PRIOR PRINTER'S NO. 2657 PRINTER'S NO. 3746
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No. 2081
Session of
2024
INTRODUCED BY WAXMAN, KHAN, HILL-EVANS, DALEY, CONKLIN AND
GREEN, MARCH 5, 2024
AS REPORTED FROM COMMITTEE ON COMMERCE, HOUSE OF
REPRESENTATIVES, AS AMENDED, OCTOBER 9, 2024
AN ACT
1 Providing for collateral requirements for virtual currency
2 lenders and for segregation of funds; and imposing penalties.
3 The General Assembly of the Commonwealth of Pennsylvania
4 hereby enacts as follows:
5 Section 1. Short title.
6 This act shall be known and may be cited as the Digital Asset
7 Regulation Act.
8 Section 2. Definitions.
9 The following words and phrases when used in this act shall
10 have the meanings given to them in this section unless the
11 context clearly indicates otherwise:
12 "Cash equivalent." Securities, including treasury bills,
13 commercial paper, marketable securities, money market funds,
14 short-term government bonds, a certificate of deposit or a
15 banker's acceptance.
16 "Client." A third party, other than the virtual currency
17 lender or a virtual currency, that uses a virtual currency
 1 lender for the lending of virtual currency.
2 "Collateral." Money or an item of value pledged as security
3 for repayment in the event of a default.
4 "Department." The Department of Banking and Securities of
5 the Commonwealth.
6 "Digital asset." A representation of economic, proprietary
7 or access rights that is stored in a machine-readable format and
8 has a transaction history that is recorded in a distributed,
9 digital ledger or digital data structure in which consensus is
10 achieved through a mathematically verifiable process. The term
11 includes digital consumer assets and virtual currency.
12 "Digital consumer asset." A digital asset that is used or <--
13 bought primarily for consumptive, personal or household
14 purposes. The term includes any other digital asset that is not
15 virtual currency.
16 "DIGITAL CONSUMER ASSET." A DIGITAL ASSET THAT IS PRIMARILY <--
17 FOR CONSUMPTIVE, PERSONAL OR HOUSEHOLD PURPOSES, INCLUDING
18 ACCESS TO GOODS, SERVICES OR CONTENT. THE TERM INCLUDES ANY
19 OTHER DIGITAL ASSET THAT IS NOT VIRTUAL CURRENCY.
20 "Lending." Engaging in the business of receiving monetary
21 value for transmission to a location inside or outside of the
22 United States by any means, including wire, facsimile or
23 electronic transfer.
24 "Money." As defined in section 1 of the act of September 2,
25 1965 (P.L.490, No.249), referred to as the Money Transmission
26 Business Licensing Law.
27 "Virtual currency." A digital asset that is used as a medium
28 of exchange, unit of account or store of value and is not
29 recognized as legal tender by the Federal Government.
30 "Virtual currency lender." A person that is regularly
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 1 engaged in the lending of virtual currency, digital consumer <--
2 assets or digital assets OR DIGITAL ASSETS USED FOR FINANCIAL <--
3 PURPOSES.
4 Section 3. Applicability.
5 This act shall apply to any virtual currency lender,
6 institution or any other person that lends virtual currency to a
7 third party in this Commonwealth.
8 Section 4. Notice of intent to conduct business.
9 No later than 90 days before conducting business in this
10 Commonwealth, a virtual currency lender shall send a letter to
11 the department notifying the department that the virtual
12 currency lender intends to conduct virtual currency lending in
13 this Commonwealth. The virtual currency lender shall include all
14 of the following information in the letter:
15 (1) The virtual currency lender's name.
16 (2) Parent companies and subsidiaries of the virtual
17 currency lender.
18 (3) A statement explaining the virtual currency lender's
19 intention on lending virtual currency in this Commonwealth
20 and include any Internet websites or branding that the
21 virtual currency lender wishes to offer.
22 (4) A statement that the virtual currency lender is in
23 compliance with applicable Federal and State laws.
24 (5) Any other information deemed relevant and as
25 specified by the department.
26 Section 5. Collateral requirements for virtual currency
27 lenders.
28 (a) Collateral required.--A virtual currency lender shall
29 require collateral, in connection with the services provided as
30 a virtual currency lender, to be held in a trust for all digital
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 1 consumer assets.
2 (b) Collateral amount.--A virtual currency lender shall
3 secure a minimum of 100% of the value of the virtual currency
4 exchanged in money or cash equivalents to serve as collateral
5 under subsection (a). The money or cash equivalent may be
6 increased or decreased depending on the market price of the
7 virtual currency.
8 (c) Use of collateral.--In the event of a default or other
9 circumstance that results in a client losing access to any
10 account with the virtual currency lender, the client's virtual
11 currency or the client's money, through fraud or other
12 malfeasance or through a technical failure, a virtual currency
13 lender shall use collateral to reimburse a client.
14 (d) Agreement required.--A virtual currency lender shall
15 require an agreement to be signed by both a client and the
16 virtual currency lender regarding the collateral required under
17 this section.
18 (e) Penalties.--
19 (1) Failure by a virtual currency lender to establish
20 policies in accordance with the requirements under this
21 section shall constitute a violation of this section, and the
22 virtual currency lender shall be subject to the following
23 fines imposed by the department:
24 (i) $5,000 for the first violation.
25 (ii) $10,000 for a second violation.
26 (iii) $20,000 for a third and each subsequent
27 violation.
28 (2) After a third violation of this section, the
29 department may conduct a review of the virtual currency
30 lender and may prohibit the virtual currency lender from
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 1 operating within this Commonwealth.
2 Section 6. Segregation of funds.
3 (a) Segregation required.--A virtual currency lender shall,
4 in connection with the services provided as a virtual currency
5 lender, manage a consumer's money and digital consumer assets
6 separately from the virtual currency lender's own money and
7 digital assets in accordance with the regulations promulgated
8 under section 7.
9 (b) Penalties.--
10 (1) Failure by a virtual currency lender to establish
11 policies in accordance with the requirements under this
12 section shall constitute a violation of this section, and the
13 virtual currency lender shall be subject to the following
14 fines imposed by the department:
15 (i) $5,000 for the first violation.
16 (ii) $10,000 for a second violation.
17 (iii) $20,000 for a third and each subsequent
18 violation.
19 (2) After a third violation of this section, the
20 department may conduct a review of the virtual currency
21 lender and may prohibit the virtual currency lender from
22 operating within this Commonwealth.
23 Section 7. Regulations
24 The department shall promulgate regulations necessary to
25 implement and enforce this act.
26 Section 8. Effective date.
27 This act shall take effect in 60 days.
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