NY State Senate Bill 2021-S9410

Archive: Last Bill Status - In Senate Committee Banks Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
May 25, 2022	referred to banks

2021-S9410 (ACTIVE) - Details

See Assembly Version of this Bill:: A9029
Current Committee:: Senate Banks
Law Section:: Financial Services Law
Laws Affected:: Amd §104, add §410, Fin Serv L
Versions Introduced in 2023-2024 Legislative Session:: S360, A938

2021-S9410 (ACTIVE) - Summary

Requires certain disclosures by a developer of virtual tokens in advertisements involving such virtual tokens; provides restrictions concerning advertising.

2021-S9410 (ACTIVE) - Sponsor Memo

                                 
BILL NUMBER: S9410

SPONSOR: THOMAS
 
TITLE OF BILL:

An act to amend the financial services law, in relation to requiring
certain disclosures in advertisements involving virtual tokens

 
PURPOSE OR GENERAL IDEA OF BILL:

Requires certain disclosures in advertisements involving virtual tokens.

 
SUMMARY OF SPECIFIC PROVISIONS:

Section 1 defines virtual tokens.

Section 2 creates a new section in the financial services law.

Section 2(a) requires certain disclosures in the advertising of virtual
tokens.

Section 2(b) creates restrictions on false, misleading, or deceptive

advertising in relation to virtual tokens and other financial products
or services.

Section 2 (c) provides that a statement or representation is false,
misleading, or deceptive if a person states that they are legally
authorized to offer residents of New York virtual tokens or other finan-
cial products or services and they are not authorized to do so.

Section 3 is the effective date.

 
JUSTIFICATION:

There has been a flood of new, unregulated virtual tokens that resemble
securities and that have been placed on the open market for unwitting
investors to invest large sums of money into in the hopes of a signif-
icant price increase. Although most of these tokens are advertised as
investment opportunities, many people invest in them without fully
understanding what they are investing in. The majority of the time,
these security tokens are created by small groups of anonymous individ-
uals who have complete control over the price of the security tokens,
either through their ability to cease technical support or to sell a
large portion of the supply all at once to make substantial profits.

The use of public figures to promote a security token is a common strat-
egy used to garner interest in the security token. These public figures
are frequently compensated in the same security tokens created by the
developers, in the hopes that their promotion of the security token will
cause the price to increase rapidly - sometimes by 10,000% or more in a
single day - and net the advertiser a large sum of money. Users are
unaware of the amount of money paid to the advertiser, even when they
are compensated with other forms of consideration such as money, leaving
them with very little information about why the advertiser is advertis-
ing the security token.

Advertisers of securities, such as stocks, must already disclose the
amount of consideration they were paid under federal anti-touting laws,

and it is time for virtual tokens that act as securities to be subjected
to the same rules.

It is not enough for security token advertisers to state that their
advertisement is in fact an advertisement to safeguard investors.
Instead, to protect investors from being misled by security token adver-
tisers, it is critical for such advertisers to disclose the amount they
were paid, whether their purchase will directly result in the advertiser
making money on the security token, and the number of security tokens
they received. If prospective investors learn that an advertiser was
compensated in the form of security tokens or other forms of compen-
sation for their advertisement, they may or may not be hesitant to put
their hard-earned money into such an investment.  Regardless of the
decision they end up making, it is every investor's right to have the
information necessary to make that decision in the first place.

 
PRIOR LEGISLATIVE HISTORY:

New bill.

 
FISCAL IMPLICATIONS:

To be determined.

 
EFFECTIVE DATE:
This act shall take effect on the thirtieth day after it shall have
become law.

2021-S9410 (ACTIVE) - Bill Text download pdf

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   9410
 
                             I N  S E N A T E
 
                               May 25, 2022
                                ___________
 
 Introduced  by  Sen.  THOMAS -- read twice and ordered printed, and when
   printed to be committed to the Committee on Banks
 
 AN ACT to amend the financial services 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. Subdivision (a) of section 104 of  the  financial  services
 law is amended by adding a new paragraph 6 to read as follows:
   (6) "VIRTUAL TOKEN" SHALL MEAN ANY INTERCHANGEABLE OR NON-INTERCHANGE-
 ABLE  UNIT  OF  DATA THAT IS STORED ON ANY BLOCKCHAIN LEDGER WHICH SHALL
 INCLUDE, AMONG OTHER DIGITAL UNITS THAT THE SUPERINTENDENT DETERMINES TO
 BE VIRTUAL TOKENS IN ACCORDANCE WITH THIS DEFINITION,  CRYPTOCURRENCIES,
 VIRTUAL  CURRENCIES, DIGITAL ASSETS AND DIGITAL TOKENS, WHETHER FUNGIBLE
 OR NON-FUNGIBLE. VIRTUAL TOKENS SHALL NOT BE CONSTRUED TO INCLUDE ANY OF
 THE FOLLOWING:
   (A) DIGITAL UNITS THAT: (I) ARE USED SOLELY WITHIN ONLINE GAMING PLAT-
 FORMS; (II) HAVE NO MARKET OR APPLICATION OUTSIDE OF THOSE GAMING  PLAT-
 FORMS; (III) CANNOT BE CONVERTED INTO, OR REDEEMED FOR, FIAT CURRENCY OR
 VIRTUAL  CURRENCY;  AND (IV) MAY OR MAY NOT BE REDEEMABLE FOR REAL-WORLD
 GOODS, SERVICES, DISCOUNTS, OR PURCHASES;
   (B) DIGITAL UNITS  THAT  CAN  BE  REDEEMED  FOR  GOODS,  SERVICES,  OR
 PURCHASES  AS  PART  OF  A CUSTOMER AFFINITY OR REWARDS PROGRAM WITH THE
 ISSUER AND/OR OTHER DESIGNATED MERCHANTS OR CAN BE REDEEMED FOR  DIGITAL
 UNITS  IN  ANOTHER  CUSTOMER  AFFINITY OR REWARDS PROGRAM, BUT CANNOT BE
 CONVERTED INTO, OR REDEEMED FOR, FIAT CURRENCY OR OTHER VIRTUAL  CURREN-
 CY; OR
   (C) DIGITAL UNITS USED AS PART OF PREPAID CARDS.
   § 2. The financial services law is amended by adding a new section 410
 to read as follows:
   §  410.  RESTRICTIONS CONCERNING ADVERTISING.  (A) NO PERSON SHALL, IN
 ANY MANNER, ADVERTISE, PRINT, DISPLAY, PUBLISH,  DISTRIBUTE,  OR  BROAD-
 CAST,   OR  CAUSE  OR  PERMIT  TO  BE  ADVERTISED,  PRINTED,  DISPLAYED,
 PUBLISHED, DISTRIBUTED, OR BROADCASTED, ANY STATEMENT OR  REPRESENTATION
 WITH  REGARD  TO  ANY VIRTUAL TOKEN FOR CONSIDERATION WITHOUT DISCLOSING
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.

                                                            LBD13980-06-2
 S. 9410                             2
 
 THE AMOUNT OF CONSIDERATION, WHETHER  PAST  OR  PROSPECTIVE,  DIRECT  OR
 INDIRECT, AND THE NATURE THEREOF.
   (B)  NO  PERSON  SHALL,  IN  ANY  MANNER,  ADVERTISE,  PRINT, DISPLAY,
 PUBLISH, DISTRIBUTE, OR BROADCAST, OR CAUSE OR PERMIT TO BE  ADVERTISED,
 PRINTED,  DISPLAYED,  PUBLISHED, DISTRIBUTED, OR BROADCASTED, ANY STATE-
 MENT OR REPRESENTATION WITH REGARD TO ANY VIRTUAL TOKEN OR OTHER  FINAN-
 CIAL  PRODUCT  OR SERVICE IF SUCH STATEMENT OR REPRESENTATION IS, IN ANY
 MANNER, FALSE, MISLEADING OR DECEPTIVE.
   (C) FOR THE PURPOSES OF THIS SECTION AND WITHOUT LIMITING SUBDIVISIONS
 (A) AND (B) OF THIS SECTION, A  STATEMENT  OR  REPRESENTATION  SHALL  BE
 FALSE,  MISLEADING  AND  DECEPTIVE  IF IT STATES OR IMPLIES, DIRECTLY OR
 INDIRECTLY, THAT A PERSON IS AUTHORIZED LEGALLY TO OFFER OR  PROVIDE  IN
 NEW  YORK  STATE OR TO NEW YORK STATE RESIDENTS A VIRTUAL TOKEN OR OTHER
 FINANCIAL PRODUCT OR SERVICE, AND SUCH PERSON IS NOT SO AUTHORIZED.
   § 3. This act shall take effect immediately.

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Senate Bill S9410

Sponsored By

Archive: Last Bill Status - In Senate Committee Banks Committee

2021-S9410 (ACTIVE) - Details

2021-S9410 (ACTIVE) - Summary

2021-S9410 (ACTIVE) - Sponsor Memo

2021-S9410 (ACTIVE) - Bill Text download pdf

Comments

Senate Bill S9410

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Sponsored By

Kevin Thomas

Archive: Last Bill Status - In Senate Committee Banks Committee

2021-S9410 (ACTIVE) - Details

2021-S9410 (ACTIVE) - Summary

2021-S9410 (ACTIVE) - Sponsor Memo

2021-S9410 (ACTIVE) - Bill Text download pdf

Comments