Commerce Committee advances bill to remove sunset on state virtual-currency licensing

Senator Reese told the Senate Commerce Committee on March 11 that Senate Bill 163 would remove the expiration date from Louisiana’s Virtual Currency Business Act so the state can continue licensing virtual-currency businesses until a federal licensing framework exists. "This law will actually remove the sunset date that had been previously placed on our licensing regulation for virtual currency businesses," Reese said.

Why it matters: The change preserves state supervision and consumer protections for businesses that exchange, transfer or store virtual currency in Louisiana rather than allowing the licensing to lapse automatically. Reese said the state originally set a sunset because lawmakers expected a federal standard; that standard has not been established.

Michelle Johnson of the Office of Financial Institutions told the committee OFI "has been running the Virtual Currency Business Act program for a couple years now, and we have approximately 36 licensees." She said licensed activities include exchange, transfer and custody services provided via online platforms or kiosks. Johnson described financial safeguards in place: a $100,000 minimum tangible net worth requirement for licensees and surety-bond requirements that vary by activity (she said bonding can range up to about $7,000,000 for larger firms).

Senator Morris asked whether the licensed firms are ‘‘brokers’’ like major exchanges; Johnson replied the program covers both large national operators and smaller local platforms and that bonding requirements are calibrated to the company’s business in the state. Committee members noted that a midyear federal change could require an orderly statutory unwind and that removing the sunset allows the Legislature to repeal the state licensing regime later if the federal government acts.

The committee moved SB 163 favorably without objection.

What’s next: The bill was reported favorably by the Commerce Committee and, if placed on the Senate calendar, would move to a floor consideration where its final enactment would depend on subsequent floor action.