This bill, sets forth various requirements and restrictions concerning virtual currency and virtual currency business activity. Section 9 of this bill defines “virtual currency business activity” to mean, in general: (1) receiving virtual currency for transmission or transmitting virtual currency; (2) storing, holding or maintaining custody or control of virtual currency on behalf of others; (3) buying and selling virtual currency as a business; (4) performing exchange services as a business; or (5) controlling or issuing virtual currency. Section 8 of this bill designates a person who engages in virtual currency business activity as a “virtual currency business.” Sections 3-7 and 9.5 of this bill define additional words and terms for the purposes of sections 2-17.5 of this bill. Section 10 of this bill exempts a broker-dealer registered with the Securities and Exchange Commission and certain financial institutions from the provisions of sections 2-17.5. Section 11 of this bill requires a virtual currency business, before engaging in virtual currency business activity with or on behalf of a resident of this State, to register with the Commissioner of Financial Institutions by submitting a form containing certain information. Section 12 of this bill provides that if the Commissioner determines that a virtual currency business has committed an act constituting fraud against an older person, vulnerable person or a person under 21 years of age, the Commissioner is authorized to impose a civil penalty against the virtual currency business in an amount not to exceed 5 percent of the gross revenue of the virtual currency business in the immediately preceding year that was derived from engaging in virtual currency business activities. Section 12 requires the money collected from the civil penalty to be deposited in the Virtual Currency Recovery Account, which is created by section 13 of this bill. Section 14 of this bill authorizes the Commissioner to award payments of restitution from the Account to eligible residents. Under section 14, a resident is eligible for a grant from the Account if: (1) the resident is a victim of fraud committed by a virtual currency business; (2) at the time the fraud was committed, the resident was an older person, a vulnerable person or a person under 21 years of age; and (3) the resident meets any other criteria for eligibility established by the Commissioner by regulation. Section 15 of this bill requires a virtual currency business, before engaging in virtual currency business activity with or on behalf of a resident, to provide to the resident a written disclosure containing the material risks involved in the activity and certain other information. Section 15.5 of this bill prohibits a person from engaging in any act or practice for the purpose of soliciting virtual currency business activity with a resident of this State that is intended to produce an erroneous belief by the resident that the person wishes to pursue a romantic or sexual relationship. Section 16 of this bill prohibits a virtual currency business from engaging in advertising or promotions which target any person or group of persons who, for certain specified reasons, is particularly vulnerable to financial exploitation. Section 17 of this bill authorizes the Commissioner to adopt regulations to carry out the provisions of sections 2-17. Existing law authorizes a domestic life insurer to establish separate accounts and allocate to those accounts amounts to provide for life insurance or annuities payable in fixed or variable amounts, or both. Existing law authorizes any amounts allocated to a separate account to be invested without regard to any requirements or limitations set forth under existing law governing the investments of life insurance companies. (NRS 688A.390) Section 17.5 of this bill prohibits a domestic life insurer from investing any amount allocated to a separate account to provide for life insurance in virtual currency.

Statutes affected:
Reprint 1: 688A.390