Relates to reporting of digital assets on the annual statement of financial disclosure filed with the legislative ethics commission or the joint commission on public ethics.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A2873B
SPONSOR: Kelles TITLE OF BILL:
An act to amend the public officers law, in relation to reporting of
digital assets on the annual statement of financial disclosure
PURPOSE OR GENERAL IDEA OF BILL:
The purpose of this bill is to close the loophole on digital assets,
like bitcoin, on the state's financial disclosure statement and add
transparency regarding individuals' interest in this type of digital
financial property.
SUMMARY OF PROVISIONS:
A new paragraph 16-a is added to subdivision 3 of section 73-a of the
public officers law to require the reporting of name and market value of
digital assets held by the reporting individual, in excess of $1,000, at
the close of the taxable year prior to the date of filing.
For purposes of the bill, "digital assets" means an asset that is
issued, transferred, or both, using distributed ledger or blockchain
technology, including, but not limited to, digital currencies, digital
coins, digital non-fungible tokens or other similar assets. DIFFERENCE
BETWEEN ORIGINAL AND AMENDED VERSION (IF APPLICABLE): The B-print
updates the term "cryptocurrencies" to "digital assets", clarifies that
the name of digital assets shall be reported, and includes definitions
for "digital asset", "digital currency", and "distributed ledger or
blockchain technology."
JUSTIFICATION:
In 2014 the Internal Revenue Service (IRS) ruled that the first non-cen-
tral bank digital cryptocurrency, known as bitcoin, be treated as prop-
erty for tax purposes. This meant that bitcoin would henceforth be
subject to capital gains tax. In July 2019, the IRS started sending
letters to cryptocurrency owners warning them to amend their returns and
pay taxes. Additionally, academic research has shown that bitcoin has
some characteristics more like the precious metals market than tradi-
tional currencies, signaling agreement with the IRS decision even if
based on different reasons. Source:
https://en.vvikipedia.org/wiki/Cryptocurrency
Because transactions of digital assets like cryptocurrency can be made
anonymously, they are difficult to track and to regulate. They are
increasingly popular tools for cybercrimes and "ransomware," a kind of
digital hijacking. The shutdown of the Colonial natural gas pipeline in
the US southeast was an international cyberattack by hackers who
demanded payment via cryptocurrency. This type of digital asset is
designed to work as a medium of exchange of units called "coins". The
coins are stored in a ledger existing in a form of a computerized data-
base and is called a "blockchain". Cryptocurrency does not exist in
physical form (like paper money) and is typically not issued by a
central authority. Bitcoin is the first decentralized cryptocurrency.
Since the release of bitcoin, many other cryptocurrencies have been
created.
PRIOR LEGISLATIVE HISTORY:
2022: A9086 (Kelles) - Referred to Governmental Operations Committee
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
None.
EFFECTIVE DATE:
January 1St folio wing enactment.
STATE OF NEW YORK
________________________________________________________________________
2873--B
R. R. 107
2023-2024 Regular Sessions
IN ASSEMBLY
January 27, 2023
___________
Introduced by M. of A. KELLES, SIMON -- read once and referred to the
Committee on Governmental Operations -- committee discharged, bill
amended, ordered reprinted as amended and recommitted to said commit-
tee -- reported and referred to the Committee on Rules -- ordered to a
third reading, passed by Assembly and delivered to the Senate,
recalled from the Senate, vote reconsidered, bill amended, ordered
reprinted, retaining its place on the special order of third reading
AN ACT to amend the public officers law, in relation to reporting of
digital assets on the annual statement of financial disclosure
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Subdivision 3 of section 73-a of the public officers law is
2 amended by adding a new paragraph 16-a to read as follows:
3 16-a. List below the name and market value of digital assets held by
4 the reporting individual or such individual's spouse or domestic partner
5 in EXCESS of $1,000 at the close of the taxable year last occurring
6 prior to the date of filing. Whenever an interest in digital assets
7 exists through a beneficial interest in a trust, the digital assets held
8 in such trust shall be listed ONLY IF the reporting individual has know-
9 ledge thereof except where the reporting individual or the reporting
10 individual's spouse or domestic partner has transferred assets to such
11 trust for his or her benefit in which event such digital assets shall be
12 listed unless they are not ascertainable by the reporting individual
13 because the trustee is under an obligation or has been instructed in
14 writing not to disclose the contents of the trust to the reporting indi-
15 vidual. The digital assets of which the reporting individual or the
16 reporting individual's spouse or domestic partner is the owner of record
17 but in which such individual or the reporting individual's spouse or
18 domestic partner has no beneficial interest shall not be listed. Also
19 list digital assets owned for investment purposes by a corporation more
20 than fifty percent (50%) of the stock of which is owned or controlled by
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD03465-06-3
A. 2873--B 2
1 the reporting individual or such individual's spouse or domestic part-
2 ner. For purposes of this subdivision, the following terms shall have
3 the following meanings:
4 (a) "Digital asset" shall mean an asset that is issued, transferred,
5 or both, using distributed ledger or blockchain technology, including,
6 but not limited to, digital currencies, digital coins, digital non-fun-
7 gible tokens or other similar assets.
8 (b) "Digital currency" shall mean any type of digital unit that is
9 used as a medium of exchange or a form of digitally stored value. Virtu-
10 al currency shall be broadly construed to include digital units of
11 exchange that: (i) have a centralized repository or administrator; (ii)
12 are decentralized and have no centralized repository or administrator;
13 or (iii) may be created or obtained by computing, manufacturing, or
14 other similar effort.
15 (c) "Distributed ledger or blockchain technology" shall mean a ledger
16 or database that stores shared state by maintaining it across a multi-
17 plicity of devices belonging to different entities and securing it
18 through a combination of cryptographic and consensus protocols, where
19 the shared state serves to authenticate, record, share, and/or synchro-
20 nize transactions involving digital assets or virtual currencies.
21 Category of
22 Market Value
23 as of the close
24 of the taxable
25 year last
26 occurring
27 prior to
28 Self/ Type of the filing of
29 Spouse or Digital Asset this statement
30 Domestic (In Table II)
31 Partner
32 _______________________________________________________________________
33 _______________________________________________________________________
34 _______________________________________________________________________
35 _______________________________________________________________________
36 _______________________________________________________________________
37 § 2. This act shall take effect on the first of January next succeed-
38 ing the date upon which it shall have become a law.
