New York has enacted the Digital Currency Study Bill, which will establish a digital currency task force and provide the governor and the state legislature information “on the effects of the widespread use of cryptocurrencies and other forms of digital currencies and their ancillary systems in the state.”  The task force will conduct an extensive review of the blockchain industry in New York (with an emphasis on cryptocurrency exchanges), while analyzing the laws and regulations of other states, the federal government, as well as foreign countries. In particular, the task force will provide legislative and regulatory recommendations to “increase transparency and security, enhance consumer protections, and to address the long term impact related to the use of cryptocurrency.”  The task force will submit their findings by December 15, 2020.

This legislation is the latest step by New York to understand and regulate cryptocurrency as well as the blockchain industry.  Clyde Vanel, the primary sponsor for this bill and the Chair of the Subcommittee on Internet and New Technologies of the New York Assembly, stated that “the task force of experts will help us strike the balance between having a robust blockchain industry and cryptocurrency economic environment while at the same time protecting New York investors and consumers.”

New York is not the first state to establish such a task force.  In September 2018, the California state legislature passed a bill that will establish a working group to discuss the potential applications of blockchain technology and how such technology will affect businesses, the government, and other social purpose organizations.  The bill also, for the first time in California, defines blockchain technology as “a mathematically secured, chronological, and decentralized ledger or database.”[1]

[1] The full text of the bill (Assembly Bill 2658) is at https://legiscan.com/CA/text/AB2658/id/1821719. On the same day Bill 2658 was passed, Governor Jerry Brown also signed into law Senate Bill 838, which authorizes a corporation or a social purpose corporation (i.e., public interest groups) to maintain certain corporate records by means of blockchain technology, including the transfer of stock certificates. Different from its prior draft versions, the passed Senate Bill 838 does not address issues related to smart contracts, or recognize the legality of data stored on a blockchain in general.