Assembly OKs bill to streamline regulations for companies using blockchain financial applications
STATE HOUSE – The General Assembly today gave its final approval to legislation sponsored by House Majority Leader K. Joseph Shekarchi and Sen. Louis P. DiPalma to clarify and streamline Rhode Island’s financial regulatory structure for users of blockchain technology. The bill will now be sent to the governor.
The legislation (2019-H 5847A), 2019-S 0753Aaa) will consolidate two licenses that are currently required for tech companies that assist consumers with financial blockchain transactions, and will better position Rhode Island’s businesses to use this emergent technology.
“Our message in Rhode Island for the last several years is that we welcome business development and growth. This bill is one element of the effort to make Rhode Island a place where businesses can thrive. By readying our regulatory systems for the technology of the future, we’re encouraging tech companies that may be developing blockchain technology to consider Rhode Island, while also making it easier for other companies, new and existing, to use it. This bill is about making it easier to do business in Rhode Island,” said Leader Shekarchi (D-Dist. 23, Warwick).
Blockchain is a database technology that can be used to store information in a secure and public or encrypted manner, creating a decentralized database of blocks of data that are shared by all users. Each block is attached to a chain of the blocks that came before it, creating an easily traceable and hard-to-alter history of the data. Although the design’s most high-profile use is to track the virtual currency Bitcoin, it has many applications, some financial, some not. Walmart has begun using it to track the supply chain of its produce, and Rhode Island-based CVS and Fidelity have been using it to ensure patient information security and to facilitate the financial transactions of the future.
“This is economic development legislation. By adopting it, we are making space for new kinds of companies and industries and helping to advance the companies that are already here. The more we can adapt our laws and regulations to emerging technologies like this, the more inviting we are to entrepreneurs and growing companies that will bring high-paying jobs in technology and other sectors. This legislation will help strengthen the economy and create jobs,” said Senator DiPalma (D-Dist. 12, Middletown, Newport, Little Compton, Tiverton).
The legislation concerns only the functions of blockchain that that involve currency or virtual currency, since those are already licensed activities in Rhode Island.
This bill would consolidate Rhode Island’s current electronic money transmitter license and its sales of checks license, and add the authority for virtual currency to the new currency transmission license. The new license will allow licensees to conduct all the activities allowed under the two prior licenses, plus virtual currency activities. Currently, users of blockchain financial applications are required to have both licenses.
Much of the bill is based on model law used in other states, reducing the regulatory burden for companies that operate in several states.
The legislation is supported by the Department of Business Regulation (DBR).
“DBR is proud to support this key piece of legislation,” said DBR Director Liz Tanner. “The bill addresses needed clarifications that will enable the blockchain community to grow in Rhode Island.”
The legislation is cosponsored in the House by Rep. Joseph J. Solomon Jr. (D-Dist. 22, Warwick), Rep. June S. Speakman (D-Dist. 68, Warren, Bristol), Rep. Christopher R. Blazejewski (D-Dist. 2, Providence) and Rep. Thomas E. Noret (D-Dist. 25, Coventry, West Warwick). Senate cosponsors include Sen. Frank Lombardo III (D-Dist. 25, Cranston), Sen. William J. Conley Jr. (D-Dist. 18, East Providence, Pawtucket), Sen. Hanna M. Gallo (D-Dist. 27, Cranston, West Warwick) and Sen. Bridget G. Valverde (D-Dist. 35, North Kingstown, East Greenwich, Narragansett, South Kingstown).
For more information, contact:
Meredyth R. Whitty, Publicist
State House Room 20
Providence, RI 02903