The Florida Senate
BILL ANALYSIS AND FISCAL IMPACT STATEMENT
(This document is based on the provisions contained in the legislation as of the latest date listed below.)
Prepared By: The Professional Staff of the Committee on Commerce and Tourism
BILL: SB 1758
INTRODUCER: Senator Brandes
SUBJECT: Money Services Businesses
DATE: March 26, 2021 REVISED:
ANALYST STAFF DIRECTOR REFERENCE ACTION
1. Arnold Knudson BI Favorable
2. McMillan McKay CM Favorable
3. RC
I. Summary:
SB 1758 makes several amendments to the Money Services Businesses statutes related to virtual
currency. The bill:
 Defines virtual currency as a medium of exchange in electronic or digital format that is not
currency;
 Subjects money transmitters to licensing requirements when transacting business involving a
virtual currency; and
 Prohibits payment instruments sellers from transacting business involving virtual currency.
The bill makes additional revisions to definitions and conforming changes.
The bill takes effect January 1, 2022.
II. Present Situation:
Background on Virtual Currencies
Virtual currency is a digital representation of value that functions as a medium of exchange, a
unit of account, and a store of value other than a representation of the U.S. dollar or a foreign
currency.1 Cryptocurrency is a type of virtual currency that utilizes cryptography to secure
transactions that are digitally recorded on a distributed ledger, such as a blockchain. 2 Units of
cryptocurrency are generally referred to as coins or tokens. Distributed ledger technology uses
independent digital systems to record, share, and synchronize transactions, the details of which
are recorded in multiple places at the same time with no central data store or administration
functionality.
1
Internal Revenue Service, Rev. Rul. 2019-24, https://www.irs.gov/pub/irs-drop/rr-19-24.pdf (last visited March 26, 2021).
2
See Id.
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U.S. regulators generally agree that virtual currency does not have legal tender status, even when
it has an equivalent value in real currency or acts as substitute for real currency, as in the case of
convertible virtual currencies like Bitcoin. The U.S. Internal Revenue Service classifies virtual
currency as property.3 The U.S. Commodity Futures Trading Commissions (CFTC) classifies
virtual currency as a commodity.4
While the U.S. Security and Exchange Commission has recently signaled that some virtual
currencies may meet the definitions of a security subject to its regulation,5 most state securities
administrators generally agree that virtual currency is not a security, even when purchased for
investment purposes.6
Recent actions by Florida to begin addressing virtual currencies highlight the challenges
authorities face in keeping up with emerging technologies. In 2017, the Florida Money
Laundering Act was amended to include virtual currency,7 which is defined to mean a medium of
exchange in electronic or digital format that is not a coin or currency of the United States or any
other country.8 In 2018, the Chief Financial Officer announced the appointment of a
cryptocurrency chief for the purpose of ensuring that cryptocurrencies are reliable forms of
payment that do not expose Floridians to financial fraud.9 The Seminole County Tax Collector’s
Office in April 2018, began accepting bitcoin and bitcoin cash as payment for new identification
cards, license plates, and property taxes.10 In 2019, the Florida Third District Court of Appeal in
State v. Espinoza,11 a criminal case involving laundering of a virtual currency, ruled that virtual
currency falls within the express definitions of “monetary value” and “payment instruments”
under ch. 560, F.S., governing money services businesses, thereby requiring registration of
money services businesses engaged in virtual currency transactions.
Florida’s Regulation of Money Services Businesses
The Office of Financial Regulation (OFR) is responsible for the administration and enforcement
of ch. 560, F.S. Under the law, a person must be licensed or exempt from licensure to engage in
3
Internal Revenue Service, Notice 2014-21, https://www.irs.gov/pub/irs-drop/n-14-21.pdf (last visited March 26, 2021).
4
U.S. Commodities Futures Trading Commission, CFTC Backgrounder on Oversight of and Approach to Virtual Currency
Futures Markets (January 4, 2018),
https://www.cftc.gov/sites/default/files/idc/groups/public/%40customerprotection/documents/file/backgrounder_virtualcurren
cy01.pdf (last visited March 26, 2021).
5
U.S Securities and Exchange Commission, Remarks at the Yahoo Finance All Markets Summit: Crypto (June 14,
2018)(Statement of Director William Hinman), https://www.sec.gov/news/speech/speech-hinman-061418 (last visited March
26, 2021).
6
North American Securities Administrators Association, Informed Investor Advisory; Cryptocurrencies,
https://www.nasaa.org/44848/informed-investor-advisory-cryptocurrencies/ (last visited March 26, 2021).
7
Ch. 2017-155, Laws of Fla.
8
Section 896.101(2)(j), F.S.
9
Department of Financial Services, CFO Jimmy Patronis: Florida Needs Cryptocurrency Oversight (June 26, 2018)
https://www.myfloridacfo.com/sitePages/newsroom/pressRelease.aspx?id=5057 (last visited March 26, 2021).
10
Martin E. Comas, Seminole Tax Collector Joel Greenberg Hires Blockchain Director as Legislators Study Technology,
Orlando Sentinel (March 4, 2019) https://www.orlandosentinel.com/news/seminole/os-ne-seminole-tax-collector-greenberg-
blockchain-20190304-story.html (last visited March 26, 2021).
11
State v. Espinoza, 264 So.3d 1055 (Fla. 3d DCA 2019).
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the activities of a money services business.12 State and federally chartered financial depository
institutions, banks, credit card banks, credit unions, trust companies, associations, and
international banking corporations are exempt from licensure under ch. 560, F.S.13
Under pt. II of ch. 560, F.S., corporations, limited liability companies, limited liability
partnerships, and foreign entities who, for compensation,14 engage in, or in any manner advertise
that they engage in the activities of a ‘”payment instrument seller” or in the activity of a “money
transmitter,” must be licensed as a money services business.
Payment Instrument Sellers
A payment instrument seller is a corporation, limited liability company, limited liability
partnership, or foreign entity qualified to do business in this state which sells a payment
instrument.15 A payment instrument is a check, draft, warrant, money order, travelers check,
electronic instrument, or other instrument, payment of money, or monetary value16 whether or
not negotiable, and does not include an instrument that is redeemable by the issuer in
merchandise or service, a credit card voucher, or a letter of credit.17
Current law does not address virtual currency related to payment instrument services under
part II of ch. 560, F.S. However in State v. Espinoza,18 the court interpreted the term “monetary
value” to contemplate virtual currency under s. 560.105, F.S., governing money services
business, thus requiring licensure as a payment instrument seller with the OFR for transactions
involving a virtual currency.
Money Transmitters
A money transmitter is a corporation, limited liability company, limited liability partnership, or
foreign entity qualified to do business in this state which receives currency,19 monetary value,20
or payment instruments21 for the purpose of transmitting the same by any means, including
transmission by wire, facsimile, electronic transfer, courier, the Internet, or through bill payment
12
The term “money services business” means any person located in or doing business in this state, from this state, or into this
state from locations outside this state or country who acts as a payment instrument seller, foreign currency exchanger, check
casher, or money transmitter. See Section 560.103(22), F.S.
13
Section 560.104, F.S.
14
The term “compensation” includes profit or loss on the exchange of currency. Section 560.204(1), F.S.
15
Section 560.103(30), F.S.
16
The term “monetary value” means a medium of exchange, whether or not redeemable in currency.
17
Section 560.103(29), F.S.
18
State v. Espinoza at 1067.
19
The term “currency” means the coin and paper money of the United States or of any other country which is designated as
legal tender and which circulates and is customarily used and accepted as a medium of exchange in the country of issuance.
Currency includes United States silver certificates, United States notes, and Federal Reserve notes. Currency also includes
official foreign bank notes that are customarily used and accepted as a medium of exchange in a foreign country. See Section
560.103(11), F.S.
20
The term “monetary value” means a medium of exchange, whether or not redeemable in currency. See s. 560.103(21), F.S.
21
The term “electronic instrument” means a card, tangible object, or other form of electronic payment for the transmission or
payment of money or the exchange of monetary value, including a stored value card or device that contains a microprocessor
chip, magnetic stripe, or other means for storing information; that is prefunded; and for which the value is decremented upon
each use. See Section 560.103(14), F.S.
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services or other businesses that facilitate such transfer within the United States (U.S.), or to or
from the U.S.22 In contrast to the federal definition of money transmitter,23 Florida’s definition
does not include a third-party transmission requirement.
Current law does not address virtual currency related to money transmitters under
part II of ch. 560, F.S. However in State v. Espinoza,24 the court interpreted the term “medium of
exchange” within the definition of “monetary value” to contemplate virtual currency under
ch. 560, F.S., governing money services business, thus requiring licensure as a money transmitter
with the OFR for transactions involving a virtual currency.
Requirements of Payment Instrument Seller and Money Transmitter Applicants
To qualify as a payment instrument seller or money transmitter, an applicant must:
 Submit an application with the OFR and pay a nonrefundable application fee. If the
application is approved, the payment instrument seller or money transmitter may, without
incurring additional licensing fees, engage in the activities of a check casher or foreign
currency exchanger as authorized under pt. III of ch. 560, F.S. Additionally, the payment
instrument seller or money transmitter may operate through authorized vendors. Authorized
vendors acting within the scope of authority conferred by the licensee are exempt from
licensure but are otherwise subject to the provisions of ch. 560, F.S.;
 Submit fingerprints for live-scan processing for persons who have a controlling interest25 in
the applicant;
 Demonstrate to the OFR the character and general fitness necessary to command the
confidence of the public and warrant the belief that the money services business shall be
operated lawfully and fairly; 26
 Be legally authorized to do business in Florida;27
 Be registered as a money services business with the Financial Crimes Enforcement Network
as required by 31 C.F.R. s. 1022.380, if applicable;28
 Have an anti-money laundering program (AML) which meets the requirements of 31 C.F.R.
s. 1022.210.29 The AML program is a licensee’s written program designed to deter money
laundering and the financing of terrorist activities by requiring certain record-keeping,
reporting, and compliance measures; and
 Have a corporate surety bond in an amount between $50,000 and $2 million.30 In lieu of a
corporate surety bond, an applicant may deposit collateral cash, securities, or alternative
security devices with a federally insured financial institution. 31
22
Section 560.103(23), F.S.
23
31 CFR 1010.100(ff)(5)(i)(A)(2014).
24
State v. Espinoza at 1067.
25
The term “controlling interest” is defined in section 560.127, F.S.
26
Section 560.1401(1), F.S.
27
Section 560.1401(2), F.S.
28
Section 560.1401(3), F,S
29
Section 560.1401(4), F.S.
30
Section 560.209(3)(a), F.S.
31
Section 560.209(4), F.S.
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Requirements of Payment Instrument Seller and Money Transmitter Licensees
A licensee must at all times maintain a net worth of at least $100,000 and an additional $10,000
per location in Florida, up to a maximum of $2 million.32
Pursuant to s. 560.123, F.S., the Florida Control of Money Laundering in Money Services
Business Act, a licensee is required to maintain certain records of each transaction involving
currency or payments instruments in order to deter the use of a money services business to
conceal proceeds from criminal activity and to ensure the availability of such records for
criminal, tax, or regulatory investigations or proceedings.
Additionally, a licensee must keep records of each transaction occurring in Florida which it
knows to involve currency or other payment instruments having a greater value than $10,000, to
involve the proceeds of specified unlawful activity, or to be designed to evade the reporting
requirements of s. 560.123, F.S., and ch. 896, F.S.33
Permissive Investments
A licensee must at all times possess permissible investments (e.g. cash, certificates of deposit,
shares in a money market mutual fund, etc.) with an aggregate market value, calculated in
accordance with generally accepted accounting principles, of at least the aggregate face amount
of all outstanding money transmissions and payment instruments issued or sold by the licensee or
an authorized vendor in the U.S.34 The OFR may waive the permissible investments requirement
if the dollar value of a licensee’s outstanding payment instruments and money transmitted do not
exceed the bond or collateral deposit posted by the licensee.35
Permissible investments include:
 Cash;
 Certificates of deposit or other deposit liabilities of a domestic or foreign financial
institution;
 Bankers’ acceptances eligible for purchase by member banks of the Federal Reserve System;
 An investment bearing a rating of one of the three highest grades as defined by a nationally
recognized rating service of such securities;
 Investment securities that are obligations of the U.S., its agencies or instrumentalities, or
obligations that are guaranteed fully as to principal and interest by the U.S., or any
obligations of any state or municipality, or any political subdivision thereof;
 Shares in a money market mutual fund;
 A demand borrowing agreement or agreements made to a corporation or a subsidiary of a
corporation whose capital stock is listed on a national exchange;
 Receivables that are due to a licensee from the licensee’s authorized vendors except those
that are more than 90 days past due or are doubtful of collection; and
 Any other investment approved by rule.
32
Section 560.209(1), F.S.
33
Section 560.209(3), F.S.
34
Section 560.210(1), F.S.
35
Section 560.210(3), F.S.
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Current law does not address virtual currency for accounting and investment purposes under
s. 560.210, F.S.
Financial Technology Sandbox
In 2020, the Legislature created the Financial Technology Sandbox within the Office of
Financial Regulation to allow financial technology innovators to test new products and services
in a supervised, flexible, regulatory sandbox using exceptions to specified general law and
waivers of the corresponding rule requirements under defined conditions.36
Currently, Financial Technology Sandbox licensees are exempt from the licensing requirements
for payment instrument sellers and money transmitters under s. 560.204(1), F.S., only to the
extent that the requirements would prohibit a licensee from engaging in, or advertising that it
engages in, the selling or issuing of payment instruments or in the activity of a money transmitter