S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   2318
 
                        2023-2024 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             January 25, 2023
                                ___________
 
 Introduced  by M. of A. VANEL -- read once and referred to the Committee
   on Science and Technology
 
 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.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD06263-01-3
              

 A. 2318                             2
 
   (C)  "STABLECOIN"  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 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.
 A. 2318                             3
 
   (M) "PRIVATE KEY" SHALL MEAN THE UNIQUE IDENTIFIER OF A WALLET, OR ANY
 SUBSTANTIALLY SIMILAR ANALOGUE, THAT IS PAIRED WITH A PUBLICLY AVAILABLE
 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-
 A. 2318                             4
 
 MENT  THAT THE SECURITY TOKEN PROVIDED WAS CREATED BY THE SAME DEVELOPER
 AS THE SECURITY TOKEN BEING ADVERTISED;
   (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
 A. 2318                             5
 
 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
 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.