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New Hampshire could become an alternative for crypto firms moving to the Bahamas

A state commission recommended that New Hampshire eliminate the gray area in which cryptocurrency companies currently operate.

New Hampshire is on the verge of becoming a national leader in cryptocurrency if its legislature follows through on recommendations made by a commission appointed by Governor Chris Sununu. The recommendations would establish a legal framework for blockchain and crypto businesses in the state, providing clarity and certainty to entrepreneurs and regulators while avoiding the onerous and largely pointless special rules federal regulators and members of Congress want to impose on the industry. The proposed rules would also protect consumers, depositors and investors. 

Blockchain businesses presently exist in something of a legal gray area in the United States. Congress has provided little guidance to the regulatory agencies, resulting in confusion and difficulties in maintaining compliance. This adds unnecessary costs and sometimes causes companies to do contradictory things. Responsibility for regulating the companies is split between the Securities and Exchange Commission and the Commodity Futures Trading Commission.

While these agencies regulate different things, they have different approaches and it’s not even clear if one agency or the other has priority. Due to the lack of clarity, many cryptocurrency exchanges and businesses have moved their operations and corporate domiciles out of the United States to countries with fewer regulations. Bermuda, the Bahamas, Antigua and Barbuda and Malta are popular offshoring sites.

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Coinbase CEO Brian Armstrong said last year that regulatory uncertainty drove 95 percent of trading offshore. “Punishing U.S. companies … makes no sense,” he tweeted. Circle moved its exchange to Bermuda in 2019, while Fidelity Investments had to offer an exchange-traded Bitcoin fund in Canada in 2021. Digital Chamber of Congress president Perianne Boring also attributed offshoring to uncertainty, saying, “they’re not willing to operate in a gray area with potential enforcement hanging over their head.”

New Hampshire’s framework would remove that gray area, setting the rules on how digital assets should be treated by regulators — as securities, commodities or currencies — and help ensure they follow Anti-Money Laundering (AML) and fraud rules. While officials will have their work cut out to lure crypto businesses away from the Caribbean, new startups will benefit, as the new rules could attract more risk-averse investors.

Top 10 states with the highest percentage of people owning crypto as of 2021. Source: Coinbase

The confusion and uncertainty are not only bad for the industry, which is continuing to grow. The draconian rules federal agencies and members of Congress want to impose could be worse. They will torpedo an industry that has important implications for the economy — not just people trading Dogecoin (DOGE) or pictures of apes. For instance, some companies are using blockchain ledgers to tokenize real estate to help people become homeowners without the huge down payment and monthly cost of a traditional mortgage. In the long run, strangling the blockchain industry in its cradle will also hurt American interests — much of the country’s “soft power” is linked to the fact that our financial institutions are well-regulated and have access to a lot of capital, while the U.S. dollar is a global reserve currency. As crypto grows in popularity and gets increasing attention from foreign governments, an attenuated domestic industry could allow our soft power to dissipate.

In part, much of the confusion stems from suspicion of cryptocurrency. A few high-profile cases that have resulted in criminal charges — such as the Silk Road marketplace and FTX — have created a perception that cryptocurrency is used merely for the “dark web,” Ponzi schemes and other illegal activities. Therefore, businesses trading in it need more regulation and oversight than banks and other firms. But the reality, as the commission pointed out, is that more financial crimes involve conventional currencies and firms. (Since 2016, Wells Fargo has paid more than $7 billion in fines and settlements related to illegal activity.)

To put blockchain-based businesses on a sound legal footing, the commission made three main recommendations: The state should permit limited liability protection for decentralized autonomous organizations (DAOs), establish a “blockchain dispute docket” in the court system and get committees of the legislature to update relevant legal codes, like the Uniform Commercial Code, the state’s securities law and state banking laws.

Related: Have Brazil and Argentina’s presidents heard of cryptocurrency?

Another concern that helps distinguish New Hampshire from skeptical federal regulators is its commitment to privacy and private property. The commission noted that the Financial Crimes Enforcement Network’s proposed rules require financial institutions to record and verify the identities of anyone involved in cryptocurrency transactions merely because of the possibility that cryptocurrency could be used to finance crime or terrorism. This is not only an absurd requirement that does not apply to other transactions but in itself creates a vulnerability cybercriminals could exploit, giving them access to a massive database of personal information.

The commission correctly recommended, “As financial institutions or money service businesses offer platforms to provide Crypto-asset services to clients that own crypto assets, these centralized organizations should be subject to the same [Bank Secrecy Act] BSA/AML rules as financial institutions that offer services to customers with cash … there should be an exceptionally high standard of proof before that BSA/AML regime … imposes greater burdens on crypto service businesses.”

New Hampshire cryptocurrency advocate and Tron DAO policy lead Andrew Hemingway approves of the commission’s work. “The ‘live free or die’ spirit is evident in the commission’s perspectives and recommendations,” he said in an email to me. "This spirit is also harmonious with the ethos of cryptocurrency."

Money laundering is a serious crime, but it is not unique to cryptocurrency. Law enforcement officials have said that preventing it is easier with crypto, because of the Blockchain’s transparency. If New Hampshire implements the commission’s recommendations, it will become a leader in the digital asset economy and serve as a guide to federal agencies and legislators on how to do it right.

Brendan Cochrane is a partner at YK Law LLP, where he focuses on blockchain and cryptocurrency issues, and an adjunct professor at Suffolk University Law School teaching Blockchain, Cryptocurrency and the Law. He is also the principal and founder of CryptoCompli, a startup focused on the compliance needs of cryptocurrency businesses.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

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New Hampshire gov releases report on blockchain following executive order

According to the commission, New Hampshire should work towards building a legal framework "for sound development of blockchain technologies and its applications."

Chris Sununu, the governor of New Hampshire, has released the results of an investigation from a ​​commission aimed at recommending legislation around digital assets and blockchain as part of a 2022 executive order.

In a Jan. 19 announcement, Sununu said the Commission on Cryptocurrencies and Digital Assets had reported the legal and regulatory status of cryptocurrencies and digital assets was “highly uncertain,” stymying development and leading to less protection for investors and consumers. The group recommended New Hampshire establish a state legal regime aimed at drawing in blockchain firms and individuals.

According to the report, sent to the governor on Dec. 22, the commission considered the human factor in its recommendations, alluding to the collapse of FTX and the arrest of its former CEO Sam Bankman-Fried — i.e. "criminal fraud resulting in the loss of billions of dollars of customer assets”. Specifically, it recommended establishing legal status for decentralized autonomous organizations, or DAOs, putting funds into the state’s court system for resolving disputes involving blockchain issues, and encouraging the government’s banking department to provide “clear, public and proactive guidance” on how financial institutions may handle digital assets.

“New Hampshire should take strong pro-active and public steps to build a better legal infrastructure for sound development of Blockchain technologies and its applications,” said the report.

The group concluded with the following:

“The Commission expects that Blockchain technologies will continue to evolve and develop, and become more integrated into our society and economy [...] this next phase of development should be accomplished not only through innovations in computer software protocols, but also should be accompanied by improvements in the legal infrastructure that necessarily operates in parallel with these activities.”

Related: Tennessee lawmaker introduces bill which would allow state to invest in crypto

Sununu referred to the report as “comprehensive and timely”. Other U.S. state governors have pushed efforts to establish regulatory clarity for crypto and blockchain, including California, while New York Governor Kathy Hochul stood behind a proposal to ban crypto mining operations not based on 100% renewable energy.

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Trends Study Says Dogecoin Is the Most Googled Cryptocurrency in the US

Trends Study Says Dogecoin Is the Most Googled Cryptocurrency in the USAccording to a recent study analyzing Google Trends data, the cryptocurrency dogecoin’s search volume in the United States was highest in the most states as compared to other cryptos. The research also details that the leading crypto asset in terms of market capitalization, bitcoin, was the second most popular crypto asset, with ten different states. […]

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New Hampshire hopes its express approval of crypto-friendly law will attract new business

A New Hampshire bill would commit the state to a new UCC section before finalization to show its commitment to the blockchain industry.

The New Hampshire House of Representatives passed a bill on Tuesday to adopt the new version of Chapter 12 of the Universal Commercial Code, or UCC, which will govern transfers of digital assets. The chapter is still in draft form, but if HB1503 is signed into law, New Hampshire will be the first U.S. state to adopt the chapter. 

Like the draft chapter of the UCC, the bill — titled “Exempting the developer, seller, or facilitator of the exchange of an open blockchain token from certain securities laws” — seeks to create a “workaround” to make it easier to buy and sell cryptocurrencies by stipulating conditions under which “a developer or seller of an open blockchain token shall not be deemed the issuer of a security.” It passed by a vote of 187 to 150.

The UCC is a set of model laws adopted in their entirety by nearly all U.S. states to facilitate interstate trade. Therefore, the changes are likely to be accepted throughout the country eventually. New Hampshire’s adoption of the new UCC chapter into law in advance of its finalization is intended to “attract investments and jobs by signaling to this rapidly growing industry that we are open for business,” according to House Majority Leader Jason Osborne.

Representative Keith Ammon, a sponsor of the bill, said that “HB1503 is an opportunity for New Hampshire to become a leader in this [blockchain and cryptocurrency technology] industry.” The bill has yet to be considered by the state’s Senate.

New Hampshire’s Republican Governor Chris Sununu did not endorse the bill, although he issued an executive order in February to create a commission to “make findings and determinations regarding the role and effectiveness of current state laws and regulations governing cryptocurrencies and other digital assets.”

The UCC draft chapter will go to the American Law Institute for approval in May and to the Uniform Law Commission in July. Pending the commission’s approval, it will then be submitted to the states.

With its desire to make state law more crypto-friendly, New Hampshire is following in the footsteps of Wyoming, which passed a series of laws in 2018 to create similar regulatory workarounds. Texas also passed a law last year that amended its version of the UCC to become more crypto-friendly.

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NH Governor Signs Executive Order to Bring ‘Regulatory Certainty’ to Cryptocurrency Industry

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New Hampshire Governor Launches Crypto Commission via Executive Order

While the US government delays providing regulatory clarity on cryptocurrencies, one state is taking proactive steps toward recognizing the nascent sector. New Hampshire Governor Chris Sununu has signed an executive order creating the Governor’s Commission on Cryptocurrencies and Digital Assets to do a wide-ranging and comprehensive survey of the digital asset space in order to […]

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New Hampshire Governor issues executive order establishing commission to study crypto

The commission will have until Aug. 8 to submit a report including a “review and investigation regarding the current status of the cryptocurrency and digital asset industry” as well as on applicable laws in the U.S. and abroad.

Chris Sununu, who has served as the Governor of New Hampshire since 2017, has established a commission aimed at investigating the technology and laws around digital assets in addition to recommending new legislation.

On Wednesday, the New Hampshire Governor’s office announced it would be issuing Executive Order 2022-1 to create the Governor's Commission on Cryptocurrencies and Digital Assets. Governor Sununu cited the “rising use and acceptance” of crypto as well as the growth of distributed ledger and blockchain technologies in his decision to establish the commission.

According to the executive order, the crypto commission will have 180 days — until Aug. 8 — to submit a report to officials within the New Hampshire state government consisting of a “review and investigation regarding the current status of the cryptocurrency and digital asset industry” as well as on applicable laws in the United States and abroad. The commission will have the authority to hold public hearings to hear from industry and regulatory experts, and “make findings and determinations regarding the role and effectiveness of current state laws and regulations governing cryptocurrencies and other digital assets” while balancing economic competitiveness, the possible impacts on the financial system, and privacy concerns.

The order states that the commission will consist of “three public members with recognized experience with cryptocurrencies, digital assets and the provision of services to institutions or consumers with respect to digital assets,” the state Attorney General, Commissioner of the Bank Department, a state senator, a state representative, a representative of the New Hampshire Bankers Association, a representative of the Cooperative Credit Union Association, and three appointees. The New Hampshire Governor also has the authority to designate his own substitutes for most of the commission members.

Governor Sununu cited “well intentioned legislation regarding cryptocurrencies and digital assets” in the order, likely referring to a bill proposing state agencies be allowed to accept crypto for tax payments — the legislation failed in 2020, with many lawmakers invoking the volatility of Bitcoin (BTC). The governor also named Ether (ETH), Binance Coin (BNB), Tether (USDT), and USD Coin (USDC) as tokens quickly “gaining momentum.”

“New Hampshire is a hub of financial innovation, and this Executive Order will further our commitment to attracting high quality banking and financial businesses in a safe and responsible manner,” said Governor Sununu.

Related: US lawmaker pushes for state-level regulations on stablecoins at hearing on digital assets

Possibly due to the lack of a clear regulatory framework at the federal level, lawmakers in U.S. states seem to be stepping up legislative proposals to recognize, invest in, or otherwise handle crypto and blockchain. In December, Florida Governor Ron DeSantis offered a budget proposal suggesting local businesses be allowed to “pay state fees via cryptocurrency directly to the Department of State.” Earlier this month, a member of the Tennessee House of Representatives introduced legislation which would establish a study committee on crypto and blockchain.

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