Blockchain Task Force
In 2019, the FBBA advocated for the first blockchain bill in the State of Florida, the creation of a blockchain task force within Florida’s state government.
The goal of this bill was to gain the government’s interest in blockchain technology, its use cases in government, and the growing industry here in Florida.
FBBA representatives attended each committee meeting the bill was sent through. We supported Senator Gruters (Senate Sponsor) and Representative David Santiago (House Sponsor) in every way possible. The first Blockchain Day at the Capitol was organized to promote Senate Bill 1024. FBBA representatives met with over 40 different legislators.
Due to our efforts and our various partners, the bill did not receive a single “no” vote throughout the entire process.
Finally, On May 23, 2019, Florida Gov. Ron DeSantis signed SB 1024 into law to establish the Florida Blockchain Task Force (Blockchain Task Force) within the Florida Department of Financial Services. To learn more about the bill, go here:
Florida Blockchain Task Force Initiative:
Since the formation of the Florida Blockchain Task Force, a dedicated team of FBBA members attended each meeting.
The Florida Blockchain Task Force met the following times: September 23, 2019, October 28, 2019, December 13, 2019, and February 21, 2020.
The FBBA’s role during each Blockchain Task Force meeting was to make sure that blockchain technology was accurately portrayed to members and to take note of any misinformation given throughout the meeting.
Although a report from the Task Force has yet to be published, the FBBA is looking forward to reading the report and sending it out to its members. To find the meeting minutes and recordings of the Blockchain Task Force meetings, please go here: https://www.myfloridacfo.com/division/cos/blockchain-taskforce
Florida Legislative Session
A well-designed and executed sandbox can facilitate innovation, protect consumers, and safeguard financial systems. Regulatory sandboxes can provide a Fintech business with valuable market insights while maintaining compliance, as well as greater knowledge of the laws surrounding its product or service, and the opportunity to begin building a relationship with a regulator.
The creation of Florida’s Financial Technology Sandbox is just another step in making Florida a safe state for blockchain and cryptocurrency innovators.
This hefty bill did more than create a new regulatory framework, but also abolished the Division of State Technology within the Department of Management Services (DMS), reestablished the Division of Telecommunications, and replaced the State Data Center with the Florida Digital Service.
The newly created Florida Digital Service is charged with proposing innovative solutions that securely modernize state government, achieving value through digital transformation and interoperability, and supporting the cloud-first policy.
The bill requires the Florida Digital Service (FDS) to develop a comprehensive enterprise architecture that addresses how information technology infrastructure may be modernized to achieve cloud-first objectives and to develop a data dictionary and data catalog for the enterprise.
The Florida Digital Service is now led by our close ally and blockchain hero, Jamie Grant.
Florida Legislative Session:
What would HB 1351 and SB 1758 do?
HB 1351 and SB 1758 introduce a clear definition of virtual currency, which is defined as “a medium of exchange in electronic or digital format” that does not include online gaming platform currencies or consumer rewards programs. This definition resolves some of the legal vagueness that the court grappled with in the Espinoza decision.
Furthermore, virtual currency businesses would not be penalized for holding virtual currencies on behalf of customers as part of the “permissible investments” requirements for money transmission licensure. Holding enough virtual currency to satisfy customer deposits is sufficient to cover these requirements; virtual currency businesses would not need to have double the reserves in an equivalent cash value, for instance.
Finally, the bills clarified that a business needs to register as a money transmitter when it serves as an intermediary for virtual currencies, which is defined as the ability to “unilaterally execute or indefinitely prevent” a transaction. This exempts non-custodial cryptocurrency activities from inappropriate money transmission regulations.
This legislation would modernized Florida’s money transmission regulations and ensure that the rules are technology neutral. Virtual currency businesses would be treated just like any other traditional business. Regulations would be no more or no less onerous simply because cryptocurrency is involved. If a firm is serving as a custodian for consumer funds, they will be regulated as such, regardless of what form the payment instrument takes.
This is a particularly important clarification for cryptocurrency activities, as there are a host of non-custodial applications that will benefit from regulatory clarity. Developers, miners, full node operators, smart contract participants, Lightning network entities, and normal users will have legal certainty that their activities will not be improperly considered money transmission by the state of Florida.
Florida Legislative Session
On May 12, 2022, Gov. Ron DeSantis signed bill CS/HB 273 (the Bill), amending Florida’s money services business (MSB) laws (i.e., Chapter 560 of the Florida Statutes) to, among other things, define “virtual currency” and address transactions involving “virtual currency.” The amendments to the Florida MSB laws take effect Jan. 1, 2023.
Part II of Chapter 560 requires licensure (unless an exemption from licensure applies) for any person who, for compensation, engages in “selling or issuing payment instruments” or engages in the activity of a “money transmitter.” Currently, the term “virtual currency” is not found in Chapter 560, and Chapter 560 does not address whether a person engaged in transactions involving “virtual currency” should be considered “money transmitter[s]” or otherwise engaged in “selling or issuing payment instruments.”
Over the last seven years, the Florida Office of Financial Regulation (OFR), the state agency that licenses and regulates financial services firms doing business in Florida, including MSBs, received over 70 petitions for declaratory statements seeking clarity on Chapter 560 licensing treatment of virtual currency and other digital assets. While the OFR has issued a number of declaratory statements discussing virtual currency activities, it did not take a clear position on licensing requirements until recently, when its declaratory statements began to align with a Florida Third District Court of Appeal ruling issued in January 2019