Alabama SB 187: Digital assets, regulates digital asset operations

Bill Text

SB187 INTRODUCED
Page 0
SB187
W42F999-1
By Senator Coleman
RFD: Banking and Insurance
First Read: 29-Feb-24
1
2
3
4
5

W42F999-1 02/19/2024 THR (L)THR 2024-762
Page 1
First Read: 29-Feb-24
SYNOPSIS:
In general, digital assets broadly refer to any
digital representation of value which is recorded
electronically, such as virtual currency or
cryptocurrency.
This bill would prohibit the state from
restricting the use or storage of digital assets,
levying additional taxes on digital assets, restricting
digital asset mining, or enacting zoning restrictions
or noise restrictions specific to digital asset mining.
This bill would exempt digital asset mining,
staking, and the operation of a node from
classification as a security or money transmission.
This bill would also define terms.
A BILL
TO BE ENTITLED
AN ACT
Relating to digital assets; to prohibit the state from
restricting the use or the storage of digital assets, levying
additional taxes on digital assets, restricting digital asset
mining, or enacting zoning restrictions or noise restrictions
specific to digital asset mining; and to exempt digital asset
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

SB187 INTRODUCED
Page 2
specific to digital asset mining; and to exempt digital asset
mining, staking, and the operation of a node from
classification as a security or money transmission.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. For the purposes of this act, the following
terms have the following meanings:
(1) BLOCKCHAIN. Data that is shared across a network to
create a ledger of verified transactions or information among
network participants, linked using cryptography to maintain
the integrity of the ledger and to execute other functions,
and distributed among network participants in an automated
fashion to concurrently update network participants on the
state of the ledger and any other functions.
(2) BLOCKCHAIN PROTOCOL. Any executable software
deployed to a blockchain composed of source code that is
publicly available and accessible, including a smart contract
or any network of smart contracts.
(3) DIGITAL ASSET. Virtual currency, cryptocurrencies,
natively electronic assets, including stablecoins and
non-fungible tokens, and other digital-only assets that confer
economic, proprietary, or access rights or powers.
(4) DIGITAL ASSET MINING. Using electricity to power a
computer or node for the purpose of securing a blockchain
network.
(5) DIGITAL ASSET MINING BUSINESS. A group of computers
working at a single site which consumes more than one megawatt
of energy on an average annual basis for the purpose of
securing a blockchain network or generating digital assets.
(6) HARDWARE WALLET. A physical device that is not
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56

SB187 INTRODUCED
Page 3
(6) HARDWARE WALLET. A physical device that is not
continuously connected to the Internet, allows an individual
to secure and transfer digital assets, and allows the owner to
retain independent control over the digital assets that are
stored in the wallet.
(7) NODE. A computational device that does any of the
following:
a. Communicates with other devices or participants on a
blockchain to maintain consensus and the integrity of that
blockchain.
b. Creates or validates transaction blocks.
c. Contains a copy of a blockchain but does not
exercise discretion over transactions initiated by the end
users of the blockchain protocol.
(8) SELF-HOSTED WALLET. A digital interface used to
secure and transfer digital assets and under which the owner
of the digital assets retains independent control over the
digital assets that are secured by the digital interface.
(9) STAKING. Using a node to lock digital assets in
order to operate the consensus mechanism of a blockchain
protocol.
(10) STAKING AS A SERVICE. The provision of technical
staking services necessary to facilitate participation in
blockchain protocol consensus mechanisms, including, but not
limited to, the operation of nodes and other associated
infrastructure.
Section 2. (a) The state shall not prohibit, restrict,
or otherwise impair the ability of an individual to do either
of the following:
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84

SB187 INTRODUCED
Page 4
of the following:
(1) Use digital assets to purchase legal goods or
services.
(2) Maintain a self-hosted wallet or a hardware wallet.
(b) The state shall not subject digital assets to any
additional tax, withholding, assessment, or charge when the
digital asset is used as a method of payment.
(c)(1) A transaction shall be exempt from capital gains
taxes if both of the following conditions exist:
a. A digital asset was used as a method of payment.
b. The value of the transaction was two hundred dollars
($200) or less.
(2) The dollar amount listed in paragraph (1)b. shall
be adjusted each year on January 1 according to the Consumer
Price Index.
Section 3. (a)