Biz Blocks by Michael Bacina, Partner Piper Alderman Lawyers | Jun 26/2020
The Governor of Louisiana has recently signed and made effective the legislature HB701, the Virtual Currency Businesses Act, to regulate and license virtual currency businesses.
Sponsored by state Rep. Mark Wright (R-77), HB701 sailed through the state House of Representatives, and the Senate Committee on Commerce, Consumer Protection and International Affairs with unanimous approval.
With the Bill coming into effect, any virtual currency business that wishes to operate in Louisiana must successfully complete a formal application process with the state Office of Financial Institutions (OFI).
Registrants licensed by states with comparable regimes (such as the NY Bitlicence) would not need a Louisiana license under the bill. Also, individuals dealing with less than USD$35,000 annually would only need to register with the OFI.
Section 1385(2) of the new Bill, stipulates that license applicants must submit:-
- The legal names and addresses of all top executives;
- an account of the business for the past five years, and;
- a declaration of any previous criminal convictions for all the executives, and
- if the firm has acquired any other licenses in the other states.
Upon receiving all the required documents, the OFI will investigate the financial condition of the applicants, considering s1385 D(1):
(a) The financial condition and responsibility of the applicant;
(b) The relevant financial and business experience, character, and general fitness of the applicant; and
(c) The competence, experience, character, and general fitness of each executive officer, each responsible individual, and any person that has control of the applicant.
If the application is denied, the applicant would be able to appeal the decision within 30 days after receiving notification of the denial.
Firms that have been licensed in other states whose regulations are similar to Louisiana’s will not have to go through the licensing process. Additionally, firms that deal with $35,000 or less in capital will not need to apply for the license, and will only require registering with the OFI.
Rep. Stephen Pugh said on the Bill:-This is just a tip of the iceberg, it still has a lot to do if it’s to properly regulate the digital currency industry.
Nonetheless, Louisiana appears to be the next US state demanding clarity on regulations for digital currency businesses and BitLicenses. So far, New York has been the most active state in seeking regulatory clarity, with the state approving 18 Bitlicenses since 2015.