A bitcoin-related bill in New Hampshire which exempts persons using virtual currency from registering as money transmitters in New Hampshire drew significant support during a commerce committee hearing. If approved, House Bill 436 will allow companies to operate without having to follow strict KYC and AML restrictions. The bill, sponsored by Rep. Barbara Biggie and co-sponsored by Reps. Keith Ammon and John Hunt, passed the state house of representatives last month.
The speakers in favor far outnumbered those speaking against, the latter which was really only the New Hampshire banking commission.
The purpose, according to the bill’s sponsor, Barbara Biggie, is to encourage innovation in New Hampshire. She said the state consumer protection act will regulate bitcoin use. She noted the Chamber of Digital Commerce supports the bill.
State Banking Commissioner Jerry Little spoke against the measure and brought a subject matter expert to testify. “This proposes to exempt that industry from any oversight by New Hampshire,” he said. He said it is known that things will go wrong with the transmission of virtual currency.
“If there are problems, people will look to the banking department and say, ‘Where were you?’” he said. “You’re telling us to look the other way.”
If the banking department has the authority to regulate, consumers can call the department to investigate issues. “We have legal authority to order full, complete restitution,” he said. “Compare that to the scene that you are contemplating” should a consumer have an issue.
Little said if a consumer were to lose funds, the department would essentially be telling them to go and get a lawyer and try to find the company responsible. “It could be anywhere on the face of the earth,” he said.
Senate Commerce Committee Chairman Daniel Innis told Little that he did not see virtual currency as a bank, but as an equity. Little responded that if the buyer of a registered stock complains to the SEC that the stock was registered with incorrect information, the buyer could be entitled to get their money back, but under the proposed amendment, the situation would be different. “Do you want the SEC to be there when somebody sets up a sham corporation?” Little asked.
Another senator noted that when the state government regulated the construct of investment properties, the entity still failed. He said this leads him to question how much government oversight should have since the agencies are not infallible.
Little responded that in the case the senator cited there were multiple jurisdictions. “In this instance (of virtual currency) we’re creating an agency that does not have anybody regulating it,” he said.
“We are giving the false impression that we are going to help that consumer,” said a lawmaker who opposes having the banking department regulate virtual currency. If someone sends virtual currency and the transaction fails, they could call the banking department and ask them to take care of it. “I don’t think our banking department needs to be part of that,” he said.
Jeremy Kauffman, the governor’s advisor on the bill, said he moved to the state to work on a blockchain related business. He said the existing law regulates blockchain. The company has a token which it hopes to sell. He said there is a need for blockchain-based tokens to be bought and sold.
Kauffman said one company stopped operating in New Hampshire, the only state it does not operate in, because they are considered under the existing law to be a money transfer company.
Kauffman said the only companies to oppose this new regulation are banks. He said dealing with money license transmissions regulations is a “nightmare.”
“Please leave this industry alone,” Kauffman said.
“Technology goes where it’s welcome,” a lawmaker in favor of the bill said. He said it is important not to overregulate it. He said the bill will be a “middle ground” that includes consumer protection.
A senior assistant attorney general spoke against the bill. Removing oversight of virtual currency tansmitters from the banking department’s purview would leave it to the state apartment of justice, he said, which only responds to issues after there is a complaint.
One business owner who accepts bitcoin and has a bitcoin ATM said third parties are critical to bitcoin. In regard to consumers getting scammed. “None of the regulations will ever address that peer-to-peer scam,” he said.
Ian Freeman, co-chairman of the New Hampshire Liberty Party, supported the bill. He said people who oppose the bill have engaged in fearmongering.
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