Florida’s Governor Ron DeSantis signed new cryptocurrency legislation on May 12, 2022. The new law provides a legal definition of what virtual currency is, amends Florida’s financial regulations related to money service businesses (MSBs), while ultimately reducing restrictions on Florida’s crypto industry. The new Florida cryptocurrency bill will become effective on January 1, 2023.
Virtual Currency Definition
The new crypto bill signed by Governor DeSantis introduces a definition for the term “virtual currency”.
The definition states that virtual currency is “a medium of exchange in electronic or digital format that is not currency”. There are two important exclusions from the definition of virtual currency that relate to utility tokens which are crypto currencies that have a use only within a specific ecosystem.
The first exclusion is that tokens “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” are not virtual currency.
The second exclusion is for tokens that are “used exclusively as part of a consumer affinity or rewards program and can be applied solely as payment for purchases with the issuer or other designated merchants but cannot be converted into or redeemed for currency or another medium of exchange.”
Most popular crypto currencies such as Bitcoin (BTC), Ethereum (ETH), Solana (SOL), Dogecoin (DOGE) and Shiba Inu (SHIB) as well as stablecoins such as Tether (USDT) and USD Coin (USDC) will fall under the definition of cryptocurrency and therefore businesses offering these products to the public will be treated as Money Service Business (MSBs) for regulatory purposes.
There will be limited compliance requirements for businesses offering game and/or customers rewards utility tokens. Utility tokens are used for earning rewards in a game such as Axie Infinity Shards (AXS) or a metaverse such as Decentraland’s MANA token and tokens used in customer reward programs
Easing Restrictions and Licensing Requirements
The most important provision is that now individual crypto traders who trade tokens on peer-to-peer platforms are no longer required to obtain a Money Transmitter License which has many requirements, including $100,000 minimum net worth, surety bond and extensive background checks and fingerprinting.
Although the bill removes licensing requirements for individuals, cryptocurrency exchanges such as Binance and Coinbase will still need a Money Transmitter License to legally operate in the state of Florida.
The new bill removes the requirement for crypto exchanges and other intermediaries who hold cash and other assets equivalent to the value of the cryptocurrency being transmitted. Instead, crypto exchanges will only need to hold crypto currency of the same type and amount owed to the party that is to receive the transmission.
The new Florida crypto regulation also introduces some new requirements. One of them is that crypto businesses will have to ensure that those tokens are delivered to the designated recipient within 10 business days after receiving payment. Crypto businesses that are required to be licensed as Money Transmitters will also be required to keep daily records of what cryptocurrency is transmitted and where.
The new Florida crypto bill will streamline, clarify and ease restrictions on cryptocurrencies and businesses involved with crypto when it becomes effective on January 1, 2023. That will cement Florida’s position as the premier crypto hub for the United States, leading to increased crypto business activity and investment in the state.
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