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A09028 Summary:

BILL NOA09028A
 
SAME ASNo Same As
 
SPONSORVanel
 
COSPNSR
 
MLTSPNSR
 
Add §350-b-2, Gen Bus L
 
Requires certain disclosures in advertisements involving virtual tokens.
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A09028 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                         9028--A
 
                   IN ASSEMBLY
 
                                    January 21, 2022
                                       ___________
 
        Introduced  by M. of A. VANEL -- read once and referred to the Committee
          on Science and  Technology  --  committee  discharged,  bill  amended,
          ordered reprinted as amended and recommitted to said committee
 
        AN  ACT  to  amend  the  general  business law, in relation to requiring
          certain disclosures in advertisements involving virtual tokens

          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
 
     1    Section 1. The general business law is amended by adding a new section
     2  350-b-2 to read as follows:
     3    §  350-b-2.  Disclosures required in advertisements involving security
     4  tokens. 1. As used in this section the following terms  shall  have  the
     5  following meanings:
     6    (a) "virtual tokens" shall mean security tokens and stablecoins.
     7    (b) "security tokens" shall mean any form of fungible and non-fungible
     8  computer code by which all such forms of ownership of said computer code
     9  is  determined  through  verification  of transactions or any derivative
    10  method, and that is stored on a peer-to-peer  computer  network  or  any
    11  other  such computerized system or through any derivative means of stor-
    12  age, and which conforms to one of the following:
    13    (i) such class of virtual tokens are advertised by  the  developer  or
    14  another  at  the  developer's  direction  to  be bought and sold for the
    15  purpose of profit, whether or not such purpose is advertised as the sole
    16  purpose;
    17    (ii) such class of virtual tokens  can  be  reasonably  understood  by
    18  members of the public to be bought and sold for the purpose of profit;
    19    (iii)  the  value of such class of virtual tokens is determined by the
    20  supply and demand of the virtual token; and
    21    (iv) such class of virtual tokens: (i) are not pegged to  an  external
    22  source, whether or not such external source is volatile, (ii) are pegged
    23  to  another  class  of  virtual  token; or (iii)   such class of virtual
    24  tokens do not employ technology which prevents large fluctuations in its
    25  price or such technology fails to prevent the same.
    26    (c) "stablecoin" shall mean any  form  of  fungible  and  non-fungible
    27  computer code by which all such forms of ownership of said computer code
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD13976-04-2

        A. 9028--A                          2
 
     1  is  determined  through  verification  of transactions or any derivative
     2  method, and that is stored on a peer-to-peer  computer  network  or  any
     3  other  such computerized system or through any derivative means of stor-
     4  age, and which conforms to all of the following:
     5    (i)  such  class of virtual tokens are not advertised by the developer
     6  or another at the developer's direction to be bought and  sold  for  the
     7  purpose of profit, whether or not such purpose is advertised as the sole
     8  purpose;
     9    (ii)  such  class of virtual tokens cannot be reasonably understood by
    10  members of the public to be bought and sold for the purpose  of  profit;
    11  and
    12    (iii)  the  value of such class of virtual tokens is not determined by
    13  the supply and demand of the class of virtual token; and
    14    (iv) such class of virtual tokens are pegged to  an  external  source,
    15  other than another class of virtual tokens, whether or not such external
    16  source is volatile, or such class of virtual tokens do employ technology
    17  which  prevents  large  fluctuations  in  its  price and such technology
    18  succeeds in preventing the same.
    19    (d) "class" shall mean a group of  fungible  or  non-fungible  tokens,
    20  irrespective of the amount created, that is intended by the developer to
    21  be:
    22    (i) in the case of fungible tokens, valued and exchanged together; or
    23    (ii)  in the case of non-fungible tokens, regarded as part of the same
    24  group of digital or physical items or valued together with the  develop-
    25  er's  other  non-fungible tokens based on the fact that the non-fungible
    26  tokens were created by a certain  developer,  taking  into  account  the
    27  developer's notoriety, sale volume, and how he or she is regarded within
    28  virtual token communities.
    29    (e)  "developer"  shall mean the person or persons, whether natural or
    30  otherwise, and any agent or employee thereof who either create in  whole
    31  or  in  part, maintain in whole or in part, or own more than ten percent
    32  of a class of virtual tokens utilizing any technical  standard  and  who
    33  offers  them for purchase in the state of New York or, where the sale of
    34  their tokens in the state of New York is prohibited,  such  person  does
    35  not  use  reasonable  efforts  to prevent such virtual tokens from being
    36  made available for purchase in the state of New York.
    37    (f) "technical standard" shall mean the rules that a class of  virtual
    38  tokens  shall  comply with in order to use the blockchain network or any
    39  derivative means thereof.
    40    (g) "non-fungible token" shall mean a virtual token used to denote  on
    41  the  blockchain ownership of any digital or physical item or any deriva-
    42  tive means thereof.
    43    (h) "fungible token" shall mean any virtual token stored on the block-
    44  chain other than non-fungible tokens.
    45    (i) "owned" and "ownership" shall mean the means by which ownership of
    46  a digital asset is noted on the blockchain or any derivative means ther-
    47  eof.
    48    (j) "token" shall mean the technical standard used to create a  fungi-
    49  ble or non-fungible piece of computer code.
    50    (k) "wallet" shall mean a device, program, or service which stores the
    51  public and/or private keys for virtual token transactions.
    52    (l)  "blockchain"  shall mean any type of technology which stores code
    53  on a database of which said database represents  the  record  of  trans-
    54  actions that make up virtual tokens or any derivative technology.
    55    (m) "private key" shall mean the unique identifier of a wallet, or any
    56  substantially similar analogue, that is paired with a publicly available

        A. 9028--A                          3
 
     1  identifier  and  associated with an algorithm that is necessary to carry
     2  out an encryption or decryption required to execute a transaction.
     3    (n)  "advertisement"  shall mean and include but not be limited to any
     4  public notice,  circular,  advertisement,  newspaper,  article,  letter,
     5  investment  service,  or  communication  to more than one person whether
     6  directly or indirectly.
     7    2. It shall be unlawful for any person, whether natural or  otherwise,
     8  or  any  agent or employee thereof to give publicity to or circulate any
     9  advertisement, which, though not purporting to offer a class of security
    10  tokens for sale, describes  such  class  of  security  tokens  that  are
    11  created  by  a  developer  seeking such advertisement for consideration,
    12  whether directly or indirectly, without fully  disclosing  the  receipt,
    13  whether  past  or  prospective,  of the amount thereof, and whether such
    14  consideration is made directly or indirectly and in the past or prospec-
    15  tively, a description  in  accordance  with  subdivision  four  of  this
    16  section for:
    17    (a) the same class of security tokens;
    18    (b)  a different class of security tokens created by the same develop-
    19  er;
    20    (c) the same or a different class of security tokens  created  by  the
    21  same  developer  and  other  consideration,  whether a class of security
    22  tokens or otherwise;
    23    (d) a different class of security tokens that is intended to  increase
    24  in  price in conjunction with the advertisement of the class of security
    25  tokens advertised, whether or not such  class  of  security  tokens  was
    26  created by the same developer;
    27    (e)  a  pre-public  offering  to  purchase  any of the security tokens
    28  described in paragraphs (a) through (d) of this subdivision  whether  or
    29  not such security tokens are actually purchased;
    30    (f)  a  post-public  offering  to  purchase any of the security tokens
    31  described in paragraphs (a)  through  (d)  of  this  subdivision  for  a
    32  reduced  price,  whether  or  not  such  security  tokens  are  actually
    33  purchased; or
    34    (g) a post-public notification of the existence of any of the security
    35  tokens described in paragraphs (a) through (d) of this subdivision  that
    36  is intended to be prior to an anticipated influx of purchasers that will
    37  raise  the  price  of  the security tokens, whether or not such security
    38  tokens are actually purchased.
    39    3. The advertiser shall have an affirmative  duty  to  use  reasonable
    40  efforts to determine whether the class of security tokens paid to him or
    41  her  were created by the same developer and whether such security tokens
    42  were intended to increase in price in conjunction with the advertisement
    43  of the security token advertised.
    44    4. The form of disclosure shall:
    45    (a) be written on each advertisement in a sufficiently readable  type-
    46  face  or,  where  such  advertisement is auditory in nature, stated in a
    47  clear and understandable tone prior to the auditory statement;
    48    (b) in the case of the same security token advertised  being  paid  in
    49  consideration,  a statement stating the exact amount of tokens provided,
    50  the date that they were provided, and the type of token provided;
    51    (c) in the case of a different security  token  created  by  the  same
    52  developer,  a statement stating the exact amount of tokens provided, the
    53  date that they were provided, the type of token provided, and  a  state-
    54  ment  that the security token provided was created by the same developer
    55  as the security token being advertised;

        A. 9028--A                          4
 
     1    (d) in the case of the same or a different class  of  security  tokens
     2  and  other consideration, whether security tokens or otherwise, a state-
     3  ment stating the exact amount of tokens provided,  the  date  that  they
     4  were  provided,  the  type  of  token provided, if the security token is
     5  different  from  the  advertisement, a statement that the security token
     6  provided was created by the same developer as the security  token  being
     7  advertised, and a description of the other consideration provided howev-
     8  er that if such other consideration conforms to any of the provisions of
     9  subdivision  two  of  this section, then a statement conforming with its
    10  respective provision in this section;
    11    (e) in the case of a  different  class  of  security  tokens  that  is
    12  intended  to  increase in price in conjunction with the advertisement of
    13  the class of security tokens advertised, a statement stating  the  exact
    14  amount of tokens provided, the date that they were provided, the type of
    15  token  provided,  and  a  statement  stating  the security token that is
    16  intended to increase in conjunction with the advertisement and that such
    17  security token is intended by the developer to increase with the  adver-
    18  tisement of the security token being advertised;
    19    (f)  in the case of a pre-public offering to purchase any of the secu-
    20  rity tokens described in paragraphs (a) through (d) of  subdivision  two
    21  of  this  section,  if an exact amount of security tokens are offered, a
    22  statement stating the exact amount of security  tokens  offered,  if  an
    23  unlimited  amount  of  security  tokens are offered, a statement stating
    24  that the developer has offered the advertiser to purchase  an  unlimited
    25  amount  of  tokens,  and  in either case, the date that the offering was
    26  made, the date which the advertiser may purchase the security tokens  at
    27  the  pre-public  price  and  the  type of token provided. The advertiser
    28  shall be prohibited from disclosing or making public whether he  or  she
    29  actually purchased the security token stated;
    30    (g) in the case of a post-public offering to purchase any of the secu-
    31  rity  tokens  described in paragraphs (a) through (d) of subdivision two
    32  of this section for a reduced price, if  an  exact  amount  of  security
    33  tokens  are  offered,  a  statement stating the exact amount of security
    34  tokens offered, if an unlimited amount of security tokens are offered, a
    35  statement stating that the  developer  has  offered  the  advertiser  to
    36  purchase a limitless amount of tokens, and in either case, the date that
    37  the  offering  was  made, the date which the advertiser may purchase the
    38  security tokens at the reduced price and the type of token provided. The
    39  advertiser shall be prohibited from disclosing or making public  whether
    40  he or she actually purchased the security token stated;
    41    (h)  in the case of a post-public notification of the existence of any
    42  of the security tokens described in paragraphs (a) through (d) of subdi-
    43  vision two of this section that is intended to be  prior  to  an  antic-
    44  ipated  influx  of  purchasers that will raise the price of the security
    45  token, a statement stating the date that the advertiser was notified  of
    46  the  existence of the security token, the approximate price of the secu-
    47  rity token at the time of the notification, whether the advertiser actu-
    48  ally purchased the security token, and, if the advertiser  did  in  fact
    49  purchase the security token, the amount that the advertiser purchased of
    50  the security token and the amount purchased;
    51    (i)  in  the case where such consideration is prospective and includes
    52  any of the items required to be disclosed pursuant to subdivision two of
    53  this section, a statement describing the method by which such  consider-
    54  ation will be paid prospectively, the type of account or other person or
    55  entity  in  which such consideration is stored, if any, that it is being
    56  held in, the date that such  consideration  will  be  released  and  the

        A. 9028--A                          5
 
     1  person  or  entity  that  such  consideration will be released to, and a
     2  statement satisfying the provision that such consideration conforms  to;
     3  and
     4    (j) in the case of a combination of any of the foregoing provisions of
     5  this subdivision, a statement satisfying each provision.
     6    §  2.  This  act shall take effect on the thirtieth day after it shall
     7  have become a law.    Effective  immediately,  the  addition,  amendment
     8  and/or repeal of any rule or regulation necessary for the implementation
     9  of  this  act  on  its  effective  date  are  authorized  to be made and
    10  completed on or before such effective date.
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