Bill Summary – FastDemocracy

WEST VIRGINIA LEGISLATURE
REGULAR SESSION
                Introduced Senate Bill 749                          FISCAL
                                                     NOTE
 By Senators Rucker, Chapman, Taylor, Karnes, and Azinger [Introduced February 12, 2024; referred to the Committee on Banking and Insurance; and then to the Committee on Finance]
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  A BILL to amend the Code of West Virginia, 1931, as amended, by adding thereto a new article,
            designated §12-10-1, §12-10-2, §12-10-3, §12-10-4, §12-10-5, §12-10-6, §12-10-7, §12-
            10-8, and §12-10-9; and to amend and reenact §47-6-4 of said code, all relating generally
            to the use of gold and silver as legal tender in the State of West Virginia; defining terms;
            authorizing the State Treasurer to establish the West Virginia Bullion Depository within the
            State Treasury; making the State Treasurer the administrator of the depository; providing
            that deposits are held in trust for account holders and are not subject to appropriation;
            prohibiting payment of interest on deposits; establishing the West Virginia Bullion
            Depository administrative account; setting forth the duties of the administrator;
           enumerating the powers of the administrator; setting forth requirements for deposits;
           authorizing the depository to issue transactional currency; requiring the administrator to
           promulgate legislative rules and emergency rules subject to certain requirements;
           exempting depository account contents from state taxation; providing for the confidentiality
           of depository records; recognizing gold coin issued by the United States as legal tender in
           West Virginia; and recognizing bullion, specie, and transaction currency, issued by the
           depository, as legal tender in West Virginia.
     Be it enacted by the Legislature of West Virginia:
                     CHAPTER 12. PUBLIC MONEYS AND SECURITIES.
     ARTICLE           10.      THE       WEST         VIRGINIA        LEGAL         TENDER          ACT.
     §12-10-1. Short Title.
            This article and the amendments to §47-6-4 of this code, adopted during the 2024 Regular
  Session of the Legislature, shall collectively be known and may be cited as "the West Virginia
  Legal Tender Act."
     §12-10-2. Definitions.
            (a) "Administrator" means the West Virginia State Treasurer.
            (b) "Account holder" means the original depositor to a depository account, or a successor
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  or assignee of said depositor.
             (c) "Bullion" means precious metals that are formed into uniform shapes and quantities
  such as ingots, bars, or plates, with uniform content and purity, as are suitable for or customarily
  used in the purchase, sale, storage, transfer, and delivery of bulk or wholesale transactions in
  precious metals.
             (d) "Deposit" means the establishment of an executory obligation of the depository to
  deliver to the order of the person establishing with the depository the obligation, on demand, a
 quantity of a specified precious metal, in bullion, specie, or a combination of bullion and specie,
 equal to the quantity of the same precious metal delivered by or on behalf of the depositor into the
 custody of the depository or a depository agent.
            (e) "Depositor" means a person who makes a deposit.
            (f) "Depository" means the West Virginia Bullion Depository authorized by this article.
            (g) "Depository account" means the rights, interests, and entitlements established in favor
 of a depositor with respect to a deposit in accordance with this article and rules adopted under this
 article.
            (h) "Depository agent" means a person licensed in accordance with this article to serve as
 an intermediary between the depository and an account holder in making a transaction in precious
 metals bullion or specie.
            (i) "Precious metal" means a metal, including gold, silver, platinum, palladium, and
 rhodium, that:
            (1) Bears a high value-to-weight ratio relative to common industrial metals; and
            (2) Customarily is formed into bullion or specie.
            (j) "Specie" means a precious metal stamped into coins of uniform shape, size, design,
 content, and purity, suitable for or customarily used as currency, as a medium of exchange, or as
 the medium for purchase, sale, storage, transfer, or delivery of precious metals in retail or
 wholesale transactions.
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           (k) "Transactional currency" means a representation of actual gold or silver bullion or
 specie, held in a depository account by a depository account holder, which may be transferred by
 electronic instruction. Such representation shall reflect the exact units of gold and silver bullion or
 physical specie in the pooled depository account in its fractional troy ounce measurement as
 provided by this article.
     §12-10-3. West Virginia Bullion Depository authorized.
            (a) The administrator is hereby authorized to establish a West Virginia Bullion Depository
  which shall be an agency and instrumentality of this state within the West Virginia State Treasury.
            (b) Upon the establishment of the depository, the depository shall serve as the custodian,
  guardian, and administrator of all bullion and specie deposited with the State pursuant to this
  article. All bullion or specie held in the depository is held in trust for depository account holders and
  is not subject to legislative appropriation.
            (c) The accounts established in the depository shall not be interest-bearing accounts. The
  depository may not pay interest on a depository account or pay any other amount to the account
  holder in the nature of interest.
           (d) Upon the establishment of the depository, there shall be created a separate special
 revenue account within the State Treasury titled the "Bullion Depository Administrative Account",
 which shall receive all fees, charges, and penalties collected by the depository as well as any
 appropriations to the depository from the Legislature. The administrator shall make expenditures
 from the administrative account for the purposes of implementing, operating, and maintaining the
 depository. Any balance, including accrued interest and other returns, remaining in the
 administrative account at the end of each fiscal year shall not revert to the General Revenue Fund
 but shall remain in the fund to be expended as authorized by this article.
     §12-10-4. Duties and powers of the administrator.
            (a) Upon the establishment of the West Virginia Bullion Depository, the administrator shall
  have the following duties:
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            (1) To administer, supervise, and direct the operations and affairs of the depository and
  depository agents;
            (2) To establish and publish the references by which the official exchange rate for pricing
  bullion and specie transactions in terms of United States dollars or other currency is determined at
  the time of a depository transaction in reference to fractional troy ounce measurement, and to
  establish procedures and facilities through which the rates are made discoverable at all
  reasonable times by system participants, both on a real-time basis and retrospectively;
           (3) To provide state-of-the-art security measures to prevent theft, fraud, or other
 unauthorized use or removal of deposits from the depository and to provide for the confidentiality
 and privacy of account holder information;
           (4) To maintain insurance coverage sufficient to cover the full value of all deposits in the
 depository;
           (5) To maintain adequate records of all depository accounts, and all transactions, deposits,
 and withdrawals associated with each account;
           (6) To operate in compliance with all federal and state laws pertaining to bullion storage,
 management, and transactions; and
           (7) To enter into a contract with each account holder prior to the opening of an account
 establishing the respective duties and responsibilities of the depository and the account holder.
           (b) Upon the establishment of the depository, the administrator shall have the following
 powers with regard to depository administration:
           (1) To execute contracts and other instruments for necessary goods and services, employ
 necessary personnel, and engage the services of private consultants, auditors, counsel,
 managers, trustees, depository agents, and any other contractor or professional needed for
 rendering professional and technical assistance and advice to the depository: Provided, That
 selection of these services is not subject to the provisions of §5A-3-1 et seq. of this code;
           (2) To assess, collect, and expend reasonable administrative fees, charges, and penalties
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 from account holders and to establish the method by which funds in the Bullion Depository
 Administrative Account shall be allocated to pay for the administrative and operating costs of the
 depository;
           (3) To establish physical standards for gold and silver materials that will qualify as bullion or
 specie accepted as deposits;
           (4) To place a lien on a depository account when necessary to secure any fees, charges, or
 other obligations owed to the depository;
           (5) To investigate and audit depository account activity and to disqualify or suspend an
 account holder based on a violation of the contract between the account holder and depository,
 apparent misconduct, or illegal activity;
           (6) To employ security officers authorized to carry firearms to ensure the physical security
 of the depository: Provided, That said officers must first fulfill the certification requirement for
 law-enforcement officers under §30-29-5 of this code and take and file an oath of office as required
 by §6-1-1 et seq. of this code;
           (7) To establish transactional currency, as provided in §12-10-6 of this code;
           (8) To promulgate legislative rules pursuant to §29A-3-1 et seq. of this code; and
           (9) To take all other necessary actions to carry out the requirements of this article subject to
 the limitations of applicable state and federal law.
     §12-10-5. Deposits.
            Upon the establishment of the West Virginia Bullion Depository, the administrator shall
  accept from individuals, for deposit into authorized accounts, gold and silver bullion or specie:
  Provided, That the administrator may establish minimum standards for materials that will qualify
  as bullion or specie accepted by the depository through the administrator’s legislative rulemaking
  authority.
     §12-10-6. Transactional currency authorized.
            (a) The West Virginia Bullion Depository may establish a transactional currency, backed by
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  gold and silver bullion or specie, for account holders to utilize. Each unit of the transactional
  currency issued to an account holder must represent a particular fraction of a troy ounce of gold or
  silver held in the account holder’s depository account.
            (b) The value of a unit of the transactional currency at the time of a transaction must be
  equal to the value of the appropriate fraction of a troy ounce of gold or silver, respectively at the
  time of that transaction, as published by the West Virginia Bullion Depository pursuant to
  §12-10-4(a)(2) of this code.
            (c) The administrator may establish a reasonable fee for the issuance or redemption of the
 transactional currency and an industry standard merchant fee for use. The administrator shall
 deposit all transaction currency fee proceeds into the West Virginia Bullion Administrative Fund.
     §12-10-7. Rulemaking.
            (a) Prior to the establishment of the depository authorized by this article, the administrator
  shall promulgate emergency rules according to the requirements of §29A-3-15 of this code which
  shall, at a minimum:
            (1) Establish a procedure for the administrator to determine and publish valuation of bullion
  or specie by fractional troy ounce, along with the exchange rates of bullion and specie accepted by
  the depository;
            (2) Establish account opening requirements;
            (3) Establish account ownership rights and requirements for joint account ownership,
  account beneficiaries, and account transfers;
           (4) Establish account deposit and withdrawal procedures, including but not limited to,
 procedures for the delivery of deposits to an account holder on demand;
           (5) Provide for the physical security of deposits and the privacy of account holder
 information;
           (6) Provide for regular third-party auditing of the depository and its procedures; and
           (7) Establish the method by which deposits may be redeemed for money if said redemption
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 is permitted by the rules.
           (b) Prior to the establishment of transactional currency authorized by this article, the
 administrator shall promulgate emergency rules according to the requirements of §29A-3-15 of
 this code, which shall, at a minimum:
           (1) Provide for the determination and publication of the value of transactional currency in
 real-time;
           (2) Establish the method by which currency may be redeemed with the depository for
 bullion or specie; and
           (3) Establish the method by which account holders will transact in the currency, whether by
 payment card,           digital currency,       or other method.
     §12-10-8. Exemption from taxation.
            For the purposes of chapter 11 of this code:
            (1) Bullion and specie held in the West Virginia Bullion Depository do not constitute
  personal property and shall not be subject to ad valorem personal property taxation;
            (2) The exchange of one type of legal tender for another type of legal tender recognized in
  this State shall not give rise to tax liability; and
            (3) The purchase, sale, or exchange of any type of legal tender recognized by this State
  shall not give rise to tax liability.
     §12-10-9. Confidentiality.
            All information pertaining to account holders or individual depository accounts is
  confidential and exempt from disclosure under chapter 29B of this code. Nothing in this section
  prohibits disclosure or publication of information in a statistical or other form which does not
  identify the individual accounts or account holders involved or provide other personal information.
                             CHAPTER 47. REGULATION OF TRADE.
     ARTICLE                      6.               MONEY                 AND                 INTEREST.
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    §47-6-4. Silver coin as legal tender.
           The gold or silver coin issued by the government of the United States and any bullion unit
 or specie accepted for deposit by the West Virginia Bullion Depository shall be a legal tender for
 the payment of all debts heretofore or hereafter contracted by the citizens of this state, and the
 same shall be received in payment of all debts due to the citizens of this state, and in satisfaction of
 all taxes levied by the authority of the laws of this state.
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              NOTE: The purpose of this bill is to recognize gold and silver bullion and specie as legal tender in West Virginia, to authorize the West Virginia Bullion Depository, and to authorize the depository to issue transactional currency backed by gold and silver.
              Strike-throughs indicate language that would be stricken from a heading or the present law and underscoring indicates new language that would be added.
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Statutes affected: 
Introduced Version: 12-10-1, 12-10-2, 12-10-3, 12-10-4, 12-10-5, 12-10-6, 12-10-7, 12-10-8, 12-10-9, 47-6-4