the licensee;

     (4) Information or records required by § 42-14.7-17 the licensee has not reported to the

department;

     (5) The number of virtual currency business activity transactions with or on behalf of

residents for the period since, subject to subsection (g) of this section, the later of the date the

license was issued or the date the last renewal report was submitted;

     (6)(i) The amount of U.S. dollar equivalent of virtual currency in the control of the

licensee at, subject to subsection (g) of this section, the end of the last month that ends not later

than thirty (30) days before the date of the renewal report; and

     (ii) Total number of residents for whom the licensee had control of U.S. dollar equivalent

of virtual currency on that date;

     (7) Evidence that the licensee continues to satisfy § 42-14.7-28;

     (8) Evidence that the licensee continues to satisfy § 42-14.7-7;

     (9) A list of each location where the licensee operates its virtual currency business

activity; and

     (10) The name, United States Postal Service address, and telephone number of each

person that manages a server used by the licensee in conducting its virtual currency business

activity with or on behalf of a resident.

     (c) If a licensee does not timely comply with subsection (a) of this section, the

department may use enforcement measures provided under §§ 42-14.7-20 through 42-17.7-25.

Notice or hearing is not required for a suspension or revocation of a license under this chapter for

failure to pay a renewal fee or file a renewal report.

     (d) If the department suspends or revokes a license under the provisions of this chapter

for noncompliance with subsection (a) of this section, the department may end the suspension or

rescind the revocation and notify the licensee of the action if, subject to subsection (g) of this

section, not later than twenty (20) days after the license was suspended or revoked, the licensee:

     (1) Files a renewal report and pays a renewal fee; and

     (2) Pays any penalty assessed under § 42-14.7-23.

     (e) The department shall give prompt notice to a licensee of the lifting of a suspension or

rescission of a revocation after the licensee complies with subsection (d) of this section.

     (f) Suspension or revocation of a license under this section does not invalidate a transfer

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or exchange of virtual currency for or on behalf of a resident made during the suspension or

revocation and does not insulate the licensee from liability.

     (g) For good cause, the department may extend a period under this section.

     (h) The department shall review the renewal of a license issued under § 42-14.7-6 to

ensure that the state that issued the original license has not suspended, revoked, or limited the

license.

     (i) A licensee that does not comply with this section shall cease operations with or on

behalf of a resident on or before the anniversary date of issuance of its license under this chapter.

     (j) A licensee shall pay the reasonable and necessary costs of the department's

investigation under this section.

     42-14.7-10. Limited volume - Short-form license.

     (a) A person whose volume of virtual currency business activity in U.S. dollar equivalent

of virtual currency will not exceed thirty-five thousand dollars ($35,000) annually may engage in

virtual currency business activity with or on behalf of a resident under a short-form license under

rules promulgated by the department without first obtaining a standard license under § 42-14.7-5

if the person:

     (1) Files with the department a notice in the form and medium prescribed by the

department of its intention to engage in virtual currency business activity with or on behalf of a

resident;

     (2) Provides the information for an investigation under § 42-14.7-5;

     (3) States the anticipated virtual currency business activity for its next fiscal quarter;

     (4) Pays the department a registration fee in the amount of three hundred dollars ($300);

     (5) If required to register with the Financial Crimes Enforcement Network of the United

States Department of the Treasury as a money-service business, provides the department evidence

of the registration;

     (6) Provides evidence that the person has policies and procedures to comply with the

Bank Secrecy Act, 31 U.S.C. 5311 et seq., as such act existed on the effective date of this chapter,

and other applicable laws;

     (7) Describes the source of funds and credit to be used by the person to conduct virtual

currency business activity with or on behalf of a resident and provides evidence of and agrees to

maintain the minimum net worth and reserves required by § 42-14.7-7 and sufficient

unencumbered reserves for winding down operations;

     (8) Provides the department with evidence that the person has in place policies and

procedures to comply with the provisions of this chapter; and

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     (9) Provides the department with a copy of its most recent financial statement, whether

reviewed or audited.

     (b) Before the virtual currency business activity of a short-form licensee with or on behalf

of residents exceeds thirty-five thousand dollars ($35,000) annually in U.S. dollar equivalent of

virtual currency, the registrant shall file an application for a standard license under § 42-14.7-5

and may continue to operate after the activity exceeds thirty-five thousand dollars ($35,000)

annually while its application for license is pending.

     (c) For good cause, the department may suspend or revoke a short-form license without a

prior hearing or opportunity to be heard.

     (d) A licensee shall cease all virtual currency business activity with or on behalf of

residents:

     (1) If the department suspends or revokes the registration, one day after the department

sends notice of the suspension or revocation to the licensee in a record by a means reasonably

selected for the notice to be received by the recipient in one day, to the address provided for

receiving communications from the department;

     (2) If the virtual currency business activity of the limited volume short-form licensee with

or on behalf of residents exceeds thirty-five thousand ($35,000) dollars annually in U.S. dollar

equivalent of virtual currency and the licensee has not filed an application for a license under §

42-14.7-5; or

     (3) On the second anniversary date of the registration.

     42-14.7-11. License not transferable.

     A license issued pursuant to this chapter is not transferable or assignable.

     42-14.7-12. Rules and regulations.

     The department may adopt and promulgate rules and regulations to implement the

provisions of this chapter and issue guidance as appropriate.

     42-14.7-13. Examinations.

     (a) The department may conduct an annual examination of a licensee. For good cause, the

department may conduct an additional examination. The department may examine a licensee

without prior notice to the licensee.

     (b) A licensee shall pay the reasonable and necessary costs of an examination under this

section.

     (c) Information obtained during an examination conducted by the department may be

disclosed only as provided in § 42-14.7-15.

     42-14.7-14. Record maintenance.

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     (a) A licensee shall maintain, for all virtual currency business activity with or on behalf

of a resident five (5) years after the date of the activity, a record of:

     (1) Each transaction of the licensee with or on behalf of the resident or for the licensee's

account in this state, including:

     (A) The identity of the resident;

     (B) The form of the transaction;

     (C) The amount, date, and payment instructions given by the resident; and

     (D) The account number, name, and United States Postal Service address of the resident,

and, to the extent feasible, other parties to the transaction;

     (2) The aggregate number of transactions and aggregate value of transactions by the

licensee with or on behalf of the resident and for the licensee's account in this state, expressed in

U.S. dollar equivalent of virtual currency for the previous twelve (12) calendar months;

     (3) Each transaction in which the licensee exchanges one form of virtual currency for

legal tender or another form of virtual currency with or on behalf of the resident;

     (4) A general ledger posted at least monthly that lists all assets, liabilities, capital,

income, and expenses of the licensee;

     (5) Each business-call report the licensee is required to create or provide to the

department;

     (6) Bank statements and bank reconciliation records for the licensee and the name,

account number, and United States Postal Service address of each bank the licensee uses in the

conduct of its virtual currency business activity with or on behalf of the resident;

     (7) A report of any dispute with the resident; and

     (8) A report of any virtual currency business activity transaction with or on behalf of a

resident which the licensee was unable to complete.

     (b) A licensee shall maintain records required by subsection (a) of this section in a form

that enables the department to determine whether the licensee is in compliance with any court

order, and law of this state.

     (c) If a licensee maintains records outside this state that pertain to transactions with or on

behalf of a resident, the licensee shall make the records available to the department not later than

three (3) days after a request, or, on a determination of good cause by the department, at a later

time.

     (d) All records maintained by a licensee are subject to inspection by the department.

     42-14.7-15. Exchange of information.

     (a) Subject to § 42-14.7-16 concerning privacy, consumer financial privacy, data

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protection, privilege, and confidentiality, the department may cooperate, coordinate, jointly

examine, consult, and share records and other information with the appropriate regulatory agency

of another state, a self-regulatory organization, a federal or state regulator of banking or

nondepository providers, or a regulator of a jurisdiction outside the United States, concerning the

affairs and conduct of a licensee in this state.

     (b) The department shall:

     (1) Establish or participate in, with another state that enacts a law substantially similar to

this chapter, a central depository for filings required by law of this state other than the provisions

of this chapter;

     (2) Cooperate in developing and implementing uniform forms for applications and

renewal reports and the conduct of joint administrative proceedings and civil actions;

     (3) Formulate joint rules, regulations, forms, statements of policy, and guidance and

interpretative opinions and releases; and

     (4) Develop common systems and procedures.

     (c) The department may not establish or participate in a central commercial depository

that contains nonpublic personally identifiable information which does not comply with section

502(e)(5) or (8) of the Gramm-Leach-Bliley Act, 15 U.S.C. 6802(e)(5) or (8), as such

subdivisions existed on the effective date of this chapter, or with the Right to Financial Privacy

Act of 1978, 12 U.S.C. 3401 et seq., as such act existed on the effective date of this chapter.

     (d) In deciding whether and how to cooperate, coordinate, jointly examine, consult, or

share records and other information under subsection (a) of this section, the department shall

consider:

     (1) Maximizing effectiveness and uniformity of regulation, examination, implementation,

and enforcement for the benefit of residents and licensees; and

     (2) Minimizing burdens on licensees without adversely affecting protection for residents.

     42-14.7-16. Information not subject to disclosure.

     (a) Except as otherwise provided in subsection (b) or (c) of this section, information not

contained in a report otherwise available to the public or reports obtained by the department from

an applicant, or licensee, information contained in or related to an examination, investigation, or

operating or condition report prepared by, on behalf of, or for the use of the department; and other

financial and operating information is not subject to disclosure. If the department determines the

information or records are confidential under the open records law of a reciprocal-licensing state,

the information or records may not be disclosed.

     (b) A trade secret of an applicant, or a licensee, is confidential and is not subject to

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disclosure. If the department determines a trade secret is confidential under the open records law

of a reciprocal-licensing state, the trade secret shall not be disclosed.

     (c) Subsection (a) of this section does not prohibit disclosure of:

     (1) General information about a licensee's virtual currency business activity with or on

behalf of a resident;

     (2) A list of persons licensed pursuant to the provisions of this chapter; or

     (3) Aggregated financial data concerning licensees in this state.

     42-14.7-17. Material change filing.

     (a) Each licensee and registrant shall file with the department a report of:

     (1) A material change in information in the application for a license issued pursuant to

the provisions of this chapter or the most recent renewal report of the licensee;

     (2) A material change in the licensee's business for the conduct of its virtual currency

business activity with or on behalf of a resident; and

     (3) A change of an executive officer, responsible individual, or person in control of the

licensee or registrant.

     (b) Absent good cause, a report required by subsection (a) of this section must be filed

not later than fifteen (15) days after the change.

     42-14.7-18. Control of licensee.

     (a) In this section, "proposed person to be in control" means the person that would control

a licensee after a proposed transaction that would result in a change in control of the licensee.

     (b) The following rules apply in determining whether a person has control over a

licensee:

     (1) There is a rebuttable presumption of control if the person's voting power in the

licensee constitutes or will constitute at least twenty-five percent (25%) of the total voting power

of the licensee.

     (2) There is a rebuttable presumption of control if:

     (i) The person's voting power in another person constitutes or will constitute at least ten

percent (10%) of the total voting power of the other person; and

     (ii) The other person's voting power in the licensee constitutes at least twenty-five percent

(25%) of the total voting power of the licensee.

     (3) There is no presumption of control solely because an individual is an executive officer

of the licensee.

     (c) At least thirty (30) days before a proposed change in control of a licensee, the

proposed person to be in control shall submit to the department in a record:

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     (1) An application in a form and medium prescribed by the department;

     (2) The information and records that § 42-14.7-5 would require if the proposed person to

be in control already had control of the licensee; and

     (3) A license application under § 42-14.7-5 by the proposed person to be in control.

     (d) The department, in accordance with § 42-14.7-5, shall approve, approve with

conditions, or deny an application for a change in control of a licensee. The department, in a

record, shall send notice of its decision to the licensee and the person that would be in control if

the department had approved the change in control. If the department denies the application, the

licensee shall abandon the proposed change in control or cease virtual currency business activity

with or on behalf of residents.

     (e) If the department applies a condition to approval of a change in control of a licensee

and the department does not receive notice of the applicant's acceptance of the condition specified

by the department not later than thirty-one (31) days after the department sends notice of the

condition, the application is deemed denied. If the application is deemed denied, the licensee shall

abandon the proposed change in control or cease virtual currency business activity with or on

behalf of residents.

     (f) Submission in good faith of records required by subsection (c) of this section relieves

the proposed person to be in control from any obligation imposed by this section other than

subsections (d), (e), and (h) of this section until the department has acted on the application.

     (g) The department may revoke or modify a determination under subsection (d) of this

section, after notice and opportunity to be heard, if, in its judgment, revocation or modification is

consistent with the provisions of this chapter.

     (h) If a change in control of a licensee requires approval of an agency of this state or

another state with which this state has a reciprocity agreement and the action of the other agency

conflicts with that of the department, the department shall confer with the other agency. If the

proposed change in control cannot be completed because the conflict cannot be resolved, the

licensee shall abandon the change in control or cease virtual currency business activity with or on

behalf of residents.

     42-14.7-19. Merger or consolidation.

     (a) At least thirty (30) days before a proposed merger or consolidation of a licensee with

another person, the licensee shall submit to the department in a record:

     (1) An application in a form and medium prescribed by the department;

     (2) The plan of merger or consolidation in accordance with subsection (e) of this section;

     (3) In the case of a licensee, the information required by § 42-14.7-5 concerning the

LC001438 - Page 19 of 51

person that would be the surviving entity in the proposed merger or consolidation; and

     (4) In the case of a limited volume short-form licensee the information required by § 42-

14.7-10 concerning the person that would be the surviving entity in the proposed merger or

consolidation.

     (b) If a proposed merger or consolidation would change the control of a licensee, the

licensee shall comply with § 42-14.7-18 and this section.

     (c) The department, in accordance with § 42-14.7-5, shall approve, conditionally approve,

or deny an application for approval of a merger or consolidation of a licensee. The department, in

a record, shall send notice of its decision to the licensee and the person that would be the

surviving entity. If the department denies the application, the licensee shall abandon the merger or

consolidation or cease virtual currency business activity with or on behalf of residents.

     (d) The department may revoke or modify a determination under subsection (c) of this

section, after notice and opportunity to be heard, if, in its judgment, revocation or modification is

consistent with the provisions of this chapter.

     (e) A plan of merger or consolidation of a licensee with another person must:

     (1) Describe the effect of the proposed transaction on the licensee's conduct of virtual

currency business activity with or on behalf of residents;

     (2) Identify each person to be merged or consolidated and the person that would be the

surviving entity; and

     (3) Describe the terms and conditions of the merger or consolidation and the mode of

carrying it into effect.

     (f) If a merger or consolidation of a licensee and another person requires approval of an

agency of this state or another state with which this state has a reciprocity agreement and the

action of the other agency conflicts with that of the department, the department shall confer with

the other agency. If the proposed merger or consolidation cannot be completed because the

conflict cannot be resolved, the licensee shall abandon the merger or consolidation or cease

virtual currency business activity with or on behalf of residents.

     (g) The department may condition approval of an application under subsection (a) of this

section. If the department does not receive notice from the parties that the parties accept the

department’s condition not later than thirty-one (31) days after the department sends notice in a

record of the condition, the application is deemed denied. If the application is deemed denied, the

licensee shall abandon the merger or consolidation or cease virtual currency business activity

with or on behalf of residents.

     (h) If a licensee acquires substantially all the assets of a person, whether or not the

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person's license was approved by the department, the transaction is subject to this section.

     (i) Submission in good faith of the records required by subsection (e) of this section

relieves the proposed surviving entity from any obligation imposed by this section, other than

subsections (c), (f), and (g) of this section, until the department has acted on the application.

     42-14.7-20. Enforcement measures.

     "Enforcement measure" means an action to:

     (1) Suspend or revoke a license or a registration;

     (2) Order a person to cease and desist from doing virtual currency business activity with

or on behalf of a resident;

     (3) Request the court to appoint a receiver for the assets of a person doing virtual

currency business activity with or on behalf of a resident;

     (4) Request the court to issue temporary, preliminary, or permanent injunctive relief

against a person doing virtual currency business activity with or on behalf of a resident;

     (5) Assess a penalty under § 42.14.7-23;

     (6) Recover on the security under § 42-14.7-7 and initiate a plan to distribute the

proceeds for the benefit of a resident injured by a violation of this chapter or law of this state

other than this chapter which applies to virtual currency business activity with or on behalf of a

resident; or

     (7) Impose necessary or appropriate conditions on the conduct of virtual currency

business activity with or on behalf of a resident.

     42-14.7-21. Enforcement action by department.

     (a) The department may take an enforcement measure against a licensee, or person that is

not a licensee but is engaging in virtual currency business activity with or on behalf of a resident

if:

     (1) The licensee, or person materially violates the provisions of this chapter, a rule or

regulation adopted and promulgated or order issued by the department, or law of this state which

applies to virtual currency business activity of the violator with or on behalf of a resident;

     (2) The licensee, or person does not cooperate substantially with an examination or

investigation by the department, fails to pay a fee, or fails to submit a report or documentation;

     (3) The licensee, or person, in the conduct of its virtual currency business activity with or

on behalf of a resident, engages in:

     (i) An unsafe or unsound act or practice;

     (ii) An unfair or deceptive act or practice;

     (iii) Fraud or intentional misrepresentation;

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     (iv) Another dishonest act; or

     (v) Misappropriation of legal tender, virtual currency, or other value held by a fiduciary;

     (4) An agency of the United States or another state takes an action against the licensee, or

person which would constitute an enforcement measure if the department had taken the action;

     (5) The licensee, or person is convicted of a crime related to its virtual currency business

activity with or on behalf of a resident or involving fraud or felonious activity that, as determined

by the department, makes the licensee, or person unsuitable to engage in virtual currency business

activity;

     (6) The licensee, or person:

     (i) Becomes insolvent;

     (ii) Makes a general assignment for the benefit of its creditors;

     (iii) Becomes the debtor, alleged debtor, respondent, or person in a similar capacity in a

case or other proceeding under any bankruptcy, reorganization, arrangement, readjustment,

insolvency, receivership, dissolution, liquidation, or similar law, and does not obtain from the

court, within a reasonable time, confirmation of a plan or dismissal of the case or proceeding; or

     (iv) Applies for or permits the appointment of a receiver, trustee, or other agent of a court

for itself or for a substantial part of its assets; or

     (7) The licensee, or person makes a material misrepresentation to the department.

     (b) On application and for good cause, the department may:

     (1) Extend the due date for filing a document or report under of subsection (a) of this

section; or

     (2) Waive to the extent warranted by circumstances, such as a bona fide error

notwithstanding reasonable procedures designed to prevent error, an enforcement measure under

subsection (a) of this section if the department determines that the waiver will not adversely

affect the likelihood of compliance with the provisions of this chapter.

     (c) In an enforcement action related to operating without a license it is a defense to the

action that the person has in effect a customer identification program reasonably designed to

identify whether a customer is a resident, which failed to identify the particular customer as a

resident.

     (d) A proceeding under this chapter is subject to chapter 35 of title 42 the (administrative

procedures act).

     42-14.7-22. Notice and hearing.

     (a) Except as otherwise provided in subsection (b) of this section, the department may

take an enforcement measure only after notice and opportunity for a hearing appropriate in the

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circumstances.

     (b) The department may take an enforcement measure other than the imposition of a civil

penalty under § 42-14.7-23:

     (1) Without notice if the circumstances require action before notice can be given;

     (2) After notice and without a prior hearing if the circumstances require action before a

hearing can be held; or

     (3) After notice and without a hearing if the person conducting virtual currency business

activity with or on behalf of a resident does not timely request a hearing.

     (c) If the department takes action under subsection (b)(1) or (b)(2) of this section, the

person subject to the enforcement measure has the right to an expedited post-action hearing by

the department unless the person has waived the hearing.

     42-14.7-23. Penalty.

     (a) If a person other than a licensee engages in virtual currency business activity with or

on behalf of a resident in violation of the provisions of this chapter, the department may assess a

civil penalty against the person in an amount not to exceed fifty thousand dollars ($50,000) for

each day of violation.

     (b) If a licensee materially violates a provision of this chapter, the department may assess

a civil penalty in an amount not to exceed ten thousand dollars ($10,000) for each day of

violation.

     (c) A civil penalty under this section continues to accrue until the earlier of:

     (1) The date the violation ceases; or

     (2) A date specified by the department.

     42-14.7-24. Revocation or suspension of license.

     (a) Revocation of a license is effective against a licensee one day after the department

sends notice in a record of the revocation to the licensee, by a means reasonably selected for the

notice to be received by the recipient in one day, to the address provided for receiving

communications from the department.

     (b) Suspension of a license or an order to cease and desist is effective against a licensee,

or other person one day after the department sends notice in a record of the suspension or order to

the licensee, or other person, by a means reasonably selected for the notice to be received by the

recipient in one day, to the address provided for receiving communications from the department

or, if no address is provided, to the recipient's last-known address. A suspension or order to cease

and desist remains in effect until the earliest of:

     (1) Entry of an order under chapter 35 of title 42 the (administrative procedures act),

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setting aside or limiting the suspension or order;

     (2) Entry of a court order setting aside or limiting the suspension or order to cease and

desist; or

     (3) A date specified by the department.

     (c) If, without reason to know of the department’s notice sent under subsection (a) or (b)

of this section, a licensee, or other person does not comply in accordance with the notice until the

notice is actually received at the address provided, the department may consider the delay in

compliance in imposing a sanction for the failure.

     42-14.7-25. Consent orders.

     The department may enter into a consent order with a person regarding an enforcement

measure. The order may provide that it does not constitute an admission of fact by a party.

     42-14.7-26. No private cause of action.

     (a) Except as otherwise provided in this section, a person does not have a private right of

action for violation of the provisions of this chapter.

     (b) The department may bring an action for restitution on behalf of a resident if the

department proves economic injury due to a violation of the provision of this chapter.

     (c) This section does not preclude an action by a resident to enforce rights under or law of

this state other than the provisions of this chapter.

     42-14.7-27. Required disclosures.

     (a) A licensee shall provide to a resident who uses the licensee's products or service the

disclosures required by subsection (b) of this section and any additional disclosure the department

by rule or regulation determines reasonably necessary for the protection of residents. The

department shall determine by rule or regulation the time and form required for disclosure. A

disclosure required by this section must be made separately from any other information provided

by the licensee and in a clear and conspicuous manner in a record the resident may keep. A

licensee may propose for the department's approval alternate disclosures as more appropriate for

its virtual currency business activity with or on behalf of residents.

     (b) Before establishing a relationship with a resident, a licensee shall disclose, to the

extent applicable to the virtual currency business activity the licensee will undertake with the

resident:

     (1) A schedule of fees and charges the licensee may assess, the manner by which fees and

charges will be calculated if they are not set in advance and disclosed, and the timing of the fees

and charges;

     (2) Whether the product or service provided by the licensee is covered by:

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     (i) A form of insurance or is otherwise guaranteed against loss by an agency of the United

States:

     (A) Up to the full U.S. dollar equivalent of virtual currency placed under the control of or

purchased from the licensee as of the date of the placement or purchase, including the maximum

amount provided by insurance under the Federal Deposit Insurance Corporation or otherwise

available from the Securities Investor Protection Act of 1970, 15 U.S.C. 78aaa et seq., as the act

existed on the effective date of this chapter; or

     (B) If not provided at the full U.S. dollar equivalent of virtual currency placed under the

control of or purchased from the licensee the maximum amount of coverage for each resident

expressed in the U.S. dollar equivalent of the virtual currency; or

     (ii) Private insurance against theft or loss, including cyber theft or theft by other means;

     (3) The irrevocability of a transfer or exchange and any exception to irrevocability;

     (4) A description of:

     (i) Liability for an unauthorized, mistaken, or accidental transfer or exchange;

     (ii) The resident's responsibility to provide notice to the licensee of the transfer or

exchange;

     (iii) The basis for any recovery by the resident from the licensee;

     (iv) General error-resolution rights applicable to the transfer or exchange; and

     (v) The method for the resident to update the resident's contact information with the

licensee;

     (5) That the date or time when the transfer or exchange is made and the resident's account

is debited may differ from the date or time when the resident initiates the instruction to make the

transfer or exchange;

     (6) Whether the resident has a right to stop a preauthorized payment or revoke

authorization for a transfer and the procedure to initiate a stop-payment order or revoke

authorization for a subsequent transfer;

     (7) The resident's right to receive a receipt, trade ticket, or other evidence of the transfer

or exchange;

     (8) The resident's right to at least thirty (30) days' prior notice of a change in the

licensee's fee schedule, other terms and conditions of operating its virtual currency business

activity with the resident, and the policies applicable to the resident's account; and

     (9) That virtual currency is not legal tender.

     (c) Except as otherwise provided in subsection (d) of this section, at the conclusion of a

virtual-currency transaction with or on behalf of a resident, a licensee shall provide the resident a

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confirmation in a record which contains:

     (1) The name and contact information of the licensee, including information the resident

may need to ask a question or file a complaint;

     (2) The type, value, date, precise time, and amount of the transaction; and

     (3) The fee charged for the transaction, including any charge for conversion of virtual

currency to legal tender, bank credit, or other virtual currency.

     (d) If a licensee discloses that it will provide a daily confirmation in the initial disclosure

under subsection (c) of this section, the licensee may elect to provide a single, daily confirmation

for all transactions with or on behalf of a resident on that day instead of a per-transaction

confirmation.

     42-14.7-28. Maintaining sufficient virtual currency.

     (a) A licensee that has control of virtual currency for one or more persons shall maintain

in its control an amount of each type of virtual currency sufficient to satisfy the aggregate

entitlements of the persons to the type of virtual currency.

     (b) If a licensee violates subsection (a) of this section, the property interests of the

persons in the virtual currency are pro rata property interests in the type of virtual currency to

which the persons are entitled, without regard to the time the persons became entitled to the

virtual currency or the licensee obtained control of the virtual currency.

     (c) The virtual currency referred to in this section is:

     (1) Held for the persons entitled to the virtual currency;

     (2) Not property of the licensee; and

     (3) Not subject to the claims of creditors of the licensee.

     42-14.7-29. Required policies and procedures.

     (a) An applicant, before submitting an application, shall create and, during licensure

maintain in a record policies and procedures for:

     (1) An information-security and operational-security program;

     (2) A business-continuity program;

     (3) A disaster-recovery program;

     (4) An anti-fraud program;

     (5) An anti-money-laundering program;

     (6) A program to prevent funding of terrorist activity; and

     (7) A program designed to:

     (i) Ensure compliance with the law of this state, and federal law, which are relevant to the

virtual currency business activity contemplated by the licensee with or on behalf of residents; and

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     (ii) Assist the licensee in achieving the purposes of law of this state and federal law.

     (b) Each policy required by subsection (a) of this section must be in a record and

designed to be adequate for a licensees contemplated virtual currency business activity with or on

behalf of residents, considering the circumstances of all participants and the safe operation of the

activity. Each policy and implementing procedure must be compatible with other policies and the

procedures implementing them and not conflict with policies or procedures applicable to the

licensee under law of this state.

     (c) A licensee's policy for detecting fraud must include:

     (1) Identification and assessment of the material risks of its virtual currency business

activity related to fraud;

     (2) Protection against any material risk related to fraud identified by the department or

the licensee; and

     (3) Periodic evaluation and revision of the anti-fraud procedure.

     (d) A licensee's policy for preventing money laundering and financing of terrorist activity

must include:

     (1) Identification and assessment of the material risks of its virtual currency business

activity related to money laundering and financing of terrorist activity;

     (2) Procedures, in accordance with federal law or guidance published by federal agencies

responsible for enforcing federal law, pertaining to money laundering and financing of terrorist

activity; and

     (3) Filing reports under the Bank Secrecy Act, 31 U.S.C. 5311 et seq., as such act existed

on the effective date of this chapter, or 31 C.F.R. Chapter X, Financial Crimes Enforcement

Network, Department of the Treasury, as such rule existed on the effective date of this chapter,

and other federal or state laws pertaining to the prevention or detection of money laundering or

financing of terrorist activity.

     (e) A licensee's information-security and operational-security policy must include

reasonable and appropriate administrative, physical, and technical safeguards to protect the

confidentiality, integrity, and availability of any nonpublic personal information or virtual-

currency it receives, maintains, or transmits.

     (f) A licensee is not required to file with the department a copy of a report it makes to a

federal authority unless the department specifically requires filing.

     (g) A licensees protection policy under subsection (e) of this section for residents must

include:

     (1) Any action or system of records required to comply with the provisions of state law

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applicable to the licensee with respect to virtual currency business activity with or on behalf of a

resident;

     (2) A procedure for resolving disputes between the licensee and a resident;

     (3) A procedure for a resident to report an unauthorized, mistaken, or accidental virtual

currency business activity transaction; and

     (4) A procedure for a resident to file a complaint with the licensee and for the resolution

of the complaint in a fair and timely manner with notice to the resident as soon as reasonably

practical of the resolution and the reasons for the resolution.

     (h) After the policies and procedures required under this section are created and approved

by the department and the licensee, the licensee shall engage a responsible individual with

adequate authority and experience to monitor each policy and procedure, publicize it as

appropriate, recommend changes as desirable, and enforce it.

     (i) A licensee may:

     (1) Request advice from the department as to compliance with this section; and

     (2) With the department's approval, outsource functions, other than compliance, required

under this section.

     (j) Failure of a particular policy or procedure adopted under this section to meet its goals

in a particular instance is not a ground for liability of the licensee if the policy or procedure was

created, implemented, and monitored properly. Repeated failures of a policy or procedure are

evidence that the policy or procedure was not created or implemented properly.

     (k) Policies and procedures adopted under this section must be disclosed separately from

other disclosures made available to a resident, in a clear and conspicuous manner and in the

medium through which the resident contacted the licensee.

     42-14.7-30. Applicant to establish policies.

     (a) An applicant, before submitting its application, shall establish and maintain in a

record a policy or procedure designed to ensure compliance with:

     (1) The provisions of this chapter; and

     (2) Law of this state other than this chapter if:

     (i) The other law is relevant to the virtual currency business activity contemplated by the

licensee; or

     (ii) The provisions of this chapter could assist in the purpose of the other law because

violation of the other law has a remedy under this chapter.

     (b) A policy or procedure under subsection (a) of this section:

     (1) Must be compatible, and not conflict, with requirements applicable to a licensee under

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law of this state and under federal law; and

     (2) May be a policy or procedure in existence for the licensee's virtual currency business

activity with or on behalf of a resident.

     (c) After the policies and procedures required under this section are created by the

licensee and approved by the department, the licensee shall engage a responsible individual with

adequate authority and experience to monitor each policy or procedure, publicize it as

appropriate, recommend changes as desirable, and enforce it.

     (d) A licensee may:

     (1) Request advice from the department as to compliance with this section; and

     (2) With the department’s approval, outsource functions, other than compliance, required

under this section.

     (e) Failure of a particular policy or procedure adopted under this section to meet its goals

in a particular instance is not a ground for liability of the licensee if the policy or procedure was

created, implemented, and monitored properly. Repeated failures of a policy or procedure are

evidence that the policy or procedure was not created or implemented properly.

     42-14.7-31. Statutory construction.

     In applying and construing the provisions of this chapter, consideration shall be given to

the need to promote uniformity of the law with respect to its subject matter among the states that

enact it.

     42-14.7-32. Signatures.

     The provisions of this chapter modifies, limits, or supersedes the Electronic Signatures in

Global and National Commerce Act, 15 U.S.C. 7001, et seq., but does not modify, limit, or

supersede section 101(c) of that act, 15 U.S.C. 7001(c), or authorize electronic delivery of any of

the notices described in section 103(b) of that act, 15 U.S.C. 7003(b) as such section and

subsections existed on the effective date of this chapter.

     42-14.7-33. Financial institutions.

     (a) A license issued under title 19 which is in effect immediately before the effective date

of this chapter remains in effect as a license for its duration unless revoked or suspended by the

licensing authority that issued it. A person or business licensed under title 19 which does not

intend to engage in virtual currency business activity is not required to inform the department of

its intention.

     (b) If the department denies, suspends, or revokes a license issued pursuant to the terms

of this chapter or suspends or revokes a registration to conduct virtual currency business activity

with or on behalf of a resident, the denial, suspension, or revocation may not be used as a ground

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for suspension or revocation of a license granted under title 19 unless the grounds for denial,

suspension or revocation independently provides a basis for action against the licensee.

     (c) The provisions of this chapter apply to virtual currency business activity with or on

behalf of a resident on or after the effective date of this chapter.

     (d) A person is deemed to be conducting unlicensed virtual currency business activity

with or on behalf of a resident in violation of the provisions of this chapter if the person engages

in virtual currency business activity on or after the effective date of this chapter and the person

does not hold a license issued or recognized under the chapter, is not exempt from the provisions

of this chapter, and has not applied for a license. This subsection includes a person that:

     (1) Has obtained a license under the title 19 whether or not that act covers virtual

currency business activity, or holds a charter as a trust company from this state; and

     (2) Does not have permission to engage in virtual currency business activity with or on

behalf of a resident.

     42-14.7-34. Severability.

     If any section in this chapter or any part of any section is declared invalid or

unconstitutional, the declaration shall not affect the validity or constitutionality of the remaining

portions.

     SECTION 2. Sections 7-11-401 and 7-11-402 of the General Laws in Chapter 7-11

entitled "Rhode Island Uniform Securities Act" are hereby amended to read as follows:

     7-11-401. Exempt securities.

     The following securities are exempt from §§ 7-11-301 and 7-11-404:

     (1) A security, including a revenue obligation, issued, insured, or guaranteed by the

United States, an agency or corporate or other instrumentality of the United States, an

international agency or corporate or other instrumentality of which the United States and one or

more foreign governments are members, a state, a political subdivision of a state, or an agency or

corporate or other instrumentality of one or more states or their political subdivisions; or a

certificate of deposit for any of the foregoing, but this exemption does not include a security

payable solely from revenues to be received from a nongovernmental industrial or commercial

enterprise unless the payments are insured or guaranteed by a person described as the issuer,

insurer or guarantor of securities under subsection (2), (3), (4), (5), (7), or (8) of this section, or

unless the revenues from which the payments are to be made are a direct obligation of a person;

     (2) A security issued, insured, or guaranteed by Canada, a Canadian province or territory,

a political subdivision of Canada or a Canadian province or territory, an agency or corporation or

other instrumentality of one or more of the foregoing, or any other foreign government or

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governmental combination or entity with which the United States maintains diplomatic relations,

if the security is recognized as a valid obligation by the issuer, insurer, or guarantor;

     (3) A security issued by and representing an interest in or a direct obligation of, or

guaranteed by, a depository institution if the deposit or share accounts of the depository

institution are insured by the federal deposit insurance corporation, the federal savings and loan

insurance corporation, the national credit union share insurance fund, or a successor to the

applicable agency authorized by federal law;

     (4) A security issued by and representing an interest in or a direct obligation of, or

insured or guaranteed by, an insurance company organized under the laws of any state and

authorized to do business in this state;

     (5) A security issued or guaranteed by a railroad, other common carrier, public utility, or

holding company that is:

     (i) Subject to the jurisdiction of the Interstate Commerce Commission;

     (ii) A registered holding company under the Public Utility Holding Company Act of

1935, 15 U.S.C. § 79 et seq. [repealed], or a subsidiary of a registered holding company within

the meaning of that act;

     (iii) Regulated as to its rates and charges by a governmental authority of the United States

or a state; or

     (iv) Regulated as to the issuance or guarantee of the security by a governmental authority

of the United States, a state, Canada, or a Canadian province or territory;

     (6) Equipment trust certificates as to equipment leased or conditionally sold to a person,

if securities issued by the person would be exempt under this section;

     (7) A security listed or approved for listing upon notice of issuance on a national

securities exchange registered under § 6 of the Securities Exchange Act of 1934, 15 U.S.C. § 78f;

any other security of the same issuer which is of senior or substantially equal rank; a security

called for by subscription right or warrant so listed or approved; or a warrant or right to purchase

or subscribe to any of the securities in this subsection;

     (8) A security designated or approved for designation upon notice of issuance as a

national market system security by the National Association of Securities Dealers, Inc.; any other

security of the same issuer which is of senior or substantially equal rank; a security called for by

subscription right or warrant so designated; or a warrant or a right to purchase or subscribe to any

of the securities in this subsection;

     (9) An option issued by a clearing agency registered under the Securities Exchange Act

of 1934, 15 U.S.C. § 78a et seq., other than an off exchange futures contract or substantially

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similar arrangement, if the security, currency, commodity, or other interest underlying the option:

     (i) Is registered under § 7-11-302, 7-11-303, or 7-11-304;

     (ii) Is exempt under this section; or

     (iii) Is not otherwise required to be registered under this chapter;

     (10) A security issued by a person organized and operated not for private profit but

exclusively for a religious, educational, benevolent, charitable, fraternal, social, athletic, or

reformatory purpose, or as a chamber of commerce or trade or professional association;

     (11) A promissory note, draft, bill of exchange, or bankers' acceptance that evidences an

obligation to pay cash within nine (9) months after the date of issuance, exclusive of days of

grace, is issued in denominations of at least fifty thousand dollars ($50,000) and receives a rating

in one of the three (3) highest rating categories from a nationally recognized statistical rating

organization; or a renewal of an obligation that is likewise limited, or a guarantee of an obligation

or of a renewal;

     (12) A security issued in connection with an employee's stock purchase, savings, option,

profit sharing, pension, or similar employees' benefit plan;

     (13) A membership or equity interest in, or a retention certificate or like security given in

lieu of a cash patronage dividend issued by, a cooperative organized and operated as a nonprofit

membership cooperative under the cooperative laws of any state if not traded to the public;

     (14) A security issued by an issuer registered as an open end management investment

company or unit investment trust pursuant to § 8 of the Investment Company Act of 1940, 15

U.S.C. § 80a-8, if:

     (i) The issuer is advised by an investment adviser that is a depository institution exempt

from registration under the Investment Advisers Act of 1940, 15 U.S.C. § 80b-1 et seq., or that is

currently registered as an investment adviser and has been registered, or is affiliated with an

adviser that has been registered as an investment adviser under the Investment Advisers Act of

1940, 15 U.S.C. § 80b-1 et seq., for at least three (3) years immediately before an offer or sale of

a security claimed to be exempt under this subsection (14)(i) and has acted, or is affiliated with an

investment adviser that has acted, as investment adviser to one or more registered investment

companies or unit investment trusts for at least three (3) years immediately before an offer or sale

of a security claimed to be exempt under this subsection (14)(i); or

     (ii) The issuer has a sponsor that has at all times throughout the three (3) years before an

offer or sale of a security claimed to be exempt under this subsection (14)(ii) sponsored one or

more registered investment companies or unit investment trusts the aggregate total assets of

which have exceeded one hundred million dollars ($100,000,000).

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     (iii) The director has received prior to any sale exempted in this section:

     (A) A notice of intention to sell which has been executed by the issuer which states the

name and address of the issuer and the title of the securities to be offered in this state; and

     (B) A filing fee of one thousand dollars ($1,000).

     (iv) In the event any offer or sale of an open end management investment company is to

be made more than twelve (12) months after the date notice under subsection (14)(iii) is received

by the director, another notice and payment of the applicable fee is required.

     For the purpose of subsection (14) an investment adviser is affiliated with another

investment adviser if it controls, is controlled by, or is under common control with the other

investment adviser.

     (15) A virtual currency issued, exchanged, sold or transferred in compliance with chapter

14.7 of title 42.

     7-11-402. Exempt transactions.

     The following transactions are exempt from §§ 7-11-301 and 7-11-404:

     (1) An isolated nonissuer transaction, whether or not effected through a broker-dealer;

     (2) A nonissuer transaction in an outstanding security if the issuer of the security has a

class of securities subject to registration under § 12 of the Securities Exchange Act of 1934, 15

U.S.C. § 78l, and has been subject to the reporting requirements of § 13 or § 15(d) of the

Securities Exchange Act of 1934, 15 U.S.C. §§ 78m and 78o(d), for not less than ninety (90) days

before the transaction; or has filed and maintained with the director for not less than ninety (90)

days before the transaction information, in any form that the director, by rule, specifies,

substantially comparable to the information which the issuer would be required to file under §

12(b) or § 12(g) of the Securities Exchange Act of 1934, 15 U.S.C. §§ 78l(b) or 78l(g), were the

issuer to have a class of its securities registered under § 12 of the Securities Exchange Act of

1934 and paid a fee with the filing of three hundred dollars ($300);

     (3) A nonissuer transaction in a security:

     (i) Of a class outstanding in the hands of the public for not less than ninety (90) days

before the transaction if a nationally recognized securities manual designated by the director, by

rule or order, contains the names of the issuer's officers and directors, a statement of financial

condition of the issuer as of a date within the last eighteen (18) months, and a statement of

income or operations for either the last fiscal year before that date or the most recent year of

operation; or

     (ii) If the security has a fixed maturity or a fixed interest or dividend provision and there

has been no default during the current fiscal year or within the three (3) preceding years, or

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during the existence of the issuer and any predecessors if less than three (3) years, in the payment

of principal, interest, or dividends on the security;

     (4) A nonissuer transaction effected by or through a registered broker-dealer pursuant to

an unsolicited order or offer to purchase; but the director may by rule require that the customer

acknowledge upon a specified form that the sale was unsolicited, and that a signed copy of each

form be preserved by the broker-dealer for a specified period;

     (5) A transaction between the issuer or other person on whose behalf the offering of a

security is made and an underwriter, or a transaction among underwriters;

     (6) A transaction in a bond or other evidence of indebtedness secured by a real estate

mortgage, deed of trust, personal property security agreement, or by an agreement for the sale of

real estate or personal property, if the entire mortgage, deed of trust, or agreement, together with

all the bonds or other evidences of indebtedness secured by them, is offered and sold as a unit;

     (7) A transaction by an executor, administrator, sheriff, marshal, receiver, trustee in

bankruptcy, guardian, or conservator;

     (8) A transaction executed by a bona fide secured party without a purpose of evading this

chapter;

     (9) An offer to sell or sale of a security to a financial or institutional investor or to a

broker-dealer;

     (10) A transaction pursuant to an offer directed by the offeror to no more than twenty-

five (25) purchasers in this state, other than those designated in subsection (9), during any twelve

(12) consecutive months; no general solicitation or general advertising is used in connection with

the offer to sell or sale of the securities; and no commission or other similar compensation is paid

or given, directly or indirectly, to a person, other than a broker-dealer licensed or not required to

be licensed under this chapter, for soliciting a prospective purchaser in this state; and either:

     (i) The seller reasonably believes that all the purchasers in this state, other than those

designated in subsection (9) are purchasing for investment; or

     (ii) Immediately before and immediately after the transaction, the issuer reasonably

believes that the securities of the issuer are held by fifty (50) or fewer beneficial owners, other

than those designated in subsection (9) and the transaction is part of an aggregate offering that

does not exceed one million dollars ($1,000,000) during any twelve (12) consecutive months;

     (11) An offer to sell or sale of a preorganization certificate or subscription if no

commission or other similar compensation is paid or given, directly or indirectly, for soliciting a

prospective subscriber; no public advertising or general solicitation is used in connection with the

offer to sell or sale; the number of subscribers does not exceed ten (10); and no payment is made

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by a subscriber;

     (12) An offer to sell or sale of a preorganization certificate or subscription agreement

issued in connection with the organization of a depository institution if that organization is under

the supervision of an official or agency of any state or of the United States that has and exercises

the authority to regulate and supervise the organization of the depository institution. For the

purposes of this subsection, supervision of the organization by an official or agency means that

the official or agency by law has authority to require disclosures to prospective investors similar

to that required under § 7-11-304, impound proceeds from the sale of preorganization certificates

or subscription agreements until organization of the depository institution is completed, and

require refund to investors if the depository institution does not obtain a grant of authority from

the appropriate official or agency;

     (13) A transaction pursuant to an offer to sell to existing security holders of the issuer,

including persons who at the time of the transaction are holders of transferable warrants

exercisable within not more than ninety (90) days after their issuance, convertible securities, or

nontransferable warrants, if:

     (i) No commission or other similar compensation, other than a standby commission, is

directly or indirectly paid or given, for soliciting a security holder in this state; or

     (ii) The issuer first files a notice specifying the terms of the offer to sell and the director

does not by order disallow the exemption within the next five (5) full business days;

     (14) A transaction involving an offer to sell, but not a sale, of a security not exempt from

registration under the Securities Act of 1933, 15 U.S.C. § 77a et seq., if:

     (i) A registration or offering statement or similar document as required under the

Securities Act of 1933, 15 U.S.C. § 77a et seq., has been filed, but is not effective;

     (ii) A registration statement, if required, has been filed under this chapter, but is not

effective; and

     (iii) No stop order of which the offeror is aware has been entered by the director or the

Securities and Exchange Commission, and no examination or public proceeding that may

culminate in that kind of order is known by the offeror to be pending;

     (15) A transaction involving an offer to sell, but not a sale, of a security exempt from

registration under the Securities Act of 1933, 15 U.S.C. § 77a et seq., if:

     (i) A registration statement has been filed under this chapter, but is not effective; and

     (ii) No stop order of which the offeror is aware has been entered by the director and no

examination or public proceeding that may culminate in that kind of order is known by the offeror

to be pending;

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     (16) A transaction involving the distribution of the securities of an issuer to the security

holders of another person in connection with a merger, consolidation, exchange of securities, sale

of assets, or other reorganization to which the issuer, or its parent or subsidiary, and the other

person, or its parent or subsidiary, are parties, if:

     (i) The securities to be distributed are registered under the Securities Act of 1933, 15

U.S.C. § 77a et seq., before the consummation of the transaction; or

     (ii) The securities to be distributed are not required to be registered under the Securities

Act of 1933, 15 U.S.C. § 77a et seq., written notice of the transaction and a copy of the materials,

if any, by which approval of the transaction will be solicited is given to the director at least ten

(10) days before the consummation of the transaction and the director does not disallow by order

the exemption within the next ten (10) days;

     (17)(i) A transaction involving the offer to sell or sale of one or more promissory notes

each of which is directly secured by a first lien on a single parcel of real estate, or a transaction

involving the offer to sell or sale of participation interests in the notes if the notes and

participation interests are originated by a depository institution and are offered and sold subject to

the following conditions:

     (A) The minimum aggregate sales price paid by each purchaser may not be less than two

hundred and fifty thousand dollars ($250,000);

     (B) Each purchaser must pay cash either at the time of the sale or within sixty (60) days

after the sale; and

     (C) Each purchaser may buy for that person's own account only;

     (ii) A transaction involving the offer to sell or sale of one or more promissory notes

directly secured by a first lien on a single parcel of real estate or participation interests in the

notes, if the notes and participation interests are originated by a mortgagee approved by the

Secretary of Housing and Urban Development under §§ 203 and 211 of the National Housing

Act, 12 U.S.C. §§ 1709 and 1715b, and are offered or sold, subject to the conditions specified in

subsection (17)(i), to a depository institution or insurance company, the Federal Home Loan

Mortgage Corporation, the Federal National Mortgage Association, or the Government National

Mortgage Association; and

     (iii) A transaction between any of the persons described in subsection (17)(ii) involving a

nonassignable contract to buy or sell the securities described in subsection (17)(i) which contract

is to be completed within two (2) years if:

     (A) The seller of the securities pursuant to the contract is one of the parties described in

subsection (17)(i) or (17)(ii) who may originate securities;

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     (B) The purchaser of securities pursuant to a contract is any other person described in

subsection (17)(ii); and

     (C) The conditions described in subsection (17)(i) are fulfilled; and

     (18) Any offer or sale of securities made in reliance on the exemptions provided by Rule

505 or 506 of regulation D as may be amended from time to time, under the Securities Act of

1933, 15 U.S.C. § 77a et seq., and the provisions of the rules under that Act as amended from

time to time; provided:

     (i) No commission or other remuneration may be paid or given directly or indirectly, to

any person for soliciting or selling to any person in this state in reliance on this exemption, except

to persons registered under §§ 7-11-201 -- 7-11-204;

     (ii) Not later than ten (10) days, or a shorter period that may be permitted by order of the

director, prior to the first sale of securities in reliance on this exemption, there is filed with the

director:

     (A) A Uniform Consent to Service of Process (Form U2);

     (B) A notice of original filing on Form D; and

     (C) A fee of three hundred dollars ($300).

     No exemption is available for the securities of any issuer if any of the parties described in

Securities and Exchange Commission regulation A. Rule 230.252, Section (c), (d), (e) or (f)

under the Securities Act of 1933 are disqualified pursuant to a rule adopted by the director.

     (19) A transaction involving issuance, exchange, sale or transfer of virtual currency in

compliance with the provisions of chapter 14.7 of title 42.

     SECTION 3. Section 19-1-1 of the General Laws in Chapter 19-1 entitled "Definitions

and Establishment of Financial Institutions" is hereby amended to read as follows:

     19-1-1. Definitions.

     Unless otherwise specified, the following terms shall have the following meanings

throughout this title:

     (1) "Agreement to form" means the agreement to form a financial institution or the

agreement to form a credit union, as applicable, pursuant to this title, and includes, for financial

institutions organized before December 31, 1995, the articles of incorporation or the agreement of

association of the financial institution, where applicable.

     (2) "Branch" means any office or place of business, other than the main office or

customer-bank-communication-terminal outlets as provided for in this title, at which deposits are

received, or checks paid or money lent, or at which any trust powers are exercised. Any financial

institution that had, on or before June 30, 2003, established an office or place of business, other

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than its main office, at which trust powers are exercised, shall not be required to obtain the

approval of the director, or the director's designee, pursuant to § 19-2-11 for any such offices

established as of that date.

     (3) "Credit union" means a credit union duly organized under the laws of this state.

     (4) "Director" means the director of the department of business regulation, or the

director's designee.

     (5) "Division of banking" means the division within the department of business

regulation responsible for the supervision and examination of regulated institutions and/or

licensees under chapter 14 of this title.

     (6) "Federal credit union" means a credit union duly organized under the laws of the

United States.

     (7) "Financial institution" means any entity, other than a credit union, duly organized

under the laws of this state that has the statutory authority to accept money on deposit pursuant to

title 19, including an entity that is prohibited from accepting deposits by its own bylaws or

agreement to form; the term includes, but is not limited to banks, trust companies, savings banks,

loan and investment banks, and savings and loan associations.

     (8) "Main office" means, in the case of financial institutions or credit unions, the location

stated in the agreement to form, as amended, and, otherwise, the location recognized by the

institution's primary banking regulator as its main office.

     (9) "Person" means individuals, partnerships, corporations, limited liability companies, or

any other entity however organized.

     (10) "Regulated institution" means any financial institution, credit union, or other

insured-deposit-taking institution, that is authorized to do business in this state, including one

authorized by operation of an interstate banking statute that allowed its original entry., however

shall not include any entity exclusively involved in the issuance, exchange, sale or transfer of

virtual currency in compliance with the provisions of chapter 14.7 of title 42.

     (11) "Retail installment contract" means any security agreement negotiated or executed in

this state, or under the laws of this state, including, but not limited to, any agreement in the nature

of a mortgage, conditional sale contract, or any other agreement whether or not evidenced by any

written instrument to pay the retail purchase price of goods, or any part thereof, in installments

over any period of time and pursuant to which any security interest is retained or taken by the

retail seller for the payment of the purchase price, or any part thereof, of the retail installment

contract.

     (12) "Retail seller" means any person who sells or contracts to sell any goods under a

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retail installment contract to a retail buyer.

     (13) "Superintendent" means the deputy director designated by the director as

superintendent of banking in the department of business regulation.

     (14) "Unimpaired capital" means the sum of all capital and allowance accounts minus

estimated losses on assets, calculated in accordance with generally accepted accounting

principles.

     (15) "Writing" means hard copy writing or electronic writing that meets the requirements

of § 42-127.1-2(7).

     SECTION 4. Section 19-14-2 of the General Laws in Chapter 19-14 entitled "Licensed

Activities" is hereby amended to read as follows:

     19-14-2. Licenses required.

     (a) No person shall engage within this state in the business of: (1) Making or funding

loans or acting as a lender or small loan lender; (2) Brokering loans or acting as a loan broker; (3)

Selling checks for a fee or other consideration; (4) Cashing checks for a fee or other

consideration, which includes any premium charged for the sale of goods in excess of the cash

price of the goods; (5) Providing electronic money transfers for a fee or other consideration

except the issuance, exchange, sale or transfer of virtual currency in compliance with the

provisions of chapter 14. 7 of title 42; (6) Providing debt-management services; (7) Performing

the duties of a mortgage-loan originator; (8) Servicing a loan, directly or indirectly, as a third-

party loan servicer without first obtaining a license or registration from the director or the

director's designee. The licensing requirement for any person providing debt-management plans

shall apply to all persons, without regard for state of incorporation or a physical presence in this

state, who initiate or service debt-management plans for residents of this state. Special

exemptions from licensing for each activity are contained in other chapters in this title.

     (b) No lender or loan-broker licensee shall permit an employee to act as a mortgage loan

originator without first verifying that such originator is licensed under this chapter. No individual

may act as a mortgage-loan originator without being licensed, or act as a mortgage-loan

originator for more than one person. The license of a mortgage-loan originator is not effective

during any period when such mortgage-loan originator is not associated with a lender or loan-

broker licensee.

     (c) Each loan negotiated, solicited, placed, found, or made without a license as required

in subsection (a) shall constitute a separate violation for purposes of this chapter.

     (d) No person engaged in the business of making or brokering loans in this state, whether

licensed in accordance with the provisions of this chapter or exempt from licensing, shall accept

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applications, or referral of applicants from, or pay a fee to, any lender, loan broker, or mortgage-

loan originator who is required to be licensed or registered under said sections but is not licensed

to act as such by the director, or the director's designee.

     SECTION 5. Section 44-3-3 of the General Laws in Chapter 44-3 entitled "Property

Subject to Taxation" is hereby amended to read as follows:

     44-3-3. Property exempt.

     (a) The following property is exempt from taxation:

     (1) Property belonging to the state, except as provided in § 44-4-4.1;

     (2) Lands ceded or belonging to the United States;

     (3) Bonds and other securities issued and exempted from taxation by the government of

the United States or of this state;

     (4) Real estate, used exclusively for military purposes, owned by chartered or

incorporated organizations approved by the adjutant general and composed of members of the

national guard, the naval militia, or the independent, chartered-military organizations;

     (5) Buildings for free public schools, buildings for religious worship, and the land upon

which they stand and immediately surrounding them, to an extent not exceeding five (5) acres so

far as the buildings and land are occupied and used exclusively for religious or educational

purposes;

     (6) Dwellings houses and the land on which they stand, not exceeding one acre in size, or

the minimum lot size for zone in which the dwelling house is located, whichever is the greater,

owned by, or held in trust for, any religious organization and actually used by its officiating

clergy; provided, further, that in the town of Charlestown, where the property previously

described in this paragraph is exempt in total, along with dwelling houses and the land on which

they stand in Charlestown, not exceeding one acre in size, or the minimum lot size for zone in