S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  9028--A
 
                           I N  A S S E M B L Y
 
                             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:
 
   Section 1. The general business law is amended by adding a new section
 350-b-2 to read as follows:
   §  350-B-2.  DISCLOSURES REQUIRED IN ADVERTISEMENTS INVOLVING SECURITY
 TOKENS. 1. AS USED IN THIS SECTION THE FOLLOWING TERMS  SHALL  HAVE  THE
 FOLLOWING MEANINGS:
   (A) "VIRTUAL TOKENS" SHALL MEAN SECURITY TOKENS AND STABLECOINS.
   (B) "SECURITY TOKENS" SHALL MEAN ANY FORM OF FUNGIBLE AND NON-FUNGIBLE
 COMPUTER CODE BY WHICH ALL SUCH FORMS OF OWNERSHIP OF SAID COMPUTER CODE
 IS  DETERMINED  THROUGH  VERIFICATION  OF TRANSACTIONS OR ANY DERIVATIVE
 METHOD, AND THAT IS STORED ON A PEER-TO-PEER  COMPUTER  NETWORK  OR  ANY
 OTHER  SUCH COMPUTERIZED SYSTEM OR THROUGH ANY DERIVATIVE MEANS OF STOR-
 AGE, AND WHICH CONFORMS TO ONE OF THE FOLLOWING:
   (I) SUCH CLASS OF VIRTUAL TOKENS ARE ADVERTISED BY  THE  DEVELOPER  OR
 ANOTHER  AT  THE  DEVELOPER'S  DIRECTION  TO  BE BOUGHT AND SOLD FOR THE
 PURPOSE OF PROFIT, WHETHER OR NOT SUCH PURPOSE IS ADVERTISED AS THE SOLE
 PURPOSE;
   (II) SUCH CLASS OF VIRTUAL TOKENS  CAN  BE  REASONABLY  UNDERSTOOD  BY
 MEMBERS OF THE PUBLIC TO BE BOUGHT AND SOLD FOR THE PURPOSE OF PROFIT;
   (III)  THE  VALUE OF SUCH CLASS OF VIRTUAL TOKENS IS DETERMINED BY THE
 SUPPLY AND DEMAND OF THE VIRTUAL TOKEN; AND
   (IV) SUCH CLASS OF VIRTUAL TOKENS: (I) ARE NOT PEGGED TO  AN  EXTERNAL
 SOURCE, WHETHER OR NOT SUCH EXTERNAL SOURCE IS VOLATILE, (II) ARE PEGGED
 TO  ANOTHER  CLASS  OF  VIRTUAL  TOKEN; OR (III)   SUCH CLASS OF VIRTUAL
 TOKENS DO NOT EMPLOY TECHNOLOGY WHICH PREVENTS LARGE FLUCTUATIONS IN ITS
 PRICE OR SUCH TECHNOLOGY FAILS TO PREVENT THE SAME.
   (C) "STABLECOIN" SHALL MEAN ANY  FORM  OF  FUNGIBLE  AND  NON-FUNGIBLE
 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
 
 IS  DETERMINED  THROUGH  VERIFICATION  OF TRANSACTIONS OR ANY DERIVATIVE
 METHOD, AND THAT IS STORED ON A PEER-TO-PEER  COMPUTER  NETWORK  OR  ANY
 OTHER  SUCH COMPUTERIZED SYSTEM OR THROUGH ANY DERIVATIVE MEANS OF STOR-
 AGE, AND WHICH CONFORMS TO ALL OF THE FOLLOWING:
   (I)  SUCH  CLASS OF VIRTUAL TOKENS ARE NOT ADVERTISED BY THE DEVELOPER
 OR ANOTHER AT THE DEVELOPER'S DIRECTION TO BE BOUGHT AND  SOLD  FOR  THE
 PURPOSE OF PROFIT, WHETHER OR NOT SUCH PURPOSE IS ADVERTISED AS THE SOLE
 PURPOSE;
   (II)  SUCH  CLASS OF VIRTUAL TOKENS CANNOT BE REASONABLY UNDERSTOOD BY
 MEMBERS OF THE PUBLIC TO BE BOUGHT AND SOLD FOR THE PURPOSE  OF  PROFIT;
 AND
   (III)  THE  VALUE OF SUCH CLASS OF VIRTUAL TOKENS IS NOT DETERMINED BY
 THE SUPPLY AND DEMAND OF THE CLASS OF VIRTUAL TOKEN; AND
   (IV) SUCH CLASS OF VIRTUAL TOKENS ARE PEGGED TO  AN  EXTERNAL  SOURCE,
 OTHER THAN ANOTHER CLASS OF VIRTUAL TOKENS, WHETHER OR NOT SUCH EXTERNAL
 SOURCE IS VOLATILE, OR SUCH CLASS OF VIRTUAL TOKENS DO EMPLOY TECHNOLOGY
 WHICH  PREVENTS  LARGE  FLUCTUATIONS  IN  ITS  PRICE AND SUCH TECHNOLOGY
 SUCCEEDS IN PREVENTING THE SAME.
   (D) "CLASS" SHALL MEAN A GROUP OF  FUNGIBLE  OR  NON-FUNGIBLE  TOKENS,
 IRRESPECTIVE OF THE AMOUNT CREATED, THAT IS INTENDED BY THE DEVELOPER TO
 BE:
   (I) IN THE CASE OF FUNGIBLE TOKENS, VALUED AND EXCHANGED TOGETHER; OR
   (II)  IN THE CASE OF NON-FUNGIBLE TOKENS, REGARDED AS PART OF THE SAME
 GROUP OF DIGITAL OR PHYSICAL ITEMS OR VALUED TOGETHER WITH THE  DEVELOP-
 ER'S  OTHER  NON-FUNGIBLE TOKENS BASED ON THE FACT THAT THE NON-FUNGIBLE
 TOKENS WERE CREATED BY A CERTAIN  DEVELOPER,  TAKING  INTO  ACCOUNT  THE
 DEVELOPER'S NOTORIETY, SALE VOLUME, AND HOW HE OR SHE IS REGARDED WITHIN
 VIRTUAL TOKEN COMMUNITIES.
   (E)  "DEVELOPER"  SHALL MEAN THE PERSON OR PERSONS, WHETHER NATURAL OR
 OTHERWISE, AND ANY AGENT OR EMPLOYEE THEREOF WHO EITHER CREATE IN  WHOLE
 OR  IN  PART, MAINTAIN IN WHOLE OR IN PART, OR OWN MORE THAN TEN PERCENT
 OF A CLASS OF VIRTUAL TOKENS UTILIZING ANY TECHNICAL  STANDARD  AND  WHO
 OFFERS  THEM FOR PURCHASE IN THE STATE OF NEW YORK OR, WHERE THE SALE OF
 THEIR TOKENS IN THE STATE OF NEW YORK IS PROHIBITED,  SUCH  PERSON  DOES
 NOT  USE  REASONABLE  EFFORTS  TO PREVENT SUCH VIRTUAL TOKENS FROM BEING
 MADE AVAILABLE FOR PURCHASE IN THE STATE OF NEW YORK.
   (F) "TECHNICAL STANDARD" SHALL MEAN THE RULES THAT A CLASS OF  VIRTUAL
 TOKENS  SHALL  COMPLY WITH IN ORDER TO USE THE BLOCKCHAIN NETWORK OR ANY
 DERIVATIVE MEANS THEREOF.
   (G) "NON-FUNGIBLE TOKEN" SHALL MEAN A VIRTUAL TOKEN USED TO DENOTE  ON
 THE  BLOCKCHAIN OWNERSHIP OF ANY DIGITAL OR PHYSICAL ITEM OR ANY DERIVA-
 TIVE MEANS THEREOF.
   (H) "FUNGIBLE TOKEN" SHALL MEAN ANY VIRTUAL TOKEN STORED ON THE BLOCK-
 CHAIN OTHER THAN NON-FUNGIBLE TOKENS.
   (I) "OWNED" AND "OWNERSHIP" SHALL MEAN THE MEANS BY WHICH OWNERSHIP OF
 A DIGITAL ASSET IS NOTED ON THE BLOCKCHAIN OR ANY DERIVATIVE MEANS THER-
 EOF.
   (J) "TOKEN" SHALL MEAN THE TECHNICAL STANDARD USED TO CREATE A  FUNGI-
 BLE OR NON-FUNGIBLE PIECE OF COMPUTER CODE.
   (K) "WALLET" SHALL MEAN A DEVICE, PROGRAM, OR SERVICE WHICH STORES THE
 PUBLIC AND/OR PRIVATE KEYS FOR VIRTUAL TOKEN TRANSACTIONS.
   (L)  "BLOCKCHAIN"  SHALL MEAN ANY TYPE OF TECHNOLOGY WHICH STORES CODE
 ON A DATABASE OF WHICH SAID DATABASE REPRESENTS  THE  RECORD  OF  TRANS-
 ACTIONS THAT MAKE UP VIRTUAL TOKENS OR ANY DERIVATIVE TECHNOLOGY.
   (M) "PRIVATE KEY" SHALL MEAN THE UNIQUE IDENTIFIER OF A WALLET, OR ANY
 SUBSTANTIALLY SIMILAR ANALOGUE, THAT IS PAIRED WITH A PUBLICLY AVAILABLE
 A. 9028--A                          3
 
 IDENTIFIER  AND  ASSOCIATED WITH AN ALGORITHM THAT IS NECESSARY TO CARRY
 OUT AN ENCRYPTION OR DECRYPTION REQUIRED TO EXECUTE A TRANSACTION.
   (N)  "ADVERTISEMENT"  SHALL MEAN AND INCLUDE BUT NOT BE LIMITED TO ANY
 PUBLIC NOTICE,  CIRCULAR,  ADVERTISEMENT,  NEWSPAPER,  ARTICLE,  LETTER,
 INVESTMENT  SERVICE,  OR  COMMUNICATION  TO MORE THAN ONE PERSON WHETHER
 DIRECTLY OR INDIRECTLY.
   2. IT SHALL BE UNLAWFUL FOR ANY PERSON, WHETHER NATURAL OR  OTHERWISE,
 OR  ANY  AGENT OR EMPLOYEE THEREOF TO GIVE PUBLICITY TO OR CIRCULATE ANY
 ADVERTISEMENT, WHICH, THOUGH NOT PURPORTING TO OFFER A CLASS OF SECURITY
 TOKENS FOR SALE, DESCRIBES  SUCH  CLASS  OF  SECURITY  TOKENS  THAT  ARE
 CREATED  BY  A  DEVELOPER  SEEKING SUCH ADVERTISEMENT FOR CONSIDERATION,
 WHETHER DIRECTLY OR INDIRECTLY, WITHOUT FULLY  DISCLOSING  THE  RECEIPT,
 WHETHER  PAST  OR  PROSPECTIVE,  OF THE AMOUNT THEREOF, AND WHETHER SUCH
 CONSIDERATION IS MADE DIRECTLY OR INDIRECTLY AND IN THE PAST OR PROSPEC-
 TIVELY, A DESCRIPTION  IN  ACCORDANCE  WITH  SUBDIVISION  FOUR  OF  THIS
 SECTION FOR:
   (A) THE SAME CLASS OF SECURITY TOKENS;
   (B)  A DIFFERENT CLASS OF SECURITY TOKENS CREATED BY THE SAME DEVELOP-
 ER;
   (C) THE SAME OR A DIFFERENT CLASS OF SECURITY TOKENS  CREATED  BY  THE
 SAME  DEVELOPER  AND  OTHER  CONSIDERATION,  WHETHER A CLASS OF SECURITY
 TOKENS OR OTHERWISE;
   (D) A DIFFERENT CLASS OF SECURITY TOKENS THAT IS INTENDED TO  INCREASE
 IN  PRICE IN CONJUNCTION WITH THE ADVERTISEMENT OF THE CLASS OF SECURITY
 TOKENS ADVERTISED, WHETHER OR NOT SUCH  CLASS  OF  SECURITY  TOKENS  WAS
 CREATED BY THE SAME DEVELOPER;
   (E)  A  PRE-PUBLIC  OFFERING  TO  PURCHASE  ANY OF THE SECURITY TOKENS
 DESCRIBED IN PARAGRAPHS (A) THROUGH (D) OF THIS SUBDIVISION  WHETHER  OR
 NOT SUCH SECURITY TOKENS ARE ACTUALLY PURCHASED;
   (F)  A  POST-PUBLIC  OFFERING  TO  PURCHASE ANY OF THE SECURITY TOKENS
 DESCRIBED IN PARAGRAPHS (A)  THROUGH  (D)  OF  THIS  SUBDIVISION  FOR  A
 REDUCED  PRICE,  WHETHER  OR  NOT  SUCH  SECURITY  TOKENS  ARE  ACTUALLY
 PURCHASED; OR
   (G) A POST-PUBLIC NOTIFICATION OF THE EXISTENCE OF ANY OF THE SECURITY
 TOKENS DESCRIBED IN PARAGRAPHS (A) THROUGH (D) OF THIS SUBDIVISION  THAT
 IS INTENDED TO BE PRIOR TO AN ANTICIPATED INFLUX OF PURCHASERS THAT WILL
 RAISE  THE  PRICE  OF  THE SECURITY TOKENS, WHETHER OR NOT SUCH SECURITY
 TOKENS ARE ACTUALLY PURCHASED.
   3. THE ADVERTISER SHALL HAVE AN AFFIRMATIVE  DUTY  TO  USE  REASONABLE
 EFFORTS TO DETERMINE WHETHER THE CLASS OF SECURITY TOKENS PAID TO HIM OR
 HER  WERE CREATED BY THE SAME DEVELOPER AND WHETHER SUCH SECURITY TOKENS
 WERE INTENDED TO INCREASE IN PRICE IN CONJUNCTION WITH THE ADVERTISEMENT
 OF THE SECURITY TOKEN ADVERTISED.
   4. THE FORM OF DISCLOSURE SHALL:
   (A) BE WRITTEN ON EACH ADVERTISEMENT IN A SUFFICIENTLY READABLE  TYPE-
 FACE  OR,  WHERE  SUCH  ADVERTISEMENT IS AUDITORY IN NATURE, STATED IN A
 CLEAR AND UNDERSTANDABLE TONE PRIOR TO THE AUDITORY STATEMENT;
   (B) IN THE CASE OF THE SAME SECURITY TOKEN ADVERTISED  BEING  PAID  IN
 CONSIDERATION,  A STATEMENT STATING THE EXACT AMOUNT OF TOKENS PROVIDED,
 THE DATE THAT THEY WERE PROVIDED, AND THE TYPE OF TOKEN PROVIDED;
   (C) IN THE CASE OF A DIFFERENT SECURITY  TOKEN  CREATED  BY  THE  SAME
 DEVELOPER,  A STATEMENT STATING THE EXACT AMOUNT OF TOKENS PROVIDED, THE
 DATE THAT THEY WERE PROVIDED, THE TYPE OF TOKEN PROVIDED, AND  A  STATE-
 MENT  THAT THE SECURITY TOKEN PROVIDED WAS CREATED BY THE SAME DEVELOPER
 AS THE SECURITY TOKEN BEING ADVERTISED;
 A. 9028--A                          4
 
   (D) IN THE CASE OF THE SAME OR A DIFFERENT CLASS  OF  SECURITY  TOKENS
 AND  OTHER CONSIDERATION, WHETHER SECURITY TOKENS OR OTHERWISE, A STATE-
 MENT STATING THE EXACT AMOUNT OF TOKENS PROVIDED,  THE  DATE  THAT  THEY
 WERE  PROVIDED,  THE  TYPE  OF  TOKEN PROVIDED, IF THE SECURITY TOKEN IS
 DIFFERENT  FROM  THE  ADVERTISEMENT, A STATEMENT THAT THE SECURITY TOKEN
 PROVIDED WAS CREATED BY THE SAME DEVELOPER AS THE SECURITY  TOKEN  BEING
 ADVERTISED, AND A DESCRIPTION OF THE OTHER CONSIDERATION PROVIDED HOWEV-
 ER THAT IF SUCH OTHER CONSIDERATION CONFORMS TO ANY OF THE PROVISIONS OF
 SUBDIVISION  TWO  OF  THIS SECTION, THEN A STATEMENT CONFORMING WITH ITS
 RESPECTIVE PROVISION IN THIS SECTION;
   (E) IN THE CASE OF A  DIFFERENT  CLASS  OF  SECURITY  TOKENS  THAT  IS
 INTENDED  TO  INCREASE IN PRICE IN CONJUNCTION WITH THE ADVERTISEMENT OF
 THE CLASS OF SECURITY TOKENS ADVERTISED, A STATEMENT STATING  THE  EXACT
 AMOUNT OF TOKENS PROVIDED, THE DATE THAT THEY WERE PROVIDED, THE TYPE OF
 TOKEN  PROVIDED,  AND  A  STATEMENT  STATING  THE SECURITY TOKEN THAT IS
 INTENDED TO INCREASE IN CONJUNCTION WITH THE ADVERTISEMENT AND THAT SUCH
 SECURITY TOKEN IS INTENDED BY THE DEVELOPER TO INCREASE WITH THE  ADVER-
 TISEMENT OF THE SECURITY TOKEN BEING ADVERTISED;
   (F)  IN THE CASE OF A PRE-PUBLIC OFFERING TO PURCHASE ANY OF THE SECU-
 RITY TOKENS DESCRIBED IN PARAGRAPHS (A) THROUGH (D) OF  SUBDIVISION  TWO
 OF  THIS  SECTION,  IF AN EXACT AMOUNT OF SECURITY TOKENS ARE OFFERED, A
 STATEMENT STATING THE EXACT AMOUNT OF SECURITY  TOKENS  OFFERED,  IF  AN
 UNLIMITED  AMOUNT  OF  SECURITY  TOKENS ARE OFFERED, A STATEMENT STATING
 THAT THE DEVELOPER HAS OFFERED THE ADVERTISER TO PURCHASE  AN  UNLIMITED
 AMOUNT  OF  TOKENS,  AND  IN EITHER CASE, THE DATE THAT THE OFFERING WAS
 MADE, THE DATE WHICH THE ADVERTISER MAY PURCHASE THE SECURITY TOKENS  AT
 THE  PRE-PUBLIC  PRICE  AND  THE  TYPE OF TOKEN PROVIDED. THE ADVERTISER
 SHALL BE PROHIBITED FROM DISCLOSING OR MAKING PUBLIC WHETHER HE  OR  SHE
 ACTUALLY PURCHASED THE SECURITY TOKEN STATED;
   (G) IN THE CASE OF A POST-PUBLIC OFFERING TO PURCHASE ANY OF THE SECU-
 RITY  TOKENS  DESCRIBED IN PARAGRAPHS (A) THROUGH (D) OF SUBDIVISION TWO
 OF THIS SECTION FOR A REDUCED PRICE, IF  AN  EXACT  AMOUNT  OF  SECURITY
 TOKENS  ARE  OFFERED,  A  STATEMENT STATING THE EXACT AMOUNT OF SECURITY
 TOKENS OFFERED, IF AN UNLIMITED AMOUNT OF SECURITY TOKENS ARE OFFERED, A
 STATEMENT STATING THAT THE  DEVELOPER  HAS  OFFERED  THE  ADVERTISER  TO
 PURCHASE A LIMITLESS AMOUNT OF TOKENS, AND IN EITHER CASE, THE DATE THAT
 THE  OFFERING  WAS  MADE, THE DATE WHICH THE ADVERTISER MAY PURCHASE THE
 SECURITY TOKENS AT THE REDUCED PRICE AND THE TYPE OF TOKEN PROVIDED. THE
 ADVERTISER SHALL BE PROHIBITED FROM DISCLOSING OR MAKING PUBLIC  WHETHER
 HE OR SHE ACTUALLY PURCHASED THE SECURITY TOKEN STATED;
   (H)  IN THE CASE OF A POST-PUBLIC NOTIFICATION OF THE EXISTENCE OF ANY
 OF THE SECURITY TOKENS DESCRIBED IN PARAGRAPHS (A) THROUGH (D) OF SUBDI-
 VISION TWO OF THIS SECTION THAT IS INTENDED TO BE  PRIOR  TO  AN  ANTIC-
 IPATED  INFLUX  OF  PURCHASERS THAT WILL RAISE THE PRICE OF THE SECURITY
 TOKEN, A STATEMENT STATING THE DATE THAT THE ADVERTISER WAS NOTIFIED  OF
 THE  EXISTENCE OF THE SECURITY TOKEN, THE APPROXIMATE PRICE OF THE SECU-
 RITY TOKEN AT THE TIME OF THE NOTIFICATION, WHETHER THE ADVERTISER ACTU-
 ALLY PURCHASED THE SECURITY TOKEN, AND, IF THE ADVERTISER  DID  IN  FACT
 PURCHASE THE SECURITY TOKEN, THE AMOUNT THAT THE ADVERTISER PURCHASED OF
 THE SECURITY TOKEN AND THE AMOUNT PURCHASED;
   (I)  IN  THE CASE WHERE SUCH CONSIDERATION IS PROSPECTIVE AND INCLUDES
 ANY OF THE ITEMS REQUIRED TO BE DISCLOSED PURSUANT TO SUBDIVISION TWO OF
 THIS SECTION, A STATEMENT DESCRIBING THE METHOD BY WHICH SUCH  CONSIDER-
 ATION WILL BE PAID PROSPECTIVELY, THE TYPE OF ACCOUNT OR OTHER PERSON OR
 ENTITY  IN  WHICH SUCH CONSIDERATION IS STORED, IF ANY, THAT IT IS BEING
 HELD IN, THE DATE THAT SUCH  CONSIDERATION  WILL  BE  RELEASED  AND  THE
 A. 9028--A                          5
 
 PERSON  OR  ENTITY  THAT  SUCH  CONSIDERATION WILL BE RELEASED TO, AND A
 STATEMENT SATISFYING THE PROVISION THAT SUCH CONSIDERATION CONFORMS  TO;
 AND
   (J) IN THE CASE OF A COMBINATION OF ANY OF THE FOREGOING PROVISIONS OF
 THIS SUBDIVISION, A STATEMENT SATISFYING EACH PROVISION.
   §  2.  This  act shall take effect on the thirtieth day after it shall
 have become a law.    Effective  immediately,  the  addition,  amendment
 and/or repeal of any rule or regulation necessary for the implementation
 of  this  act  on  its  effective  date  are  authorized  to be made and
 completed on or before such effective date.