True to its motto 'Live Free or Die,' New Hampshire has taken a landmark step to foster cryptocurrency innovation. The state House early Wednesday morning passed House Bill 436, which exempts virtual currencies like Bitcoin from burdensome money transmitter regulations. This move is expected to attract digital currency businesses to the Granite State, avoiding the regulatory exodus seen in other states.
Behind the Bill: From Beanie Babies to Blockchain
Jeremy Kauffman, the governor-appointed advisor for the virtual currency bill, shared colorful details of the legislative process. 'Listening to twenty politicians debate an esoteric issue is fantastically entertaining,' he told Bitcoin.com. 'At one point in committee, there was a fifteen-minute debate as to whether or not a previous bill would have regulated Beanie Baby trading, and whether or not such trading should be regulated even if it did.'
Significant discussion time centered around Silk Road and ransomware, according to Kauffman. 'There is tremendous conflation among politicians between the bad things that happen with Bitcoin and the technology itself,' he said. 'New Hampshire has the highest per-capita Bitcoin usage and the longest-running Bitcoin meetup. Due to the Free State Project, a lot of early bitcoiners were residents here.'
Data from Google Trends confirms the state ranks sixth in 'Bitcoin' search volume in the U.S., behind California, Nevada, Washington, New York, and Utah. Representative Keith Ammon, the bill's sponsor, and long-time Bitcoin advocate, spoke in favor on the floor. Representative Barbara Biggie co-sponsored the bill, and Representative John Hunt, who helped move the bill out of committee, defended it by comparing regulating Bitcoin to regulating Beanie Babies.
Avoiding the Exodus of Bitcoin Businesses
Harsh regulations in other states have driven digital currency companies away. Hawaii's recent virtual currency rules required licensed custodians to maintain redundant fiat currency reserves equal to the aggregate face value of all digital currency funds held on behalf of customers—a requirement that led Coinbase to leave the island state.
Meanwhile, a French citizen is suing the New York Department of Financial Services (NYDFS) over the 'Bitlicense,' arguing that insufficient research was done before implementing the regulation. The lawsuit's latest filing states: 'There are significant and irreconcilable factual differences between the arguments presented by Plaintiff-Petitioner and by Defendants-Respondents... Those fundamental factual differences and disputes involve whether Bitcoin is a “financial product” or service which impacts whether Defendants-Respondents had the authority to regulate Bitcoin.'
Advice for Crypto Advocates
Kauffman offered advice for those seeking similar legislation in other states: 'Talk about how many smart people are betting a lot of money on this being “Web 3.0” or similar. Talk about how the states that encourage this kind of innovation will get the jobs. Reference New York as an example of doing it wrong, and all the businesses that fled and closed.' He concluded on the LBRY blog: 'New Hampshire already has the highest per-capita Bitcoin usage. And very soon it is likely to have the most favorable regulatory climate.'
With HB 436 now passed, New Hampshire positions itself as a national leader in cryptocurrency-friendly regulation, offering a blueprint for other states aiming to attract the digital economy without stifling innovation.